June 2, 2011

Recently, as I was sitting in the airport waiting area before boarding a plane, I happened to glance at the book a young Marine was reading. It was called History's Worst Decisions. It had a serpent on the cover and I thought it might be required reading, so I asked him as much. "No," he replied. "Just a recommendation from a commander." He proceeded to share a few of those bad decisions, and it got me thinking about decision-making.

Decision-making seems so complex, especially in the business setting. I think there's way to make it simple, or at least simpler.

There are two key inputs to any important decision: the "what is" and the "what should be." Let's start with the "what is."

The "what is" are the facts, the basic foundation of what you need to make an informed decision. It's where any decision-making process should start. We need to know "what is" really going on, the full truth and reality of the current situation, from all sides of the issue.

That seems easy to understand, but it's hard to do. The biggest barrier we face defining the "what is" is our capacity to make meaning out of raw data. A few things get in the way. First, we tend to "satisfice"; that is, glom onto the first choice offering an acceptable payoff. Second, we tend to employ short-term thinking, because our ability or desire to think into the future is limited. Third, we tend to sub-optimize—often throwing out the best and worst alternatives without knowing the difference.

Those three challenges aren't insurmountable—you just need some good old determination and discipline. But there's a fourth, and potentially crippling challenge. It's the answer to a deceptively simple question: When does the truth get told in your company?

Think about your last meeting. Did the truth get told before the meeting? If so, you're typical. During the meeting? If so, you're lucky. After the meeting? If so, you're in trouble.

The other key input is the "what should be?" With the facts and truth in hand, we need to come to grips with the driving force behind the "what should be," which is quite simply this: purpose. Purpose sits at the intersection of strategy (the plan for winning) and core values (non-negotiable principles defining how we will conduct ourselves). Purpose defines why your company exists, and is the end to which all important decision-making should be directed. Purpose seeks to make it clear what the company believes in.

When we are clear about the "what is" and the "what should be," anyone and everyone can make the important decision. Here's a simple schematic:

For example, we can delegate true authority and accountability to frontline customer service reps because they have the two key inputs. But if your customer information systems only gives them part of the "what is" (for example, they don't have the purchase or service history of the customer) and company leaders have been vague or ambiguous in clearly defining and communicating the "what should be" (for example, values on how we should treat customers are unclear), then it will be very difficult to fully empower the customer service reps.

The upshot is that we won't be able to give them the latitude they need to be responsive and decisive during an important customer touchpoint, such as when the customer demands an answer to the question: "What can you do for me now?" Instead of empowerment, they get a rule book that continually reminds them that they need to check with their supervisor for any exceptions. And that's a problem, because we live in a world of exceptions.

Leaders need to operate above the line of empowerment. They need to constantly tell stories, share anecdotes and communicate examples of the action that people have taken that exemplify the purpose and strategy, so that everyone understands where the line of empowerment is. Everyone in the company needs the capacity to make decisions based on a well-defined "what is" and "what should be." If they can't, they won't be able to help you move the business forward.

Try using the "anatomy of a decision" diagram above next time you face a key decision in a team setting where you play a lead role. Ask yourself three key questions:

1. Have I clearly defined the "what is"?
2. Have I brought clarity to the "what should be"?
3. Have I empowered or involved others in a meaningful way to "make the decision"?

My sense is that if you use this simple model, you'll be rewarded with better decisions—ones supported by more buy-in from your team.

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Matthew E. May, Article, leadership, decision-making

Join the conversation ( 1 )

• ITGeek is @bentrem 12 months ago

  

  Just now, in Twitter, I responded to this: @ericries RT @mskrys - #sfedu "failed entrepreneurs are the only ones to back" from @navalI tweeted, "A proper R&D environment is set up to deal with / benefit from failures. Analogous?"Perhaps what I have in mind isn't actually "simplify". In fact I think simplification can be as fraught as optimization; to be used only as appropriate.What I have in mind is something like clarification. Not necessarily "restricted case", but something like. To reduce invisible variables, to have good working operational definitions for terms ... to know the ground and the surround. "It's hard to make things easy!" and likewise making things simple can require complexity.To never make a mistake ... illusory, no? But to be set up in a way that makes immediate consequences (i.e. consequences small rather than calamitous) sensible and meaningful ... to make mid-course correction possible (feed-back/feed-forward?) ... so that good, robust, forensic quality dialectic can be applied. Perhaps the AI would be complicated and complex. It definitely would. Be we're good with heuristics. Subtle can be simple.Oh, here: is "straight forward" always "simple"?very nice to find your blog!ben aka @ITGeek