We all make numerous decisions everyday. In business, we make decisions that result in money being spent and resources being committed. Of course, decision-making is no big deal because we have all had plenty of training and schooling on decision-making. You remember those classes: Decision-Making 101, Strategic Decision-Making 201, Making Complex Decision-Making Easy 301 and my favorite ¡°Saving your A_ _ Decision-Making 401.
In reality, of course, decision-making is a big deal yet most of us do not understand why we make the decisions, what outcome we are seeking or how it turns out. Especially in today’s business environment after making a decision, we are moving forward to the next issue that needs our brilliant decision-making.
In professional baseball, a batter who is successful 3 out of 10 times (or fails only 7 out of 10 times) is revered by fans and paid millions because he is a .300 hitter. In business, we have senior executives and CEO’s who are also paid millions yet their decision-making success is below the Mendoza line**¡ (less than 2 out of every 10 decisions are successful).
** if your unfamiliar with the term ¡°Mendoza Line¡:, ask any baseball fan.
You are probably saying my successful decision-making is better than that, right? Yet how often do you mutter, ¡°if I only knew¡ or°why didn’t I consider that¡ Even if it is better, you are still making more bad decisions than good. So how do you take corrective action to raise your ¡°batting average.¡:
I have certainly made my share of rash, poor, wrong and bone-headed decisions. But with mistakes, as long as you can park you ego and pride, comes experience, knowledge and the desire to seek answers.
Most poor or failed decisions start with the decision-maker committing one of three blunders; failure-prone practices, rush to judgment and poor allocation of time, money or resources.
Failure-Prone Practices
Decision-makers fall into a rut. Not knowing or being oblivious to a poor track record has them making decisions the same way and getting the same poor outcome.
We all know decision makers whose decisions are the equivalent of only sticking their toe in the water. For example, they will make a decision because it has a low cost and therefore they can never be blamed for increasing expenses.
Another failure prone decision-making practice is to look for things beyond the decision maker’s control. Government regulations or unexpected budget cuts offer convenient excuses to these decision-makers for not pursuing better practices.
Rush to Judgment
Decision-makers often jump on the first idea that comes along and make premature commitments. When answers are not readily available, grabbing on to the first thing that seems to offer relief is a natural impulse.
Poor Allocation
Decision makers will make wrong-headed investments of time and money for costly evaluations often without knowing what they will do with the outcome. To make matters worse, these evaluations are often defensive ¡ª carried out to support an idea someone is wedded to with the decision-maker trying to show support (hoping) it will work. A much better use of the money and resources would be to set goals and objectives, measure benefits and risk and to manage the forces that can derail a decision. Decision-makers blunder when they fail to focus on outcomes and stay committed to determine whether it was a worthy undertaking.
So having covered the three blunders that lead decision-makers down the path to poor or unsuccessful decisions, let’s talk about the debacles or traps that follow these blunders that will truly doom your decisions.
While there are only three blunders, there are at least seven traps that can be identified. They are:
– Failure to Reconcile Claims
– Failure to Manage Forces Stirred Up by a Decision
– Ambiguous Directions
– Limited Search and No Innovation
– Misuse of Evaluation
– Ignoring Ethical Questions
– Failure to Learn
When caught in any of these traps, decision-makers are apt to make a bad call that can become a debacle.
Failure to Reconcile Claims
As a business owner you watch your results closely when you notice a trend of lost sales and revenue. Keeping track of your competitors, you see that one in particular is growing at about the same rate that you are losing business. You make the decision that the quality of your product must improve to recapture this lost business and so you devote time, money and resources. Yet your loss of business could be for any number of reasons that have nothing to do with the quality of your product.
Decision-makers get trapped when they rationalize a reason for a decision without looking into it further. The relationship of the concern ¡ª the loss of sales and revenue ¡ª and the perceived reason ¡ª low product quality ¡ª may have no connection.
Failure to Manage Forces Stirred Up by a Decision
If a decision is perceived as jeopardizing another’s ¡°turf, or their security, value to the business of any number of other perceived reasons, people around the decision will become aroused. Any of these can create opposition to the decision, no matter the quality of the decision. Opposition will take shape in subtle ways through delay, token compliance and attempts at negotiation to hold up a decision or limit its use.
The savvy decision maker heads off this types of resistance by shaping the decision to practices, resources and relationships valued by people and communicating the value to the decision to all impacted.
Ambiguous Directions
Decision makers must set a clear direction for the decision. Why is decision being made? What is the goal and the expected results? I also believe besides the goal, objective and outcome, the decision should also include a ¡°champion¡: who is on point and leading and that the decision lets all involved know the delivery date. Including all of these key components, greatly increases your decision-making success rate.
Limited Search and No Innovation
¡°Keep your options open¡: is sage advice. When making a big-ticket expenditure, such as buying a car or a house, we identify several options before settling on one. Yet, many decision-makers in business making weighty decisions drastically limit their search for different options. Opportunistic behavior drives our search when the pull of a quick fix or the push of a pet idea takes precedence over the proper search for the right solution.
Misuse of Evaluation
Decision-makers who set out to support a preferred idea get drawn into defensive evaluation. Vast sums invariably are spent to find evidence that validates what a decision-maker wants to do or must support. Little, if anything, is spent on claim investigation, implementation, direction setting, or searching for new ideas. These kinds of evaluations ignore possible risks, painting a rosy picture in order to support a presupposed conclusion.
Ignoring Ethical Questions
A person’s ethics is rooted in their standards of fairness and justice. What one believes to be fair and just is imposed on a decision and how the decision is made. Decision-makers apply standards of fairness and justice to what they see, which may or may not capture what actually takes place. Both the appearance and the reality of an ethical lapse can spell trouble.
Ethical issues can erupt at any point in the decision-making effort. Claims can seem wrong-headed and provoke opposition. Decision makers feeling pressured to act may barge ahead and run over people whose interests could have been served or preserved. Whose interests are being served and whose are neglected will always pose an ethical issue. Failure to apply personal standards when making decisions at work sets an ethical trap.
Failure to Learn
Decisions produce outcomes with consequences. Learning requires an assessment of these consequences and the actions taken to realize them. Hoping to deflect blame and protect prerogatives, some decision makers maneuver to keep their decisions from receiving a post-mortem. There is also a natural reluctance to reveal information that could expose mistakes and errors. Perverse incentives, misleading outcomes and a ¡°hindsight bias¡: also coax people to conceal information, forging a climate in which one tells others as little as possible.
Your decision-making will not improve unless you are open to objective evaluation, constructive criticism and post-mortems.
The urge to ¡°fix¡: something is out of sync with the needs of decision-making. Making good decisions calls for an exploratory mindset and an appreciation of skillful questioning that is used to get to the bottom of things. Discover what gives life and results to the issue being contemplated. Get various points of view in meetings and other forums, and challenge those listening to reflect and make sense of what is heard.
Doing this will help you avoid the three blunders and the seven debacles that doom most decision-making. Or you could go back to school and start with Decision-Making 101.