Category Archives: Decision Making

How We Make (un)wise decisions?

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Last month, during an executive education session, we were discussing how very smart people can make decisions that, upon the benefit of 20/20 hindsight, seem boneheaded.  In fact, when we analyzed a situation, the most common response was “What were they thinking?”  We humans pride ourselves on being good thinkers and decision makers.  We talk about how we go through a rational decision making process, and indeed, the heart of any executive’s role is that of making good decisions.

In many cases, we think we go through a very rational decision making process: We look at the problem, we gather facts about the problem, we look at alternatives and options,we weigh the advantages and disadvantages of each option, and we make a decision based upon the “best” option available.  In fact, the more experienced we become, we then   think through a mental chess match of the impact of that decision in multiple layers of the organization, our partners, our competitors, and then create a second level of rational decisions based upon what we anticipate are the most likely decisions of the other party.  Rodin’s sculpture, “The Thinker”,  and Descartes, “I think, therefore, I am”  are shining examples of this rational decision making model.  This is the basis of the scientific method. Milton Friedman won a Nobel Prize for his model of rational decision making and the concept of “satisficing” decisions.   The most common of decisions focuses upon receiving a recommendation or series of recommendations from another member of the team.  Usually, the decision is whether to accept a recommendation, reject or modify the recommendation, and then either make the decision or refer it to a more senior level.

Yet recent research in behavioral economics, led by recent Nobel Prize winner, Daniel Kahneman, outlines a series of biases that can distort the thinking and reasoning of even the most senior of executives.  In an article in HBR, he and his colleagues, Lovallo, and Sibony, outline a series of tactics that you and I can use to reduce our biases and make better decisions.

Kahneman, et. al,  note that we have two types of thinking-intuitive and reflective. Intuitive thinking is almost like autopilot-we walk, drive, brush our teeth, prepare coffee, and engage in everyday conversation.  Intuitive thinking is strongly linked with our senses and creates context for different words, phrases, and helps us make quick links between seemingly unrelated ideas.  For those who have “seen this before”, this intuitive thinking can help rapidly make sense of new situations.

Yet, in the background is reflective thinking, ready to engage when we do something new, important, or takes a great deal of concentration.  Unfortunately, unless we intentionally engage reflective thinking, we can be led astray.  If we don’t have experience with a new situation and rely on our gut or hunch, we may get entirely different (and boneheaded) solutions.  For example, take the word, “shot”. For a basketball fan, especially here in ACC country, shot means something completely different than for someone who is an Olympic track and field fan.

Kahneman and his colleagues note that simply knowing that you and I have these two types of thinking and their accompanying biases is necessary, yet insufficient.  In future posts, I’ll outline some of their major points and some ways to dramatically improve your team’s decision-making processes and results.

Source: “Before You Make That Big Decision”, Kahneman, Lovallo, and Sibony, Harvard Business Review, June 2011.

Who Has the D? Hint-think “RAPID”

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One of the areas that the Shelton Leadership Center focuses upon is teaching effective decision making.  We’re making a significant investment in trying to help individuals and teams learn and apply principles of critical thinking and decision making.  As one board member noted, “One key of high performing organizations is making good decisions and making them quickly.

I ran across Decide and Deliver, written by Marcia Blenko, Michael Mankins, and Paul Rogers.  They also wrote an earlier article  (Jan 2006) in HBR entitled,  “Who has the D?” In their work, they note there can be three bottlenecks to quick and effective decisions even in high performing organizations:

1. Global vs Local decision making: Who has the authority to make the decisions and tailored to local conditions? Is this a local decision (made by those closest to the front lines and facing the customer)or one that has to be made at a centralized level for consistency across the organization (who sees the big picture, sets broad goals, and overall strategic goals)?

2.  Crossfunctional vs Functional decision making:  What roles should different elements within cross functional teams play in the decision making?

3. Internal vs External Partnerships: This occurs most frequently with strategic partnerships and joint ventures.  Which decisions must be made by members internal to the organization and which decisions should be owned by the external partner?

Rogers and Blenko offer a decision making primer to think through who should make which decisions using the acronym “RAPID”, although they caution the thinking does not need to happen in this order:

R-Recommend: Who is responsible for recommending or proposing a course of action or alternatives.

A: Agree: Who has to agree with and sign off on or veto the recommendation? (They suggest only a few people have this veto power).

P: Perform: who is responsible for executing or implementing the recommendation

I: Input: Who has input or are consulted on the decision. These are usually those who are typically involved in implementing the decision.

D: Decide: Who is the formal decision maker who is ultimately responsible for the decision and has the authority to resolve any impasses in the decision making process and commit the organization to action.

What are some keys you use or teach your team with effective decision making?

 

Yes, But Can They Trust You? (Part 3 of 3)

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My previous two posts have focused on trust as a leader.  I’ve focused on one of NC State’s Poole College of Management professors, Dr. Roger Mayer. Dr. Mayer’s research on trust focuses on three elements: ability, benevolence, and integrity. I have linked the previous posts on ability and benevolence.

The final leg of trust from Dr. Mayer’s research is integrity.  Integrity focuses upon dependability and consistency with values and principles that others find important.   Dependability and consistency is basically doing what you say you are going to do over a prolonged period of time.  Yet if you act dependably in ways that your team does not value, you lose integrity. For example, you lack dependability and consistency if you are flitting from one initiative to another to a third based on the latest book, article, or management fad you’ve read about.  At the same time, if you act consistently in a way that is contrary to what your team values, then you have little to no integrity in their eyes. This is a critical part of culture.

In future posts, we’ll share some specific examples from GEN Shelton and senior leaders from a variety of backgrounds (public service, private and corporate practice, collegiate, and youth).  I’m interested in your examples as well.

What was a situation where you saw a leader demonstrate one or more of the three legs of trust (ability, benevolence, and integrity)?

 

 

Yes, But Can They Trust You? (Part 2 of 3)

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Last week, I outlined Dr. Roger Mayer’s work on trust. He notes that ability is one key factor of growing trust as a leader (click here for part one on ability). In his work in executive education programs at NC State’s Poole College of Management, he notes that many participants want to learn how to create a culture of innovation and trust. He notes that while ability is critical, the second of three factors on growing trust as a leader is benevolence.

According to Dr. Mayer’s research, benevolence relies upon empathy and selflessness.    Empathy focuses upon the relationship between you and the other person. You have to take the time to learn about the other people on your team, their interests outside of work and what is important to them.

Selflessness focuses upon your intentions and motives.  Are you perceived as a “glory hound” or one who hogs the credit for any success? Do you attempt to shift blame if there are any negative impacts on the team’s work?

How have you seen some of the best leaders with whom you’ve worked demonstrate selflessness and empathy?  I look forward to your comments.

Yes, But Can They Trust You? (Part 1 of 3)

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As a leader in today’s widely dispersed work around the globe and around the clock, you must align people, processes, and projects to help achieve your organization’s goals and objectives.  Yet, simply announcing the financial and operational targets is insufficient.  Do you find yourself asking a question like:

  • How can I gain greater commitment from my team members?

Earning your team’s trust is one critical factor to aligning your team and driving for results. One of my colleagues, Dr. Roger Mayer, at North Carolina State University‘s Poole College of Management, has focused his research on growing trust within organizations.  He’s found three key trust factors (ability, benevolence, and integrity) that can increase your organizational velocity and improve bottom-line results.  I’ll outline these three factors in this and the following two posts.

Factor 1: Ability: Ability focuses on one’s critical job-related skills.  As you start your career, these are your technical skills (degrees, patents, articles, or industry certifications). Yet, if you focus solely upon growing and maintaining your technical skills as you lead others, you will derail.

You’ve seen technically brilliant individuals derail when they have to lead others on a team to achieve an objective. One of the reasons they don’t engender trust is that they view each interchange or discussion as a contest to show others that their idea is technically superior to anybody else’s. By focusing on “winning” each interchange, the leader gets the well-deserved reputation as one who cannot be trusted. You must shift from purely technical to a blend of technical and interpersonal abilities.

The higher you go in the organization, you must develop other skills as well. This is difficult for many of us. We were promoted because of our technical skills. One fundamental lesson to remember is that we need to shift more from the answer provider to the questioner.  You have a perspective and a point of view. You may want to consider a previous post on the kinds of questions you might want to ask.