If I asked you “Do you always know what’s best?” chances are you’d respond “No”. But if I asked you a slightly different question: “Do you know always what’s best for your business?” there’s a very strong chance that you’d respond “Yes.”
Hypothetical: Your company’s product development team has been stumped by an ongoing parts availability issue. A teammate proposes adopting a solution you’ve never heard of. She provides examples of notable companies successfully employing this approach to solve identical problems. She concludes with “I think this is what’s best for the business. Can I implement it?”
If you tell her “Do it”, you’re either part of an infinitesimally small minority or—according to research by numerous social scientists and business scholars—you’re not being entirely honest.
How would you respond?
Our Fickle Psyches
Despite our best intentions, the brain often sabotages our ability to make good decisions.[note color="#dddddd"]Anchoring makes us believe numbers, even when they’re wrong. See: Enron, Lehman Brothers or Bernie Madoff
Positive Illusion erroneously shapes our beliefs about what’s accurate, to include our ability to make unbiased decisions.[/note]
Each of us believes we’re the exception to, well, pretty much everything. We see ourselves as intelligent, rational, and open-minded. We tell ourselves that our decision-making skills exceed those of others. And it’s others, not us, who are victim to psychological phenomena. The truth is that small business failure statistics and science say otherwise.
So how do we prevent decision-making bias? And how do we design an organization that makes decisions well? While there’s no one-size-fits-all model, there are plenty of tools to help:
Explore Options: Familiarize yourself with various decision-making methodologies. Buy a copy of the pocket-sized The Decision Book: 50 Models for Strategic Thinking.
Organizational Structure & Decision Making
Many businesses put more thought into where to eat lunch than they do their structure, which greatly influences decision-making culture. Those businesses typically default to an autocratic hierarchy (top-down, directorial management); however, the opposite of directorial isn’t pure democracy.
Here are some approaches that show decision-making authority doesn’t have to be an all-or-nothing proposition:[pullquote align="right"]
|Greater org-wide flexibility and focus||Requires parameters and periodic reevaluation|
|Better allocation of managerial resources||Micro-managers and control freaks will hate this|
|Introduces alternative paradigms||Requires the ‘right’ blend of people & facilitation|
|Better allocation of managerial resources||Framing biases can influence decision making|
|Objectivity; data doesn’t lie||Cultural change that requires buy-in|
|Design of Experiments & KPIs||Requires more time due to necessary research|
|Offers opportunity to implement Lean principles||Requires mapping of decision-making process|
|Allows quick, predictable decisions||You’ll hear “This can’t account for all possibilities”.|
Launch a Decision Lab
For each environment and every situation, numerous effective decision-making approaches are available. When designing your approach, think holistically and consider personal assessments, organizational structure, roles and responsibilities, short-term objectives, and long-term strategy. If you’re unsure what model’s best, then become a decision-making laboratory: Explore hypotheses, search for alternatives, run multiple pilots, and customize models for your needs.
So let me ask again: “Do you know always what’s best for your business?”