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An organization’s health is only as sound as its leader’s decisions. Some companies prosper from wise leadership directions, while others struggle after flawed choices—the kind that receive extra publicity because of the adverse impact on their organizations, people and communities.
The pressures and expectations that face leaders in today’s demanding climate may prompt a skewed, rushed or compromised decision process. But leaders who approach decisions with objective, rather than subjective, criteria can maximize their organizations’ potential.
Decision-Making Basics
Two fundamental forces determine our prosperity: decision quality and luck, asserts World Series of Poker champion Annie Duke in Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts (Penguin, 2018). Leaders instinctively (and rightly) dislike depending on luck and want their decisions to shape the future.
In our fast-paced world, important issues never become simpler, only more complex. You have less time to take each course of action and make each choice, with an ever-increasing impact on outcomes. Decisions that don’t go well are critiqued and analyzed. The need to make good decisions has never been more paramount—not just for leaders’ well-being, but for everyone under their authority.
People have two different modes of thought when a decision is required, and each has its place:
- An automatic mode, which is more reactive than responsive. It’s based on instinct and feelings when emergency situations can’t wait for much analysis.
- An analytic mode, which is more deliberate and methodical. It allows for (and requires) thorough evaluation of all options and outcomes.
A leader’s decision-making success hinges on resolving the balance between these two modes; react when necessary, but learn to shape your reactive thinking with analysis. Prioritize choices that benefit everyone.
Decision-making burdens many leaders because each choice rules out an alternative. This can cause hesitation or paralysis. Leaders are misled into thinking they can hold off making decisions without consequence. But making no decision is in itself a decision, with a separate set of consequences.
Uncertainty is another challenge for decision-makers. Conditions are constantly changing, and information may be incomplete. Experienced leaders know that even a wisely crafted decision, one made with full analysis and care, can go south. Yet, decisions must still be made, and leaders must be held accountable. It comes with the territory.
Decisions Roadblocks
Numerous innate traits inhibit our decision-making process. Executive coaches are trained to spot these human tendencies and help mitigate them to manageable levels:
- Being overwhelmed by a situation’s complexity. The executive consulting firm McKinsey & Company describes this as anxiety, doubt and hesitation that can distort the thinking needed to make a wise decision. Everyone has a specific threshold for discomfort.
- Associating a decision’s quality with its outcome. Duke calls this “hindsight bias,” which occurs when seemingly unassailable ideas fail after unforeseen factors take their toll.
- Thinking irrationally. Leaders who struggle emotionally with failure often envision only positive outcomes. They often misunderstand causes and their effects, can’t spot some painful truths and avoid negative ideas.
- Passing input through a subjective filter (bias). Leaders who rely on a slanted worldview, preconceived opinion or tainted by ingrained belief systems see and hear what they want to believe.
- Dismissing others’ input. Prideful leaders avoid new thinking, sidestep risks, and cover mistakes to avoid appearing inferior or incompetent.
- Worrying about image. Fearful leaders prone to making decisions out of self-preservation, bypass what may best benefit the organization.
Decision-Making Solutions
Leaders can use three primary tactics to overcome decision-impairing roadblocks:
- Minimize the level of uncertainty.
- Raise their comfort level with unavoidable uncertainties (perhaps harder to adopt).
- Refine their thinking to process information better and draw reasonable conclusions.
Each strategy contributes to a sturdy foundation for making choices, pointing the way to higher levels of knowledge, improvement and expertise. Leaders can thereby bolster their confidence and heighten their ability to make better decisions.
Notice that the first tactic doesn’t focus on eliminating uncertainty. Virtually all decisions carry some degree of uncertainty. Minimizing uncertainty requires the most accurate information available. Leaders can turn unknowns into facts by asking questions and considering as many angles as possible. Thinking outside the norm helps identify obscure issues. Great leaders take advantage of an experienced team to address relevant issues.
Leaders who embrace the discomfort of uncertainty make the greatest strides in growth, both personally and professionally. Allow risks to sharpen your focus and determination. Ultimately, you have little control over certain circumstances, so some degree of uncertainty is acceptable. It doesn’t prevent you from making great decisions.
Duke suggests shifting your focus away from how much uncertainty you have to your degree of confidence. Make uncertainty a quantitative and objective analysis rather than an emotional concern. If you can estimate your confidence level, you can gauge where you stand and assess how much improvement you need to be comfortable making a decision. Gather pertinent facts to reduce uncertainty and make the wisest possible decision.
Clearer Thinking
Fact-finding and information management can be taxing, even to seasoned leaders. Emotions influence most thought processes, and leaders can be left with distorted impressions. McKinsey’s experts advise leaders to pause, take a step back and calm the mind. Approach thinking more rationally, and don’t allow anxiety to overrun reason.
Leaders who come to appreciate other perspectives solve problems most productively. Active listening skills are the best tool for engaging staff and enhancing rational thinking. Taking an objective approach, with input and choices, reduces emotional influence, bias, fear and rumors.
Clearer thinking also comes from lessons learned. Leaders who continue to learn, read, ask questions and research gain more real-life knowledge of how their world works. Ask friends and colleagues about their experiences and what they learned. These steps reduce misconceptions and clarify effective solutions.
Our culture draws a heavy line between right and wrong. Duke urges leaders to stop trying to be right. Good decisions can still go awry, and a poor outcome doesn’t mean a decision (or leader) was bad. There are too many factors at work behind the scenes, some of which are truly out of your control. Clearer thinking takes this into account and allows greater satisfaction in making the best possible decisions.
Leaders known for their good decisions employ the approaches discussed here, maximizing their certainty, clarifying their thinking and enhancing their confidence. Their decisions benefit their organizations, in lieu of themselves, and garner the respect and trust that seem to be sorely lacking today.
Feel free to pass this newsletter on to friends and acquaintances should you think they might benefit from it.
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