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Decision-Making Best Practice 14 – Balanced Use of Knowledge and Experience
It’s the age old question of which is more valuable, knowledge or experience. Those arguing for experience rightfully suggest that ‘the numbers’ can be deceiving and that the nuances of a given circumstance – unaccounted for by broadly applicable models and high-level, quantitative facts – often dictate the best course of action. Those favoring knowledge would argue that no two situations are exactly alike and that the underlying nuanced conditions providing success in the past likely went unrecognized and represent the very differences that will cause an experienced-based decision to go awry. The question is, Who is right? – those favoring knowledge or those favoring experience? Our answer is neither and both. We believe the best decisions are made using a well-proportioned blend of both knowledge and experience.
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Leaders face the difficult challenge of selecting those few operational activities their organization will pursue from the multitude that are proposed every planning cycle. Collectively, these activities define the company; its culture, its direction, and ultimately its success or failure.
Every decision made represents a risk to the organization; some large, others small; some immediate, others latent; some positive, others adverse. Regardless of the impact, it is desirable to have each decision bring optimal benefit to the organization. Achieving these frequent, repeatable, and positive results requires a mechanism to drive consistency in decision-making; consistency that is only achieved through established procedures on which decision-makers are trained and against which performance is evaluated and acceptable behaviors reinforced.
John Hamm is one of the top leadership experts in Silicon Valley. He was named one of the country’s Top 100 venture capitalists in 2009 by AlwaysOn and has led investments in many successful high-growth companies as a partner at several Bay Area VC firms. Hamm has also been a CEO, a board member at over thirty companies, and a CEO adviser and executive coach to senior leaders at companies such as Documentum, Cisco, Hewlett-Packard, TaylorMade-adidas Golf and McAfee. John teaches leadership at the Leavey School of Business at Santa Clara University.
When considering various operations to continue or new initiatives to pursue, there tends to be a singular focus on cost, revenue generation potential, or regulatory compliance necessity of the activity. However, many initiatives offer highly qualitative but no less beneficial contributions to the organization that should be considered beyond the simple financial return. In today’s marketplace, some of these qualitative benefits significantly contribute to sales such as the advancement of diversity and inclusion within the organization and green initiatives in both the organization’s production processes and products. Such qualitative benefits serve to enhance the organization’s reputation and in doing so attract superior talent and additional customers that would otherwise be lost to competing organizations. Thus, it becomes increasingly important to consider the total benefit of ownership of a give business operation or initiative; one that includes the ongoing quantitative and qualitative benefits these activities.
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