Great Escapes: nine decision-making pitfalls and nine simple devices to beat them by Michael and Jerry Useem explores the logic flaws that often skew perceptions and undermine decision-making effectiveness. The article provides methods executives and managers can employ to avoid each logic trap thereby improving their decision-making.
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Great Escapes provides actionable methodologies for dealing with the decision-making challenges StrategyDriven contributors find to be the most prevalent at organizations of all sizes. Many of the best practices found on the StrategyDriven website compliment the Great Escapes’ recommendations; making this article a StrategyDriven recommended read.
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For better or worse, our decisions and those of the other members of our organization define today’s realities and tomorrow’s outcomes. In a world that is becoming increasingly knowledge based, more and more members of an organization are making impactful decisions every day; thereby extending decision-making’s importance from the executive suites to the desks of the vast majority of professionals.
Decision-making can be categorized based on the time frame in which associated actions will yield observable results. Near-term decisions are often supported by predetermined guidelines to enable more rapid decision-making while long-term decisions, clouded by the ever increasing uncertainty of changing conditions, rely more heavily on broad philosophical principles and decision-maker experience. The four general decision-making categories are:
Near-Term Decisions: decisions supported by policies, procedures, schedules, and regulatory guidelines
Category One: immediate actions taken in response to emergent conditions as directed by procedure. These decisions seek to seize advantage of momentary opportunities or avoid adverse consequences associated with rapidly changing conditions. Decisions of this type should be supported by procedural guidance whenever possible to improve consistency and predictability of response; thereby minimizing the organization’s risk exposure. Examples include: buying or selling of commodities when a target price is reached and actions taken in response to changing operating system conditions.
Category Two: day-to-day choices regarding activities and resource allocations. These decisions have immediate impact on the organization and may have unrecognized or less predictable long-range impacts. Decisions in this category are frequently supported by pre-established performance standards, policies, and schedules. Examples include: daily work scheduling and task assignment and procurement choices between vendors for a one-time purchases.
Long-Term Decisions: decisions made in the absence of procedural guidance and shaped by market trends, regulatory policies, and societal norms
Category Three: intermediate range decisions made in response to more slowly evolving trends where it is believed a particular desired outcome may be achieved in the days, weeks, or months ahead if a particular course of action is pursued today. Decisions in this category may have both near- and long-term impacts on the organization. While not directly supported by policies, procedures, or regulatory guidelines, these decisions often leverage guiding principles or intent to establish a target end state. Examples include: decisions made in response to slowly degrading equipment where failure is likely, vendor selection where contracts will be entered into for annualized periods, equipment leases other than hourly or daily rentals, monthly scheduling, and hiring and termination decisions for first line management positions and below.
Category Four: long-range or strategic decisions define near- and long-term actions seeking to achieve results that will be years in the making. While influenced by the organization’s mission, vision, values and regulatory policies, these decisions are largely shaped by broader market trends. Subsequently, decisions in this category have the highest degree of uncertainty because of their long time horizon and the increasing uncertainty associated with market prediction over time. Examples include: construction of new facilities, major equipment replacements, expansion of product lines, mergers and acquisitions, and hiring and termination decisions for senior managers and executives.
Regardless of their impact time frame and the immediacy in which they are made, all decisions go through a similar process that begins with condition recognition and ends in action. Phases of decision-making include:
Scope and Significance Identification Phase: condition scoping, condition resolution cost-benefit and risk assessment, action need determination, action response prioritization
Action Plan Development Phase: alternative development (including cost-benefit and risk assessments for each alternative), alternative selection, and communication and action plan development (for the selected alternative)
Action Plan Implementation Phase: communication and action plan implementation, follow-up condition monitoring, decision evaluation, and action plan adjustment
Organizational Capabilities and Cultural Development Phase: decision-making process training, performance expectations established and reinforced, questioning attitude developed and reinforced, decision-making self-assessment and lessons learned communication
The final phase, Organizational Capabilities and Cultural Development, is an enabler of decision-making. This phase occurs on an ongoing basis; creating an organizational mindset that enables both the recognition of decision opportunities and helps the organization learn and grow from its decision-making successes and shortfalls. Strong execution of the Organizational Capabilities and Cultural Development Phase is a hallmark of organizational excellence.
Focus of the Decision-Making Forum
Decision-making is a complex process that when done well enhances both strategic planning and tactical business execution. Materials within this forum explore the four categories of decision-making, underlying concepts, and performance best practices and warning flags. The following articles, podcasts, documents, and resources cover those topics critical to effective decision-making.
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Understanding the resource cost of activities is key to creating confidence that assigned work can be completed successfully and on time. Regardless of whether activities are frequently recurring and therefore well understood or one time efforts to produce a unique product or service, the use of standardized resource assumptions greatly helps the organization anticipate the quantity and type of resources needed to perform its approved work.
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Nathan Ives is a StrategyDriven Principal and Host of the StrategyDriven Podcast. For over twenty years, he has served as trusted advisor to executives and managers at dozens of Fortune 500 and smaller companies in the areas of management effectiveness, organizational development, and process improvement. To read Nathan’s complete biography, click here.
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Organizational silos act as barriers; hindering the performance of business units, work groups, and individuals as they strive to achieve the organization’s shared goals. Nowhere in the organization are silos more destructive than if they exist within the executive team. Here, silos prevent the free flow of information and resources needed to successfully execute cross-functional initiatives with the barriers to collaboration cascading downward though the entire organization. To help prevent these silos from forming, all strategic plan goals must be shared equally by all executives.
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Nathan Ives is a StrategyDriven Principal and Host of the StrategyDriven Podcast. For over twenty years, he has served as trusted advisor to executives and managers at dozens of Fortune 500 and smaller companies in the areas of management effectiveness, organizational development, and process improvement. To read Nathan’s complete biography, click here.
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Bringing Out the Best in People by Aubrey C. Daniels illustrates how executives and managers can motivate their workforce to goal achievement through a system of positive reinforcement. Dr. Daniels’s process shapes worker behaviors by identifying an individual’s recognition and reward reinforcers, establishing a fair performance monitoring system, and providing effective, continuous feedback.
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An organization only becomes truly StrategyDriven when all of its members share a common vision, maintain focus on that vision, and continuously exhibit a commitment to successfully achieving the vision. StrategyDriven Contributors like Bringing Out the Best in People because it provides a very direct means of gaining and maintaining employee commitment to the organization’s goals. The system of positive reinforcement presented by Dr. Daniels is powerful because it is readily actionable. Many of the best practice recommendations found on the StrategyDriven website compliment the programs prescribed in Bringing Out the Best in People; making this book a StrategyDriven recommended read.
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For better or worse, our decisions and those of the other members of our organization define today’s realities and tomorrow’s outcomes. In a world that is becoming increasingly knowledge based, more and more members of an organization are making impactful decisions every day; thereby extending decision-making’s importance from the executive suites to the desks of the vast majority of professionals.
Understanding the resource cost of activities is key to creating confidence that assigned work can be completed successfully and on time. Regardless of whether activities are frequently recurring and therefore well understood or one time efforts to produce a unique product or service, the use of standardized resource assumptions greatly helps the organization anticipate the quantity and type of resources needed to perform its approved work.
Organizational silos act as barriers; hindering the performance of business units, work groups, and individuals as they strive to achieve the organization’s shared goals. Nowhere in the organization are silos more destructive than if they exist within the executive team. Here, silos prevent the free flow of information and resources needed to successfully execute cross-functional initiatives with the barriers to collaboration cascading downward though the entire organization. To help prevent these silos from forming, all strategic plan goals must be shared equally by all executives.
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