Every leader faces numerous decisions every day. Some of them are small and can be decided based on a simple framework, others however need different kinds of responses. These situations need a different toolset to inform the decision making process.
Sometimes the very smartest decision a leader can make is to delegate that decision to someone else. Victoria Medvec (Kellogg Insight, 2017) suggests that while every decision is made somewhere along a risk continuum, before deciding if you should be the one making the call, you should first consider the following:
- Who is involved in making the decision?
Sometimes a low risk decision gets pushed up to the leadership team rather than being dealt with locally, there are risks that when this happens not only is it wasting executive time on what should be routine decisions, but also the executive may not be as well informed and has potential to be more error prone.
- How much time should be spent on the decision?
The amount of time invested in the decision should consider the risk continuum. The bigger the risk the more important to spend the right amount of time considering the alternatives.
- How much certainty is required?
Many leaders by nature tend to over analyse. “To avoid paralysis by analysis, the level of risk should drive how much certainty is required: When is 70 percent enough? When is 50 percent sufficient? When should we just make the call based on our gut because the risk is so low that it would be better to revise the decision if needed later than to analyze it upfront? You want to save your analytic rigor for the important stuff.”
- What is your tolerance for error?
Not all decisions are the same and considering that we are hardwired to learn from mistakes it is often quoted that an innovative organisation should recognise those who have been willing to take risks and in doing so have been willing to get it wrong. But while that is important for an organisation looking to achieve growth where a bad decision may cause a delayed product launch, there is a different level of risk for a brain surgeon – we most certainly don’t want them to just wing the decision.
“Most people tend to overestimate the risk of making a bad decision and underestimate the risk of inaction.”Victoria Medvec (Kellogg Insight, 2017)
In 1999 Dave Snowden developed the CYNEFIN framework while he was working for IBM (Cynefin is a Welsh word which means Habitat). The framework has five decision making constructs (Simple, Complex, Chaotic, Complicated and Disorder).
(also known as obvious or clear) this domain is where your decision is based on ‘known knowns’. When making these decisions there is likely to be a process and a series of rules that will inform the decision. The framework advises to “sense – categorise – respond“
the complicated domain is where the decision is based on the ‘known unknowns’. Decisions in this domain require expertise or complex analysis. The framework recommends to “sense – analyse – respond“.
in complex the decision is based on ‘unknown unknowns’. The “cause and effect can only be deducted in retrospect and there are no right answers”. The framework recommends “probe – sense – respond“.
in the chaotic domain events are “too confusing to wait for a knowledge based response”. In this case the intent is to act to reestablish order. “act – sense – respond“.
sometimes it is very hard to categorise the root of the decision and place it in the correct domain as it feels the ground is shifting and there is no clarity about which domains apply. “The way out of this realm is to break down the situation into constituent parts and assign each to one of the other four realms. Leaders can then make decisions and intervene in contextually appropriate ways.“
Larina Kase (Graziadio Business Review 2010) puts the emphasis on three capabilities. Emotional Intelligence, Managing Uncertainty and Trusting Instinct.
Having effective emotional self control to deal with the strategic and long term implications of our decisions.
The ambiguity of complex decision making comes because there are many variables to consider and with that numerous potential choices to make. As we seek to consider all the different aspects we can often waste valuable resources and not make a better decision. One way to simply the decision is to reduce the number of choices. Where the risk of a decision outweighs its potential reward you can remove those options from the variables.
Intuition is Built on Practice
Great decision making takes practice, the process does require a certain level of discomfort and an ability to deal with ambiguity. As a leader you have a choice based on knowledge, experience and an ability to balance risk.
DIGEST of an article from Kellogg Insight When Should Leaders Own a Decision and When Should They Delegate? By Victoria Medvec Published: 2nd October 2017 https://insight.kellogg.northwestern.edu/files/Guide-to-Reaching-Your-Leadership-Potential.pdf https://insight.kellogg.northwestern.edu/article/how-should-leaders-make-efficient-decisions and from HBR A Leader’s Framework for Decision Making by David J. Snowden and Mary E. Boone Published: November 2007 https://hbr.org/2007/11/a-leaders-framework-for-decision-making and from Graziadio Business Review Great Leaders are Great Decision-Makers By Larina Kase, PsyD, MBA Published: October 2010 https://gbr.pepperdine.edu/2010/10/great-leaders-are-great-decision-makers/