I expect you’ve been feeling the pressure to make the right decisions as events unfold in this Covid crisis. Who should we bring back from Furlough? How should we arrange the office? What business should we go after? What assumptions should we make? What does our strategy look like for the next 3 and 6 months, and beyond?
Can you improve your chances of making the right decisions?
Definitely – and by the end of this article you will have some tips on how.
The more I’ve worked with Boards or Executives the more often I’ve seen their decision making in action, like David Attenborough observing families of Mountain Gorillas, I get to observe leaders in their natural habitat. And it’s fascinating to see patterns come up time and again.
There’s been a ton of research carried out on what influences decision making, so I want to focus on a couple of key points. I’ll be drawing on the excellent work of Gleb Tsipursky who wrote ‘Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters’. And I’ll be sharing Gleb’s 7 killer questions which will help your team make better decisions during the crisis and beyond.
First let’s look at what’s going on underneath the bonnet so to speak.
Last week I had to replace a tyre on my car, the guy in the garage gave me three prices – the high one, then the medium, then low. Tyres aren’t my specialist subject, so I picked the medium priced one of course. But was that the best choice? I’m likely to have been influenced by Price Anchoring, how I heard the first bit of information (the most expensive tyre) and then the other prices sounded cheap in comparison (and the mid-price one felt just right – like Goldilocks). A while ago I chose a web designer (several web sites ago thankfully), somewhat based on his portfolio but mostly because I felt obliged after he’d kindly given me some free advice. I was feeling Reciprocity Bias, where the urge to reciprocate the kind action of the web designer overwhelmed any doubts I may have had about the quality of his work.
These are unconscious biases and the scary thing is I made these decisions even though I knew how the biases might impact me. That’s how powerful it is!
And it costs businesses money. According to Gleb Tsipursky :
“One of the most important types of projects for a business is a merger or acquisition. Yet 70 to 90 percent of mergers and acquisitions fail to create value, and CEOs who lead failed M&As are frequently replaced. For instance, Microsoft’s CEO Steve Ballmer left in large part due to the tensions around his push to acquire Nokia, which eventually led to Microsoft writing off $8.4 billion.”
Gleb talks about leaders being overconfident and tending to ‘look at the products, at the strategy, but not look at the people.”
This may be called Optimism Bias but I like to call it ‘close my eyes to the other information because this is the thing I really want to have happen’ bias. Some might say many marriages (and subsequent divorces) are built on this one.
It’s unconscious but there is hope.
At this challenging time you need optimal decision making. But what can you do?
First, it’s important to acknowledge these decision-making biases are happening. Steve and I are always trying to call each other out when we spot it. I have a tendency for signing up to coach training programmes (I know, my guilty secret exposed). I really should evaluate the return on investment more (it’s my job for heaven’s sake) but sometimes I just want to tap into the expertise of a coaching thought leader so I’ll wilfully ignore any doubts I may have (remember Optimism Bias?).
After you’ve registered that this could be happening to you too, here are 7 questions you could be asking to avoid decision disasters:
- What important information did I not yet fully consider?
Consider your preferences. Are you a facts and data person? Or are you a people-oriented person? How can you tap into the benefits of both? Try this: metaphorically (or actually if appropriate) bring some other perspectives into the room. What would Alec from the sales team think you should be discussing? And for facts and data: what information don’t you know that you should build in. What does the cashflow forecast look like 6 months ahead assuming x,y and z rather than just 2 months?
- What relevant dangerous judgment errors (Cognitive Biases) did I not yet address?
It’s worth becoming aware of some of the key biases so you can call them out in the team. There’s lots of information online – search for cognitive biases. Or you might like to check out Gleb’s Book
- What would a trusted and objective adviser or sounding board suggest I do?
This is great if you’ve got someone you can call to mind – but also works if you consider someone you admire, especially if they have a different perspective to you. I often call to mind our business mentor Peter Hawkins because his wisdom is easy to tap into. Who is right for you?
- How have I addressed the ways it could fail?
- What new information would cause me to revisit the decision?
These last two questions are ones I don’t often hear in the natural habitat of the Mountain Gorilla families. I do hear them say ‘we need to learn from our mistakes’ by doing a review (or post-mortem), but how about learning from what mistakes could happen (a “premortem”)? Questions like: if we think ahead and imagine the project failed, what went wrong? What did we do/not do? Imagine the project succeeds, what caused the success? How can we integrate reasons for success into our strategy now?
If you’re the MD or CEO it can be hard to imagine your decision making is sometimes fallible! And if you’re part of an executive team it’s not always easy to call out your super confident peer.
But these are turbulent times, and if you counter these biases as a leader and as a team you might just come out of this knowing you made the very best decisions you could.