>Every day as leaders, we are called upon to make decisions—some more important than others—but all having impacts on the organization and its stakeholders. Investments get made for better or worse, employees are redirected this way or that, customer requirements get met or are left unsatisfied, suppliers receive orders while others get cancelled, and stakeholders far and wide have their interests fulfilled or imperiled.
Leadership decisions have a domino effect. The decisions we make today will affect the course of events well into the future–especially when we consider a series of decisions over time.
Yet leadership decisions span the continuum from being made in a split second to those that are deliberated long and hard.
In my view, decision makers can be categorized into three types: “impulsive,” “withholding,” and “optimizers.”
- Impulsive leaders jump the gun and make a decision without sufficient information—sometimes possibly correctly, but often risking harm to the organization because they don’t think things through.
- Withholding leaders delay making decisions, searching for the optimal decision or Holy Grail. While this can be effective to avoid overly risky decisions, the problem is that they end up getting locked into “analysis paralysis”. They never get off the dime; decisions linger and die while the organization is relegated to a status quo—stagnating or even declining in times of changing market conditions.
- Optimizers rationally gather information, analyze it, vet it, and drive towards a good enough decision; they attempt to do due diligence and make responsible decisions in reasonable time frames that keep the organization on a forward momentum, meeting strategic goals and staying competitive. But even the most rational individuals can falter in the face of an array of data.
So it is clear that whichever mode decision makers assume, many decisions are still wrong. In my view, this has to do with the dynamics of the decision-making process. Even if they think they are being rational, in reality leaders too often make decisions for emotional or even unconscious reasons. Even optimizers can fall into this trap.
CIOs, who are responsible for substantial IT investment dollars, must understand why this happens and how they can use IT management best practices, structures, and tools to improve the decision-making process.
An insightful article that sheds light on unconscious decision-making, “Why Good Leaders Make Bad Decisions,” was published this month in Harvard Business Review.
The article states: “The reality is that important decisions made by intelligent, responsible people with the best information and intentions are sometimes hopelessly flawed.”
Here are two reasons cited for poor decision making:
- Pattern Recognition—“faced with a new situation, we make assumptions based on prior experiences and judgments…but pattern recognition can mislead us. When we’re dealing with seemingly familiar situations, our brains can cause us to think we understand then when we don’t.”
- Emotional Tagging—“emotional information attaches itself to the thoughts and experiences stored in our memories. This emotional information tells us whether to pay attention to something or not, and it tells us what sort of action we should be contemplating.” But what happens when emotion gets in the way and inhibits us from seeing things clearly?
The authors note some red flags in decision making: the presence of inappropriate self-interest, distorting attachments (bonds that can affect judgment—people, places, or things), and misleading memories.
So what can we do to make things better?
According to the authors of the article, we can “inject fresh experience or analysis…introduce further debate and challenge…impose stronger governance.”
In terms of governance, the CIO certainly comes with a formidable arsenal of IT tools to drive sound decision making. In particular, enterprise architecture provides for structured planning and governance; it is the CIO’s disciplined way to identify a coherent and agreed to business and technical roadmap and a process to keep everyone on track. It is an important way to create order of organizational chaos by using information to guide, shape, and influence sound decision making instead of relying on gut, intuition, politics, and subjective management whim—all of which are easily biased and flawed!
In addition to governance, there are technology tools for information sharing and collaboration, knowledge management, business intelligence, and yes, even artificial intelligence. These technologies help to ensure that we have a clear frame of reference for making decisions. We are no longer alone out there making decisions in an empty vacuum, but rather now we can reach out –far and wide to other organizations, leaders, subject matter experts, and stakeholders to get and give information, to analyze, to collaborate and to perhaps take what would otherwise be sporadic and random data points and instead connect the dots leading to a logical decision.
To help safeguard the decision process (and no it will never be failsafe), I would suggest greater organizational investments in enterprise architecture planning and governance and in technology investments that make heavily biased decisions largely a thing of the past.