Managing Systems
How do we really go about making decisions?
By: Farouk Elsharnouby
Decision making is a science in itself, and doing something is always better than doing nothing
Posted: 14/12/2006
Let’s look at this organically. You respond to your body needs without hesitation because you feel, sense, know and trust the information your body sends to your brain, and your brain gets the message and analyses and decides. You then execute the decision. You are hungry and you want to eat meat (a need that requires a decision). Then your subconscience reminds your conscience that you are not allowed to eat meat by doctor’s orders (counter-argument). You open your refrigerator and you find many things inside. You think, analyse, then decide to have a salad made of cucumber, tomatoes and lettuce. Then you remember the water mains are out up to 8 pm. You decide to have a chocolate (the final decision after considering several alternatives and counter-arguments); then you execute by eating the chocolate.
The same thing happens when you come to make a decision and execute it. Imagine an organisation having such a culture. Information is crucial when making decisions. How you gather this information, test, analyse, reason, conclude, decide and execute is very important. Information can be gathered in more than one way. You can obtain it from interviews, meetings, documentation, observation and other scientific ways of data collection which can be tested for reliability, relevance and correlation. Decisions must not be based on hearsay, rumours, suspicions or doubt. Decisions must be based on factual information (facts). But more on this later.
Getting information leads to a decision being made, and an action being executed; it isn't as simple as that, as we will see, but this is the general idea. Decision making should not be a habit, but a step by step process that has to be consciously followed and continuously improved through experience and lessons learned. Most often, however, decisions are made in organisations as a habit and are less methodologically thought out: in other words, people don't work according to any kind of checklist, mental or otherwise. A checklist is important to ensure that you don’t miss anything obvious. One has to follow a process in decision making: especially in major decisions. It requires consultation, analytical skills, common sense and people who can constructively participate and contribute.
The person making the decision has to consider all the information possible and that every consideration is given to all possible variables and he is clear on the issue from all sides concerned. Committees are not there to make decisions, but facilitate the making of decisions. We all make decisions all the time from major and minor, from the routine to the trivial. The way we go about making decisions varies greatly from individual to individual, organisation to organisation, and culture to culture.
Other things we do impact the way we make decisions. When they are analysing or evaluating an issue some managers are cautious and particular, some are too sure of themselves and others utilise the past in predicting the outcome. These are the most common pitfalls. Other pitfalls that affect our reasoning and further our own biases include sticking to the status quo, and investing more money after bad because it is hard to accept a mistake. Our minds work in strange ways and rightly so, but we have to always ask ourselves, how can we change the way we think and improve the way we go about making decisions.
Before deciding what to do we should ask ourselves why we want to do it. How can we build tests and disciplines in the decision-making process that uncover errors in thinking and analysis before they become errors in judgment? When we come to make a decision we can be stubborn, emotional and sometimes quite hesitant, but the more we understand how we make decisions, the better we can go about doing them.
In any decision we make there is a calculated risk, then an uncalculated risk. Imagine the risks you will be taking when you don’t think before making a decision. It is a serious thing to ignore, very serious. Any decision is a kind of gamble but your chances are better when you do your homework well. Sometimes you may have to gamble when the risks are high because the rewards are worth it. It is up to you; you are the decision maker, as long as you can cope with a negative outcome.
As long as we gather appropriate information, analyse, logic and reason, then when we make a decision we act, we are on the right track. We do so hoping that a change will occur that makes things better.
Now let us consider indecision. When you make a good or bad decision, you learn from the outcome and your decisions. Not making a decision at all is the worst of all. Some organisations have a culture of indecision and if they do decide they take their time to execute. Failure to execute or act is also a major cause of not performing well. It is like saying later better than never. Governments, and many of their departments have such a culture, and some banks do too, especially government-owned ones. Executives and managers in such organisations create that culture like experts without knowing it and their employees love it. No responsibility and no accountability, just clocking on in the morning on time and leaving on time. The BBC comedy series Yes, Minister, and its successor, Yes, Prime Minister depicts what I am saying.
Science says that in the absence of emotions in the brain, it is impossible to make any decisions at all. Does that mean that our decisions always have an emotional flavour to them?
Sometimes we cannot wait for all the information to make a decision, otherwise it will be too late. Our experience, intelligence and shrewdness can help us decide using our gut feeling. It takes courage to make such decisions. It may show confidence and knowledge. Using instinct, intuition and sharp analytical skills are also very important in making certain types of decisions. Making decisions can be exciting and challenging. It is action and an effective way of using the cells in your brain. If you have such an attitude you can be creative and innovative. This is one of the reasons why many executives don’t like strategic planning.
Strategic planning is not as rewarding as many think because it hinders decision making. It does not influence strategy that much at all. It is an annual occurrence. Senior executives avoid the planning process. Their decisions shape the company strategy and determine its future. The way planning works and the way decision making happens vary greatly. In strategic planning you review and approve, and in decision making you debate and decide. Big decisions are made outside the planning process; therefore, strategic planning becomes merely a general judgment that top management has already made, rather than a means for identifying and debating the critical decisions that the company needs to produce a better performance. An annual planning schedule does not give executives time to address the issue that affects performance.
Strategic planning and strategic decision making are therefore two different things. In strategic planning managers analyse market and competitor information, identify threats and opportunities and then define a years' plan. But in reality managers make strategic decisions continuously, usually motivated by an immediate need for action and/or reaction. For example, when a new competitor enters the market or a rival introduces a new technology, executives must act quickly and firmly to secure their company performance. Most executives make decisions issue by issue without regard to the calendar. An organisation performing well relies on its ability to make good and timely decisions and makes them happen quickly. Such organisations pay major attention to decisions that contribute more value to business.
Good decision making must be followed by implementation. Clear accountability is essential: who contributes input, who makes the decision, and who carries it out. Good decisions made quickly allows the organisation to act on opportunities and overcome obstacles. Good decision makers create an environment where people can come together quickly and efficiently to make the most important decisions.
The key to good decision making is to involve the right people at the right level in the right part of the organisation, at the right time. Clear decision roles are important as long as they are supported by the right approach to decision making through the organisation's measures and incentives, information flow and culture. This way it becomes routine and a healthy one. Last, but not least, involve the people who will live with the new decisions. They have every right to be part of the whole process.
Farouk Elsharnouby is an organisation development specialist; his website is www.ods313.com.
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