Making Decisions
“A decision is the action an executive must take when he has information so incomplete that the answer does not suggest itself.” — Arthur W. Radford
Decisions are interesting things. It can be argued that not making decisions well can cause significant damage to any organization. A friend of mine (who happened to come out of the military), explained to me that decision making is the essence of leadership. Another friend of mine once told me that perhaps the most important job of an executive is to make decisions (and to make them decisively). Clearly it can be stated that there is a high correlation between organizational rank and percentage of time spent on making decisions. Decision making is not free. At a minimum it requires an investment of time, perhaps a significant amount of time.
Given this as a backdrop, it is useful to look at the anatomy of a decision – the characteristics which can be applied to a decision to help understand this little thought about but very important aspect of our lives. The following characteristics have served me well in looking at decisions which I am part of.
Magnitude – The impact/scope of decisions is often the first characteristic that comes to mind when people think of a decision. What is the impact of the decision to be made? Will this decision be a $100 or $1,000,000 decision. Will the company enter a reduction in force? Which of many strategic options should be taken? How many people does this decision affect? Will the decision affect individuals, work groups, departments, organizations, current or future customer base?
Ownership - Who will make the decision? Given the downside of a bad decision, it is not unusual to find that some corporate cultures are decision averse. Committees are set up to make decisions. Sub-committees are created to collect data, run scenarios, and provide recommendations. In this way, the group will hold accountability and individuals within the group will not have to stick their necks out. Decisions, however are made by individuals not groups.
Quality - How important is it that this decision be made correctly? In a world of limited time and imperfect information, not all decisions will be perfect. If a good decision can be made with half the investment required to make a perfect decision, is it worth the additional effort to move from good to perfect? While everyone would like to think that all their decisions are (or should be) perfect 100% of the time, the reality is that most people will be better served to understand which decisions require the greater investment and those in which a good decision will not only suffice but would be superior to the perfect decision due to a smaller required investment.
Urgency – How short is the fuse on the decision? Some decisions are required to be made immediately, some will need to be made within a quarter. In some cases, decisions should be deferred as it is either not urgent or the decision will benefit from other events playing themselves out. In the best of circumstances, their will be an inverse correlation between the scope and urgency of decisions, meaning the big decisions will have low urgency (more time allowed to make the decision).
Duration – What is the shelf life of the decision? This characteristic is often given little thought. Some decisions are temporary and have to be remade every few months. Others will last a decade or be permanent. In some cases decisions are used as a bridge to a larger decision or action. Thinking about this characteristic will often provide insight to a different decision making approach. For example, if a decision is seen to be urgent with a moderate scope and impact, but will be repeated in a few months, it may lead to the decision being delegated as opposed to made directly.
Sequence – Is this decision connected to other decisions? In many cases, there is a set of decisions which have to be made which are inter-related. It is often useful to understand if there is a sequence to these decisions and how each decision will affect the others. Many times when thought through, large decisions can be better structured as a series of smaller decisions which when properly sequenced will achieve better results.
If you think about the decisions which you are required to make, how would you characterize them? By placing them into a framework as described above, are you able to gain new insights into both the decisions and how you will approach the making of these decisions?
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I immediately decided this is among the most sensible pieces I have read on what are at the core of leadership and management but given so little attention to, decisions.
Imran
IMRAN.TV
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The blog is amazing.good to see this post.Keep posting.