NOW! WHAT WAS THE QUESTION?
Fundamentals
of decision making
By
When you're working to help decision-makers in large
companies streamline their organizational processes, it helps to have walked in
their shoes.
In my experience as president of an international
manufacturing and distribution company, I had a marketing director who, as I
found out, was what's called a reactive
planner. One day I gave him a new assignment that I thought would require a
significant amount of background research and evaluating alternative courses of
action. I didn't expect to hear back from him for a couple of weeks. To my
amazement he returned within half an hour and presented a handwritten
three-page note outlining what he thought should be done to meet this new
challenge.
As his supervisor, I applauded this man's responsiveness,
but I was concerned about the quality of his response. While making some basic
inquiries about supportive data and alternative direction, I realized that he
was relying on his opinion of the issue and then jumped to the first solution
that surfaced. Questioning him further, I discovered that he had never been
taught the fundamentals of good decision-making.
In analyzing problems within our clients’ companies we
frequently discover that many of them, like my erstwhile marketing director,
have adopted reactive planning in
response to current issues. These people are by and large operationally
competent, with the confidence to prove it. When stimulated by a problem
triggered by a phone call, mail, or a conversation, they react, mustering
resources to pinpoint the cause of the problem and rush to a solution. Calling
it intuition, hunches, even logical thinking (without the logical steps), such people tend to respond to problems with quick
decisions.
One pitfall in reactive
planning is the fallacious belief that eliminating unwanted threats or
problems will automatically ensure the achievement of organizational goals.
Another is that reactive planning is often used independently in different parts
of the organization, with no attempt to integrate various plans or consider the
impact of the action on the organization as a whole. When people all over the
building are making decisions in this manner, there's no realistic way they can
be acting in concert.
We are not concluding that reactive planning leads to organizational failure, but we do
generally find that the organizations are not achieving their potential, even
though they grow. With this type of dysfunctional planning process, the
organization suffers whenever their managers are not available. Because the organizations do grow, the
managers find themselves working harder with more stress each year as the
threats and problems seem to accelerate at a geometric rate.
OK, so reactive planning is a decision-making no-no.
What's a better way? The seven-step decision-making
process outlined below is a simple, straightforward approach that will save
you from making the wrong decision because you acted too fast.
1) Define your objectives. It should go without saying that you need to know where
you're going when you're deciding how to get there, but reactive planners are
often so focused on the stimulus (the immediate problem) that they forget to
make sure the company's objectives
are coordinated with this issue.
As a supervisor or leader, your
responsibility is to assure that working on the stimulus will result in
achieving those objectives faster than all of the other priorities being
addressed. (In a future article, we will share concepts on the art of
delegation.)
2) Collect the data. This means conducting research on markets, customer queries,
manufacturing techniques, or whatever you need to know in order to make a sound
decision. It's important to base decisions on factual information, not simply
someone's recollection of the facts, or opinions stated as facts.
The same story repeated more than
once starts to sound like a fact and look like a fact, but that doesn't mean it
is a fact. Just because people believe it (or want to believe it) doesn't make
it true. This teaching comes straight out of TQM processing, which relies on
making decisions on fact, not feel.
3) Determine the alternatives. This step involves creative brainstorming to determine
all the possible alternatives (within reason) that could be pursued. As usual
in brainstorming, you don't criticize the alternatives that surface -- you just
surface the alternatives.
Unlike my marketing manager, you
don't go for the first alternative before looking at them all. The idea that
gets expressed first is not necessarily the right answer. At this stage, it's
just one possible alternative.
4) Evaluate alternatives and select the best. After you've defined your
objectives, marshaled the facts, and considered all the alternatives, it’s decision time. It is important to have a logical
process for this evaluation and many different criteria you can use.
For example, when a wrong decision
would be really disastrous, you can list all the adverse consequences for each
alternative, rank the consequences according to probability and severity, and
base your decision on minimizing the probability and severity of these
consequences.
On the flip side, when the wrong
decision wouldn't be the end of the world, you can use the opposite kind of
evaluation to rank the positive rewards of each alternative, that is, the
probability and degree of its potential success.
Having a logical process is a
tremendous aid in convincing others of the wisdom of your choice. A number of
resources are available outlining the selection process and various evaluation
criteria in detail.
5) Make an action plan. Once you've chosen the best alternative, it's time to
implement. This means defining what needs to be done, when to start and
complete the action, who does what, and what resources
you're going to use in what way.
A common failure we see is the
complete lack of an action plan. A written
action plan is a fundamental planning and delegation tool and improves the
efficiency of the implementation. (Contact us if you would like an action
planning template that our firm developed.)
6) Implement your plan. In other words, assign supervisory responsibility to
assure that target dates on the action plan are met, and set up a follow-up
procedure for making sure everyone is doing the assigned task on schedule.
A real key is to not let people
fail on the tasks they have been assigned.
Don’t wait for the due date to follow-up. Contact them well in advance to understand
current progress and problems.
7) Set goals / measurements. Looking ahead to your defined objectives, you will also
need to create goals or measurements to provide concrete ways of knowing when
the original objectives have been met.
And that's it! Simple,
really: know where you're going, look at all the ways you could get there,
choose the best way, pursue it, and set a mark so you'll know when you've
arrived. Too often the people employed by our clients want to rush through
decision-making to produce fast results, even at the expense of maximizing the
company's potential success.
The process outlined above may sound complicated and time
consuming, but it actually takes very little time -- and time spent on this
process will be time saved in achieving the company's ultimate objectives.