Three Rules for Better Decision Making

By Mike Shipulski, innovationexcellence.com.

The primary responsibility of management is to allocate resources in the way that best achieves business objectives. If there are three or four options to allocate resources, which is the best choice? What is the time horizon for the decision? Is it best to hire more people? Why not partner with a contract resource company?

Build a new facility or add to the existing one? No right answers, but all require a decision.

Rule 1 – Make decisions overtly.

 

All too often, decisions happen slowly over time without knowledge the decision was actually made. A year down the road, we wake up from our daze and realize we’re all aligned with a decision we didn’t know we made. That’s bad for business. Make them overtly and document them.

Rule 2 – Define the decision criteria before it’s time to decide.

We all have biases and left to our own, we’ll make the decision that fits with our biases. For example, if we think the project is a good idea, we’ll interpret the project’s achievements through our biased lenses and fund the next phase. To battle this, define the decision criteria months before the funding decision will be made. Think if-then. If the project demonstrates A, then we’ll allocate $50,000 for the next phase; if the project demonstrates A, B and C, then we’ll allocate $100,000; if the project fails to demonstrate A, B or C, then we’ll scrap the project and start a new one. If the decision criteria aren’t predefined, you’ll define them on-the-spot to justify the decision you already wanted to make.

Rule 3 – Define who will decide before it’s time to decide.

Will the decision be made by anonymous vote or by a show of hands? Is a simple majority sufficient, or does it require a two-thirds majority? Does it require a consensus? If so, does it have to be unanimous or can there be some disagreement? If there can be disagreement, how many people can disagree? Does the loudest voice decide? Or does the most senior person declare their position and everyone else falls in line like sheep?

Think back to the last time your company made a big decision. Were the decision criteria defined beforehand? Can you go back to the meeting minutes and find how the project performed against the decision criteria? Were the if-then rules defined upfront? If so, did you follow them? And now that you remember how it went last time, do you think you would have made a better decision if the decision criteria and if-thens were in place before the decision? Now, decide how it will go next time.

And for that last big decision, is there a record of how the decision was made? If there was a vote, who voted up and who voted down? If a consensus was reached, who overtly said they agreed to the decision and who dissented? Or did the most senior person declare a consensus when in fact it was a consensus of one? If you can find a record of the decision, what does the record show? And if you can’t find the record, how do you feel about that? Now that you reflected on last time, decide how it will go next time.

It’s scary to think about how we make decisions. But it’s scarier to decide we will make them the same way going forward. It’s time to decide we will put more rigor into our decision making.