The Illnesses that Plague Decision Making

Posted on March 31, 2006

How does your company make decisions?  Is your top team afflicted by one of these four illnesses?  Learn how to curb the infection and mitigate the damage.

After Hyperion and Arbor Software merged, the group had, “lots of pent up decisions,” says Jeff Rodek, who was the new CEO and Chairman.  Everybody was frozen, waiting for other decisions to be made, so they would know what to do.  While making good decisions is always wise, Mr. Rodek knew that making any reasonable decisions to get the merged firms in motion again was imperative.

As I sat at the Alliance of Chief Executives East Bay meeting listening to Mr. Rodek’s comments, what flashed through my head was that the process of decision making can be every bit as important as the decisions themselves.  I remember well in the four acquisitions I’ve made that they each brought a pile of decisions.

I flashed through the decision making illnesses I’ve seen in my career.

Frozen with Inaction (too slow)
Making decisions means making mistakes.  But that is terrifying for some.  They either overanalyze or just get stuck, and decisions never get made.  Sometimes this is caused by a company culture that punishes mistakes too harshly.  Other times it is caused by inadequate training in how to make that level of decisions.  Sometimes it is caused by lack of self-confidence.  Nonetheless, the result is missed opportunities, because nothing waits forever.

Decision of the Day (too fast)
Most often seen with impetuous entrepreneurs, they get in a mood and make a big decision, sending everyone off scurrying.  A week or a month later, they are in a different mood, change the decision (or make another one) and everyone scurries off in a different direction. This pattern repeats, and they wonder why, a year later, nothing has really been accomplished.  This illness can be seen at lower levels too, with people who don’t plan carefully, then stick to the plans.

Decisions based on guesswork disguised as fact (false information)
“It’s got to be true” are famous last words.  Rather than take some time to find and study the facts, some jump to conclusions and pretend they are facts.  Sometimes it is because the company doesn’t have a good information management system (Hyperion did not pay me for this comment).  Sometimes it is because the team doesn’t have the analytical skills to know how to prove their case.  At other times, it is executive ego digging up justifications for what they want.  Careful distinction between assumptions, beliefs, and facts is crucial.

Alternatives Not Compared
If only it were as simple as good versus bad.  What about good versus better versus best?  If your firm chooses good, and the competition chooses best, you’re in trouble.  I agree that it takes a lot longer to review all the available options, but it’s worth the time.  Remember that you don’t have to work out all the scenarios to the penny.  The moment you can show that certain alternatives are inferior, move on to greener pastures.

Do any of these “illnesses” strike a chord in your company?  If so, don’t just try harder next time.  Focus in on the process itself, and create some rules/structure that improves the process.  That might mean time constraints, minimum proof levels or requiring written due diligence.

I had a small client that lacked disciplined decision making.  I introduced them to Jim Horan’s one page business plan concept, but tweaked it slightly to be a one page anything plan.  It was quite handy in making sure they had really thought about the who, why, when, how & what for any item worth doing.  (www.onepagebusinessplan.com)

Ultimately, the litmus test for any decision is, “Did you make the best decision you could have made given the constraints at the time?”  If the answer is yes, good job — even if the decision itself turned out ugly.

Takeaways

• Think about how your company makes decisions.
• Decisions should be timely, well analyzed, planned and hold up over time.  If not, modify your decision-making processes.
• Be sure that you don’t overly penalize people who make good decisions that end up as mistakes.