Monday, 23 March 2009

4 ways to make better decisions

I read an article recently about how groups make decisions. It struck me that whilst not being able to make a decision is harmful to performance, making bad decisions is even worse.

History throws up some monumentally bad decisions that serve as a reminder to us all that smart people sometimes get things spectacularly wrong.

Deciding to launch the Challenger Space Shuttle in 1986 even though a good number of people knew there were problems was not one of NASA’s finest hours. Televised live to a huge audience it was a massive set back to their work, and a tragic loss to the families of all those on board.

Yet what impresses me about NASA is its openness. It has an online database of lessons learnt which is there for anyone to inspect. It has very detailed findings by engineers as well as some of the larger and more significant lessons. I have no doubt that as public-facing data it is less frank and less complete than their internal version, but nonetheless it’s an extremely useful reminder to everyone that lessons need to be, and indeed can be, learnt.

It also gives some confidence that things will actually change and people will learn from such a horrendous accident.

A great deal of research has been done on decision making and how to improve it.

Researchers have identified 4 danger signs:

  • Emotion

  • Attachment

  • Using intuition

  • Decisions based on self-interest rather than the greater good.

All make us a little uncomfortable because they are certainly not confined to the historically dreadful decisions, but also crop up in our day to day work. And just knowing that list isn’t necessarily going to save us from a mother-of-all-foul-ups.

So, how to avoid bad decisions? Well, that makes interesting reading, too. You might be surprised to hear that all four recommendations involve other people. Far from “committees” producing camels, they actually produce better decisions. Recommendations include:

  • Finding safeguards for risky decisions

  • Get someone to challenge your views

  • Not having all the power vested in one person

  • Monitoring what happens afterwards.
Four simple and effective ways to make better decisions.

Targets and scorecards have been shown over and over again to be harmful if they are measuring the wrong things. Deciding what are the right things is easier to say than it is to do, but that little list above might just be some help.

6 comments:

  1. This a key area and I would offer that the biggest factor is often an organisation's culture and values, NASA has changed from the accident, look before and there were many issues, BP oil refinery fire in US, Piper alpha all impacted by the business rather than one event.

    The danger I would also say with the "rules" is that they can takeone away from the need to grab the nettle, make a decision, take control as accounatbility if often diulted with too much control - moving decsions up the organisaton is not always right or approriate.

    first thoughts!

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  2. I guess the difficulty with a discussion like this is - it depends what the decision is. Clearly some decisions can be made by an individual and others benefit from having more eyes and ears on the job.

    I delivered this as a speech on Saturday and found many nods of agreement round the room as I talked about the danger zones and how to mitigate the risks.

    It's a fascinating area and certainly in relation to performance management one that benefits from consultation.

    Interesting thoughts.

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  3. I talk about the culture as whilst controls are very important they are designed to prevent the holes in the Swiss cheese, as it were lining up , and disaster ensuing. So whether financial loss, incident/accident or just a delay.

    We do need robust procedures, comprehensive contracts that focus on failure, governance, and similar but they all seem to be designed to mitigate rather than improve.

    My focus has always been on ensuring the right decision is made by the right person,group, at the right time and place born out of empowerment/learning....type organisational values.

    Feel we should have a positve outlook to ensuring good decsions rather than ensuring that bad decisions don't occur.

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  4. Yes - I so agree that culture plays a big part. Which is also what's so interesting about the NASA example - moving from a pure budget/performance culture to a higher focus on safetly whilst trying to keep the best of the budget/performance initiatives. And whilst most of us hope we never get caught up in something as big as the NASA example, checklists can help with even smaller decisions.

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  5. Checklists have a place , think aircraft landing all airlines use standard operating procedures and one pilot will read out list and other will verbally confirm. Great whenevrything per plan but it does go wrong - schipol the other week unfortunately.

    Its like risk management getting so close to the detail one can miss the bigger picture. There is probably no one answer and in reality we need to use a range of levers to ensure success. The worry i have is we are biased towards defensive measures rather than addressing root causes embeded in the culture.

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  6. I didn't see the decision making points as a checklist, more as a reminder. The point about intuition being dangerous in decision making, for example, doesn't sit well with us but researchers have shown that data-driven decisions are normally better decisions.

    It is difficult, though, to talk about "decision making" as if it were one thing. Deciding the fate of hundreds of people in a reorganisation or what sort of paper should be used for a new brochure are not exactly comparable.

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