Decision Process Deficiencies

Findings from a recently-published study of 400 management decisions over a 20-year period provide dramatic evidence that many decision failures develop from process deficiencies rather than from management deficiencies or external factors, which are often blamed. What kinds of process deficiencies were found?

Quite often, these flaws will combine to set the stage for a real decision disaster.

Decision-making practices that are especially failure-prone were used in two-thirds of decisions examined in the study. The quick-fix is a very common practice that often fails. It may miss the real problem or just create new problems. Another weak practice is imitating others without taking care to adjust for situation differences. Insufficiently-critical adoption of "best practices" is common today.

Over-reliance on power and persuasion to force decision acceptance and implementation is also prominent among failure-prone practices. Efforts to build solid support among those involved or affected may be limited or ignored because they take "too much time". Instead, push-back and reluctance from stakeholders may be valuable signals that the proposed decision may be flawed in some way.

A more subtle practice weakness that derails many decisions is assuming that a direction or primary objective has been both adequately defined by the decision-maker and fully understood by those involved. In reality, the players may often be working on different understandings of what is to be accomplished and why. Such misunderstandings can lead to weak commitment by critical parties, conflicting efforts, and even to intentional blocking efforts.

Perhaps the most common, resource-related decision failure is using resources primarily to defend an early commitment to action, rather than to understand the situation fully and develop a range of options for dealing with it. This trap is usually accompanied by premature commitment to a decision.

Organizations spend enormous sums each year on consultants who tend to support their client's position on an issue instead of bringing a fresh view to the table. Many produce "CYA" studies that are fortunately ignored but enough are accepted to become the foundation for a flawed decision. Too little is spent on objectively evaluating a tentative decision when corrective measures are almost without cost.

In some cases, a decision is expedited to "get things moving quickly", bypassing essential steps that build understanding, gain the support of involved parties, and develop a suitable range of action options. The last of these is especially important, since early in the process is the best time to seek creative solutions and get vital ideas from interested and involved parties. Options tend to narrow as time passes and positions get locked in, making it steadily more difficult to move away from a decision that is proving to be deficient.

Decisions are often made on the basis of early evidence of need or pressures from a single involved party. Decision-makers can get locked into flawed decisions by commitments made before adequate information is available. In some cases, one particular course of action may be so conspicuous as to gain acceptance without any real foundation in fact. Effort then focuses on defending the commitment rather than on developing additional options. Decisions are also often made well before understanding of critical social and political issues is gained. Some organizational cultures value fast decisions by managers, virtually assuring that many decisions will be premature.

Being locked into a flawed decision can compound the problems to be addressed. Problems created by the decision itself can sometimes be far worse that the initial need. Much of the organization's effort and resources must subsequently be devoted to handling a self-created set of problems.

Research tells us that most people cannot consider more than a few important facts about a situation at any one time. For complex situations—which many management issues are—we respond to complexity by simplifying and revisiting until something that looks acceptable falls out. All too often, what falls out is just a simple solution, not a good solution.

To make complex situations easier to see all at once and to be able to understand them in their entirety, we need to have a way of capturing and organizing situation and decision-related information in what we might call a "decision map". This can be nothing more than a summary table but it must contain all important considerations and have some means of prioritizing them. Only when we have a concise, complete picture before us can we make a decision that takes into account all critical factors and options.

Decision mapping can be a powerful technique for clarifying decision situations and making them easier to understand in all of their critical aspects.

A 50% decision failure rate may be acceptable if it generates a rich flow of successful innovations. A high failure rate, in fact, is often essential to innovation, as is a culture tolerant of "failure". Risk-averse organizations are typically intolerant of failure and generate few innovations. If your organization has a low decision "failure" rate, then perhaps you are discouraging decisions that embody innovative approaches. Trying new approaches nearly always increases the failure rate.

What is an optimal decision failure rate for encouraging innovation? It almost certainly is different for each organization and probably cannot be determined in practice. Instead, a more productive approach is managing those decisions that prove to be weak so that potential failures are identified and concluded as early as possible. This is equivalent to managing product development in which failure rates from idea to product success are as high as 99%, tolerable only because the most likely failures are caught early and weaknesses in others are corrected when the cost of doing so is lowest.

Timing is everything in many decision situations. The opposite of the quick-fix decision is the deferred decision, or a decision to do nothing, in the hope that the problem will go away or resolve itself without management action. Viewed from a decision practices standpoint, however, doing nothing is a legitimate option but only if set against other options for action. Doing nothing without considering other options is effectively a premature commitment, which the study shows to be especially failure-prone.

Deferring a decision until more information is available or action options have been properly identified is another option, usually a sound one. Such decisions may involve taking some initial steps quickly to minimize damage or to buy time to assess the situation more fully. This brings up the somewhat complex topic of sequential decision-making where a situation is best addressed by a series of smaller, linked decisions. What is done at each step depends upon outcomes up to that point and any additional understanding that may have been gained.

Sequential decision-making is extremely common in most organizations but it is often done incorrectly. Subsequent decisions tend to be made within the context of an initial, over-arching decision instead of being developed within a changing context that evolves through a sequence of learning steps. Decision-making is not a one-step process in most cases but a series of orchestrated steps, each building effectively upon steps taken before and knowledge gained from each step. The ultimate decision may be very different than originally envisioned as the result of breaking the decision process up into stages in which learning can be employed.

Surprisingly, all too few process changes take early account of critical organizational strengths. Changes are designed without adequately protecting these, resulting in costly adjustments or serious damage to core strengths. Can you list your organization's most important strengths today? Many executives and managers cannot do so readily, or will offer an amazing array of different views.

Core strengths can come from brands, market position, technology, processes, people, culture, and similar factors but the mix is nearly always unique to each organization. While identifying them can be easy in some instances, most cases require careful thought and discussion to develop a sound consensus. What you think may be your strengths may in fact be wished-for, but not actual, strengths. Customers can often be your best guide to what really makes your organization a success.

Identifying core strengths is normally a one-time effort, or at least until the organization undergoes a major change. Core strengths should be so well known and understood that any manager can list them without hesitation and can explain them consistently—vitally important for organizational cohesiveness and coordination.

Once you have a consensus on core strengths available, you can set them beside each major decision to assess potential impacts. If there appear to be none, you can proceed as planned, perhaps with the precaution of tracking a key metric or two related to core strengths as part of implementation.

If your decision may have a significant impact on a core strength, then you need to be very careful about proceeding without additional investigation. You may, for example, be implementing an aspect of customer relationship management (CRM) that is focused on cost reduction. However, your organization may have service (as perceived by customers) as a core strength, one that could be seriously damaged by certain aspects of the CRM initiative. In this case, you may need to change the CRM approach so as to minimally impact customers, or you may need to add a counterbalancing service increment. At the very least, you will want to include in your CRM project a number of tracking metrics in service aspects most important to your customers.

How many of these might be present in your organization's management decision process? An assessment such as the one that we will now outline is the only way to find out. More... è

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