Better Organizational Decision Making

The dynamics of decision making in organizations differs a lot based on the type of company you are. If you are at a start-up, quick decision making is usually worth more and getting a product out the door is a key driver of the organization. In fact, it’s likely that the company does not have the wherewithal to do a thorough research into the intricacies of the decision. The larger organization, however, may want to invest more in the decision making process. It has more invested in their product, in their customer base etc, and so more is at risk. Then again, the time spent on a decision might just be down to the need to CYA or inertia. Whatever it is, looking at it through the start-up glasses, things often seem to move at glacial speeds.

The less time you allow yourself to think through, research and test your decision, the more important it is to understand your biases.
Biases influence the way we make decisions, and generally, not in a favorable way.

These biases surface throughout the day to day operation of the organization.
For example recruiters have been found to favor people similar to themselves, someone that would “pass the airport test”.

In the same manner

• The Conformation bias will stop you from evaluating evidence contradictory to your view
• Clustering illusion will let you recognize patterns in data and overestimate their importance
• Conjunction fallacy will have you believe that a special set of circumstances are more likely than a general one.

And these are just a few of the decision-making biases that start with the letter “C”. There’s a whole heap of biases that has been identified and thoroughly researched. The scary part is that we know of them, we may even have studied them. But when we need to make a decisions, time after time, we fall prey to them.

Then, there is my favorite, the Dunning-Kruger effect. It lets the unequipped make decisions full of certainty and leaves the subject-matter experts in constant doubt about their own abilities. I guess the Burden or Curse of Knowledge effect has a stronger hold of us than we believe.

So how might you fight these biases and their impact on your decision making abilities?

One method is to think about how you think, very meta — I know. You need to do that so that you are able to recognize where you are falling short. The two tools I would recommend to support you with that go together hand in hand:

• Active reflection, I fully subscribe to the point of view that we “don’t learn from experience, we learn from reflecting on experience”. Reflection is the mechanism we have to analyze and produce new insights. You observe prior experiences and your capabilities to abstract and conceptualize help you improve on your future decisions.
• Decision logging and review (reflection). From a learning point of view making a note of the decision. Understanding what went into it, and then, carefully considering the merits of it.

Having a decision making framework, a process that you use to identify the elements that go into a making a good decision, should help you not to recruit someone because you think you would enjoy being stuck with them in an airport. But, rather, because she/he is the best person to accomplish the goals of your organization.

A Sample Decision Making Framework

That framework should at a minimum support the decisions that you need to make repeatedly, like whom to recruit for different roles. But a well designed system should also force you to think things through a little better even if it is an ad-hoc decision like what financial services company your start-up should use.

Among the things that a decision framework might include are:

• A clear, objective problem definition. Ensuring we understand the problem at hand.
• Risk assessment. What is at risk? Understand whether the decision really needs to be made now, or whether it can be postponed.
• Is the decision reversible? If we go one way, how far down the road can we travel and still back out of the decision and choose an alternative route. This should inform how fast you can make that particular decision.
• Decision criteria. The criterion by which we judge the decision. Do we give different weight to different criteria?
• Potential options, a list of options that are, or can be made available to us.
• Potential outcomes, ties into understanding what is at risk
• Action - making a decision and documenting it.
• Reviewing the decision. As noted above, reflecting on the decision as time passes helps you learn and make better decisions down the line. I’ll make an arbitrary recommendation of a review 6 months after a decision is made. But that is obviously dependent on the decision.

The research that Daniel Kahneman and Amos Tversky did* into judgement and decision making wound up describing two systems of thought.

• System 1 which is impulsive, fast, emotional and unconscious of thought.
• System 2, which is thoughtful, slow, logical and effortful.

The risk in all decision making is that we fall on the side of easy, System 1 thinking. Having a decision making process forces you to work objectively, systematically and effortfully. Inviting System 2 to help you with the decision.

At worst having the decision making process makes you aware that you have made a conscious decision NOT to invest effort into making the decision.

* Kahneman and Tversky also did fantastically interesting research into heuristics and biases. Their collective work is described in Kahneman’s opus “Thinking fast and slow”. That book I love so much that I have an audio, Kindle and a hard copy.