Four truths in decision making
Decision making is much like gambling. We throw the dice, make the decision and hope that what comes up is a winner.
So, how do we win?
Decisions are made to influence a future situation. They cannot make a situation come true but they can influence it. Good decisions use data and assumptions underpinned by an attitude that befits a gambling mentality. The leaders who make good decisions know that each one is but a minor step in the massive gamble of life and recognise this in their planning. They know that the best they can do is influence an outcome and so put effort into understanding what can go wrong as well as go right. Please note the order of this sentence.
After a bad result I have read or heard more times than I like the statement “I trusted that source and made my decision accordingly”, as though this is an acceptable excuse. “Sorry shareholders” I hear, “I trusted that report and expanded into a new area, it was the data not me that was at fault”. Really? Who believes that.
Value the watching
Great leaders make a decision then watch. And watch. And watch what happens as the decision takes effect so they can act quickly if needed. Their value comes not from acting too often, but from knowing what to watch. Its not about making the right decision, but about making the decision right.
Great leaders make a decision then watch. And watch. And watch what happens as the decision takes effect so they can act quickly if needed. Their value comes not from acting too often, but from knowing what to watch.
The four truths in decision making
Here are 4 truths that savvy leaders know about planning and decision making:
(1) Data is biased: Relying on data is risky. Publicly available data is prepared for the public and won’t fit user needs exactly. Privately collected data is swayed by emotions, politics and a raft of other factors. All data has limits. Reading data without consideration of its limits and relevance is problematic.
A highly recognised authority included a statement in an economics briefing this week that there was “bleak news” because Australian retail sales stalled throughout September 2017. Its reference to retail sales is important: The September Trade Surplus, a different index, doubled against August and was the 11th straight month of positives after 31 months of negatives. Looking at the trade figures things are better than bleak I would say.
The authority then went on to say that “Households are confronting the weakest wages growth in a generation”. The day prior a local paper reported wages of a CEO as being 56% more than 5 years ago. I would think he belongs to one of the households referred to earlier. Not for him the lowest wages growth in a generation methinks. Granted he is an anomaly but all of his sector had strong wages growth, especially when the low inflation rate is factored in. Another conflict.
So when a leader reads the authority’s data, is it ‘bleakness’ she should see, or cycles and changes in consumer behaviour? Suffice to say that the leader who reads this as “bleakness” will make different decisions to the leader who reads it as “changes in consumer behaviour”. This difference has big ramifications for agility and longevity.
(2) The future is uncertain: No one knows what will happen next. Leaders who understand this have equanimity and a watchfulness that allows rapid response. What happened today and at any point in the future is a result of hundreds to millions of past decisions made by a plethora of people. To expect something to occur as proposed is foolish at best.
The US President Mr Trump has allowed the world to see what happens when a leader says what he is thinking. Mr Trump is a leader who has influence and to whom people listen. Although you may not have the same global impact as he, each decision you make and each dollar you spend also impacts the global situation – albeit not as immediately or as significantly but it impacts none the less.
There are a myriad of decisions made everyday which impact your future and that of your firm. Only some of which you are aware. What you can’t see may be more important than what you can. A truth that is often forgotten.
(3) Assumptions are lies: A lie is “Something intended or serving to convey a false impression”. Anything attempting to describe a future as certain is a lie that should be treated with appropriate tremor. Yet plans are put into place and adhered to as though life is certain. A fallacy at best. Leaders show their inexperience and disengagement when they adhere to plans. A plan merely starts the journey, opening negotiations, setting priorities and pointing a direction to take. It is the outcome not the plan that is important.
(4) Facts apply in situ: Facts exist in situations long gone that are more faceted than a fly’s eye. Will the current situation match the past? Unlikely. Even some medical experiments controlled to the minutest detail fail to replicate. How can you expect to recreate something made logical only in hindsight? Don’t agree? Ask your loved one to describe a situation you know well. The answer will differ to your recollection in some shape or form. Now pose the question again, framing it carefully. Likely the answer will be closer to what you remember but whose facts are now seen? You are guiding the response to uncover the facts that you thought important. How will you replicate that?
Successful leaders know that decisions are important, as without them nothing happens. They also know that decisions rarely produce the result desired as they apply to a future yet uncovered using facts that occurred long ago. These leaders thus spend time educating themselves on what is happening in the world, and watching how people act in various situations. They know the decision is the start, not the end of any journey and its results need careful attention.
Great leaders know that it is they and the people round them who create the future, not facts, or assumptions, or indexes and thus put much effort into reflecting on their colleagues, their team, their competitors and their even own behaviour so they can act rightly when needs arise.
So if you desire to be a leader of influence then become a well educated leader: When you next read a statement, statistic or listen to a colleague, test the words written or spoken against your experience, and the experience of others. Read widely and assimilate the information before you put your view forward and then carefully watch the results of your actions unfold.
If you want to build a personal leadership brand that is trusted, be a leader who owns the decisions you make, don’t make the mistake of hiding behind data. Everyone knows that it was your job to make the decision work. Own it.
Let me know how you go.
 The Australian Institute of Company Directors’ Weekly Round Up, 6th November 2017. The AICD provides data with integrity. My comment relates to risks of readers who read without reflection, not the veracity of the report.
Jennifer is a strategy implementation coach who helps leaders turn their strategies into remarkable results.
She assists executives and business owners to achieve goals such as improved profit, productivity, leadership skills, business value. Her services are Business and Executive Coaching, Group Facilitation and advising on Board Governance. Her straight forward process help leaders achieve results without delay.
To find out how she can help you, call +61 439 520 182 or email.