Businesses reply on leaders for their most challenging strategic decisions -- where to invest, what to divest, when to place big bets. Leaders know that making good, fast decisions is challenging under best of circumstances. But the trickiest are those we call “Big Bets” - unfamiliar, High stakes, once in a life time, life changing decisions.
When you are in crisis, which arrive at overwhelming speed and enormous scale, organizations face a potentially paralyzing volume of these Bog Bet decisions.
Not to forget all leaders are human beings and like all of us they suffer from decision bias that might lead to them making catastrophic decisions. The typical approach of many companies, big and small, will be far too slow to keep up in such turbulence. Postponing decisions to wait for more information might make sense during business as usual. But when the environment is uncertain and defined by urgency and imperfect information waiting to decide is a decision in itself. For instance, delaying the decision to cancel noncritical surgeries can mean not freeing up physician and hospital capacity now and potentially exposing or infecting more people.
Strategic decisions are those decisions that have an influence over years, decades, and even beyond the lifetime of the project. Once a strategic decision is made, it is very unlikely to be altered in the short term. These decisions are difficult to make and even more difficult to rectify if they go wrong.
We all suffer from Three types of bias that can be distinguished: Conformation bias, Selection bias, and Confounding.
1. Conformation bias
It happens when you look for information that supports your existing beliefs, and reject data that go against what you believe. This can lead you to make biased decisions, because you don't factor in all of the relevant information.
2. Selection bias
Selection bias is an experimental error that occurs when the participant pool, or the subsequent data, is not representative of the target population.
3. Confounding bias
A systematic distortion in the measure of association between exposure and the health outcome caused by mixing the effect of the exposure of primary interest with extraneous risk factors.
Pay attention to Decision Quality (DQ)
The way in which they decide among options can determine the outcome as much as the decision itself. DQ is an approach to analytic, fact-based decision making that emphasizes insight over intuition, and analytics over conjecture. This approach crafts strategy and makes the decisions that drive superior performance and yield significant returns on investment. And, because the decision-making process is fact-based and transparent, there is greater chance of alignment and success.
All high-quality decisions meet six requirements:
Setting the right frame
Gathering meaningful data
Clarifying values and tradeoffs
Using logical reasoning
Committing to action.
Focusing on each element of this rational decision-making model and involving the right people at the right time in the right way make it possible to create significant value and avoid mistakes that erode value. On the other hand, a lack of DQ leads to decision failures: Failed strategies, wasted capital in investment decisions, recycling of decisions, blaming, and witch hunts.
Ask yourself and your team these questions: What is most important rig
ht now? What might we be missing? How might things unfold from here, and what could we influence now that could