Author: Dr. Pete Hammett, Visiting Professor
The volume of material and research on the topic of decision making is astounding. From what I’ve seen, we can categorize these insights into two critical influencers in the decision-making process:
- how leaders reflect inwardly and externally when making decisions, and
- the organizational structures that support or inhibit the decision-making process.
First, let’s take a moment to look closer at some of the myths typically associated with effective decision making:
Myth |
Reality |
| Senior leaders have free reign to make the decisions they feel are needed | Senior leaders are confronted with multiple constraints in their decision making, such as:
✓ Board of Directors ✓ Availability of funding/capital ✓ Competition ✓ Personal biases |
| Leaders move between companies often, and thus, corporate leadership (governance/decision making) is negatively impacted by a transitory leadership | In many companies, the core leaders leading the firm are long-tenured employees who deeply associate their success with the wellbeing of the organization |
| The overall goal of senior leaders is to strengthen shareholder value | The primary goal for senior leaders is the survival of the organization they are highly invested in – which translates into increasing and ensuring corporate wealth and well-being – not necessarily shareholder wealth |
| Decision making at the senior leader level is a rational process that considers multiple factors in a logical manner | Many decisions are based on forecasts and projections, which, for the most part, are educated guesses. Thus, leader decision making typically reflects non-rational considerations that have been filtered by the leader’s own belief system. |
Understandably, senior leaders will develop preconceived notions of where the organization’s strengths lie, how the firm stacks up against the competition, what its customers want, etc. However, these beliefs can cause the leader to isolate themselves from critical external perspectives. Even when senior leaders work as a collective team within their organizations, their group-thinking can create a “consensus-filter” that blocks consideration of external views. Senge draws this point out when he comments how “many people hold the idea that when leaders and teams engage in collective inquiry (group decision making), members’ isolation will de facto be reduced. True and not true. In many cases the better people get at wading into the hardest inquire, the more it raises their level of isolation…”(Senge, P. and Joni, S. 8). Signs of this isolation can range from overconfidence all the way to over inflated, out-of-control egos.
Blinded by Their Light
There is a paradox that encumbers senior leaders as they move up the corporate ladder. The drive for results begins to fuel a desire, perhaps even a passion, to achieve stellar performance. After a while, the leader may begin to believe there is very little they can’t accomplish if they simply put their mind to the task at hand. To a degree, it is this very self-confidence that propelled the leader forward in their career. However, if left unchecked, an imbalance can occur where senior leaders build a false sense of self-confidence regarding their work and less confidence in the work of others.
This plays out as senior leaders begin to doubt anyone other than themselves as being capable of making sound decisions. This can become evident when a leader maintains a stranglehold on a failing strategy despite signs and advice to change course. Thus, as Pfeffer asserts, “there is persistence with flawed decisions not simply as a way of justifying one’s previous commitments but also because, given the level of involvement in the decision making process, the decision maker does not accurately perceive the outcomes and therefore never really apprehends the true extent of the problem or failure” (Kramer 13). So, while an external observer may clearly see the danger in continuing with a course of action, a leader may see it as ‘sticking to their guns’.
The root cause for such failures is a leader’s over-inflated ego — a perception that they have all the right answers, or that without them, the organization would be lost. In contrast, Jim Collins offers a counter to the egocentric leader by outlining what he terms as “Level 5” leaders: those who build “enduring greatness though a paradoxical combination of personal humility plus professional will” (140).
One pattern I’ve observed is the senior leader’s professional will – the desire and perseverance to achieve results. What I’ve not seen, however, is the humility of leaders. In fact, we don’t even attempt to measure humility as a leadership competency. Unfortunately, humility is a leadership quality that is often mistaken for weakness or lack of confidence. However, there is no purer strength or assuredness than that found in genuine humility. Most leaders would not be comfortable being characterized as humble, nor would many leaders attribute humility as a key factor in realizing their success. Rather, most leaders point to their ability to successfully maneuver within the corporate infrastructure or their ability to be resourceful and get things done. Here again, Collins highlights this point by suggesting “the great irony is that the animus (will or spirit) and personal ambition that often drives people to become a Level 4 (effective) leader stands at odds with the humility required to raise to Level 5” (142).
Execution, Organizational DNA and Decision Rights
The drive to achieve bottom-line results and improve time-to-market has yielded a maniacal focus on how organizations can break through performance barriers through ruthless execution. While the term “ruthless execution” might imply results at all costs, this isn’t necessarily the case. For example, Cisco’s John Sifonis suggests that in its basic form “ruthless execution” is simply about taking quick, decisive action (1). In other words,
- access the problem;
- frame the issue within the constructs of available resources;
- define and analyze trade-offs, and
- MAKE A DECISION AND GO!
So, why do consulting firms regularly recount case studies of organizations with brilliant strategies that are unable to execute against clearly defined action plans (Hamilton 1)? To help us answer this question more fully, it is helpful to examine an organization’s structure under the lens of its DNA and focus our attention on the specific decision-making process.
Just as individuals have unique characteristics, companies also have distinct traits. From this comparison, the analogy of “organizational DNA” has been used to “codify the idiosyncratic characteristics of the company” into four base components (Neilson 3-4):
- Structure (the boxes and line within a hierarchy);
- Motivators (reward and recognition);
- Information (metrics used to identify and measure activity) and
- Decision Rights (the specific decision-making authority assigned)
While the interaction of each base component is critical to the functioning of an organization, it is within the area of Decision Rights, and specifically the decision making process, that we can begin to understand some of the barriers that impact an organization’s ability to achieve its goals. To help in developing this understanding, we can start by reviewing how leaders approach decision making. This is a topic for the next blog in this multi-part series, so stay tuned for more to come.
- Part 3 – How Senior Execs Approach Decision Making: A Look at Personality Data From the C-Suite
- Part 4 – Personal Observations: Executive Decision Making
- Part 5 – A Call to Action
