Decision Management

A Game Plan to Achieve Organizational Grand Slams

By J. Frank Yates, professor of business administration and marketing at the University of Michigan Business School and award-winning teacher and author of Decision Management: How to Assure Better Decisions in Your Company

A tennis player's forehand looks like a single fluid movement, but it's a series of actions. She grips the racket, gets in position, watches her opponent's approaching shot, pivots her shoulders and hips, turns her foot, transfers her weight, keeps her forearm parallel to the ground, holds the racket head at a precise angle, draws back the racket, steps forward, shifts her weight again, swings the racket forward, keeps her arm straight and her wrist firm, contacts the ball and follows through with a long sweeping motion.

Decisions are made the same way. Each one is the last step in a series of actions. However, many decision makers, like tennis players, are unaware of these steps as they occur. And a mistake or miscalculation at any point in the process can send a decision sailing out of bounds.

A good decision manager, like a good tennis coach, can help players understand this process, work through each step and consistently make winning decisions. This is critically important because a company's health is tied directly to the quality of the decisions made each day throughout the organization.

That's right. Effective corporate actions result from superior decisions, which in turn rest heavily on solid decision management practices rather than luck or general business acumen. Despite this, corporate leaders seldom attribute successes and failures to decision making or even consider how their companies make decisions. This is unfortunate, because the actions all managers take-or fail to take-have a profound impact on how the people around them make decisions. These managerial actions and behaviors constitute decision management, a powerful tool for managers at every level.

Every decision requires the resolution of 10 fundamental issues. When I present this concept, corporate managers and MBA students often are taken aback. They say, "Wait a minute! You expect me to implement a 10-point checklist every time I make a decision? I'd never get anything done."

No, that's not what I'm saying. These 10 Cardinal Issues (see page 15) are not new tasks or responsibilities. You already confront each of them every time you make a decision, whether you realize it or not. And your likelihood of success improves dramatically when you recognize and consider how to resolve each issue better than you normally do. Otherwise, good decisions are left to chance and a competitive advantage is lost.

Decision Managers Influence, Guide

Even though managers recognize their responsibility to make good decisions, participate in group decisions and influence deliberations that lead to other decisions, they seldom understand the underlying decision-making process or think about their role as decision managers. In this role, they influence and guide the people around them to make effective decisions that enhance the company's prosperity.

Managers typically neglect decision management because they don't appreciate its monumental impact. They also tend to have a superficial understanding of what decision making entails and how the people around them decide-like a tennis coach unable to break down a forehand into its component parts.

Decision management also is hampered by an interesting psychological phenomenon called "bolstering." When we make a decision, we internally enhance the positive aspects of our choice and denigrate the other options to alleviate doubt and discomfort with our decision. For this reason, people typically believe they are excellent decision makers and seldom scrutinize their own decisions. And when they do, they're biased. As a result, it's better to leave decision evaluation to the people who are affected by the action.

The 10 Cardinal Issues, which are covered in depth in my book Decision Management, provide a way to conceptualize the activities that lead to decisions. With this knowledge, managers can anticipate and avoid mistakes and help their staffs and colleagues employ effective decision-making processes. As a decision manager, it's important to engage people individually-one tennis player might need to adjust the way he pivots while another needs to change the angle at which his racket strikes the ball.

Decision-making procedures are ingrained in people, so a complete overhaul is unlikely to succeed. That's okay, because it's also unlikely to be necessary. Small refinements, based on the 10 Cardinal Issues, can make a profound difference.

I recommend you use the 10 issues as a framework for the ongoing, active and systematic examination of decision-making practices in your company. Evaluate how your organization and people deal with each issue, and whether it's the best approach. This type of review rarely occurs, unfortunately, because every crisis sends people scrambling for a solution rather than encouraging reflection on the decisions that led to the problem. When a key employee takes a job with a competitor, for example, managers work frantically to fill the void; they typically don't explore previous decisions leading to the climate that caused the prized employee to quit. This is tantamount to rescuing the survivors of a plane crash, then leaving the site without investigating the cause of the crash.

The goal of decision evaluation is not to blame or punish. It is to determine precisely where and why the decision-making process broke down in order to reduce the odds that mistakes will be repeated. It is to make us better and our companies stronger. The investment you make in adopting, modeling and advocating effective approaches to the 10 Cardinal Issues of decision making will be repaid many times over.
 

10 Cardinal Decision Issues

Recognizing and consciously considering the 10 Cardinal Decision Issues can dramatically improve the likelihood of success. In brief, they are:
 

Need

Deciding whether a decision should be made.

  • A company receives a request for a bid on a large project.
  • A competitor releases an upgraded product.
  • Customers increasingly complain about poor service.

Companies constantly are confronted with events like these-problems to address and opportunities to exploit. Successful decision managers vigilantly monitor the business landscape so they can see these events unfolding and determine whether, when and how to initiate a decision-making effort.

Mode

Who will make this decision?
How will they decide?

  • Should a particular decision be made by a senior executive or delegated (perhaps even to a computer)?
  • Is a consultant's expertise needed?
  • Should a committee be convened?
  • If so, who should serve on it and what process should they follow?

Managers must understand the numerous means of making decisions and carefully apply them to specific issues.

Investment

What resources will be invested in decision making?
Decision makers must weigh the material resources needed to make a decision-direct expenses and staff time, for example-as well as the emotional costs, including stress, conflict and uncertainty in the organization.

Options

What are the potential responses to a particular problem or opportunity?
The goal here is to assemble and evaluate options in a way that

  • Unearths the ideal solution (or one close to it).
    • Wastes minimal resources.

Methods for gathering potential choices include soliciting ideas from staff, seeking input from a consultant, brainstorming and evaluating how other organizations have responded to a similar issue.

Possibilities

What could happen as a result of a particular course of action?
Managers must foresee outcomes that are likely to be important to beneficiaries and stakeholders in the decision. Many decisions fail when these parties-including employees, customers and neighbors-are blindsided by adverse outcomes the decision makers failed to even consider.

Judgment

Which of the things that could happen would happen?
Decisions are shaped by predictions, opinions and projections; it's important to evaluate their accuracy and determine how much weight to give them. The quality of these judgments improves markedly as the number of people participating in the process increases-particularly when the participants provide a variety of viewpoints.

Value

How much would beneficiaries care, positively or negatively, if a particular outcome were realized?
Different stakeholders may have dramatically different values regarding an action and its outcomes. The intensity of these values determines whether they will take action supporting or opposing the decision.

Tradeoffs

Every prospective action has strengths and weaknesses; how should they be evaluated?
There are formal "tradeoff tools" that can help with complex decisions. In most cases, when this issue is resolved, the decision is made.

Acceptability

How can we get stakeholders to agree to this decision and the procedure that created it?
It's critical to identify groups that might object to a decision, why they feel that way, whether they can derail the decision and how to preclude such trouble.

Implementation

The decision has been made. How can we ensure it will be carried out?
A decision that is not implemented is a failure. It's important to recognize, and prevent, circumstances that can cause this to happen. Such circumstances include failure to allocate adequate resources to the initiative, failure to assign a senior manager to champion the project and failure to provide incentives that ensure staffers will make implementation a high priority among their responsibilities.


More About Decision Management

Decision Management: How to Assure Better Decisions in Your Company by J. Frank Yates is part of the University of Michigan Business School Management Series. To order a copy, call toll free 800.956.7739, fax 800.605.2665 or visit www.umbsbooks.com. Remember to use code UMB to receive your discount.
To contact Yates directly, send messages to jfyates@umich.edu.