4 Costly Decision-Making Missteps and How to Avoid Them

4 Costly Decision-Making Missteps and How to Avoid Them

As a leader, you likely spend much of your time thinking about results—financial, operational, and otherwise. But how often do you rigorously reflect on the quality of your decision-making and how to improve it over time? 

This is an important question because – whether you realize it or not – wherever you happen to be in any area of your life is exactly where you’ve chosen to be. You see, your current circumstances, whether fantastic, average, or even miserable, are the results of millions of choices and decisions you’ve made over time.

If you’re not regularly reflecting on and learning from your decisions, you’re apt to be more frustrated, as is your team. The high or low quality of your decision-making compounds over time and ultimately determines your destiny. This is why some create more success than others: it boils down to how we make our choices.

With this in mind, let’s explore a handful of effective decision-making techniques and the costly missteps they help avoid to stack the deck in favor of achieving the outcomes you want. 

Compartmentalize

Let’s begin by stepping into something you may have been advised to avoid in other areas of your life: compartmentalization. 

About a year into my relationship with a client in the technology sector, we assessed their employees’ performance and cultural fit using a methodology called Topgrading. Through this rigorous process, and somewhat to their surprise, it became clear to the executive team that to fulfill their commitment to continue growing, they needed to upgrade (replace) some of their staff. 

In my experience, their reaction and realization were typical. It often takes an outside perspective and a structured process to properly illuminate how and why things need to change. I’ve learned that teams proceed from this point by making one of three decisions: 

1. They deny or rationalize the issue at hand, take no action, and continue on the current path. 

2. They operate inside their comfort zone and take limited, low-risk actions but stop short of the steps necessary to achieve meaningful results. 

3. They swallow hard and decide to act, usually exchanging some short-term pain for a significant long-term expected payoff.

Though they didn’t realize it at the time, my clients were standing at this three-pronged fork in the road.

As we talked through their options to upgrade staff and the implications of each, one of the first things that emerged was fear. They worried about what would happen. Would the terminated staff exit with important institutional knowledge? Would they take other employees or customers with them? Would they badmouth the company online? 

The complexity of our dialog skyrocketed with each “what if” scenario. That was when I stepped in to let the team know they were unintentionally conflating the decision itself with numerous other components of acting on it, and that in doing so they were setting themselves up to embark on one of the two weaker paths: denial and inaction or comfort zone actions. 

To take the third, less-traveled path—to do the hard, right things—the team would have to compartmentalize the why, what, how, and when of their decision. 

Here’s an example to illustrate what I mean by this: 

Many leaders have dealt with a toxic high performer. You know the individual needs to be sent packing, but since they bring some value to the business, perhaps sales or certain know-how, you fear two things: loss and retribution. Let’s say the problem employee is in sales. You worry about how much revenue you’ll lose without them, and whether they’ll take some of your clients with them. You might also worry that they’ll move to a competitor or recruit some of your other staff to join them. 

In situations like these, the complexities of how and when—How should I let them go? and When should I let them go?—typically dominate and delay the decision-making process. But if you compartmentalize the elements of your decision and start with the why, determining exactly why you need to take action first, then move to the what—determining the right action to take without regard to how or when to act, it becomes much easier to see the right path and commit to it. 

Once the commitment to right action is made, then and only then, advance to the how and what. These elements pertain to your plans to act on the decision, but not on the decision itself! 

As an added bonus, how and when can be delayed or planned for over time, because the right decision has already been made. Taking some time to implement your decision can be beneficial, allowing you to plan for contingencies or consequences. On the flipside, don’t let yourself (or your team) use that as an excuse to delay implementation indefinitely. 

Compartmentalize by making the decision first (why and what), then planning to execute at the time of your choosing (how and when).

Make Time for Reflective Thinking versus Reactive Thinking

Reactive work happens in response to external triggers like emails, phone calls, and an employee standing at your office door. On the other hand, reflective work includes planning, strategizing, and deep thinking—and it only happens when you give yourself time to truly focus. While some reactive work is bound to be part of your daily life as a leader, you’ve got to make the time for reflection—particularly because it’s necessary to make more thoughtful, informed decisions. 

I witness the debilitating impact of reactive thinking interruptions to reflective thinking from time to time during my meetings with the leadership teams I coach. This happens when we take a break and one of the executives makes a call to check on an “of the moment” problem impacting their team. When we reconvene after the break, there is notable distraction and lower quality high-level thinking for the first 15-20 minutes before that leader gets themselves back in gear for reflective thinking. Psychologists call this task switching and have demonstrated it exacts a significant toll on our productivity. To learn more about the cost of task switching and run a fun little experiment on yourself to prove the point, click here.

To avoid task switching and fully engage in the reflective work necessary to make solid decisions, set aside an hour or so of uninterrupted time in your calendar each day (or perhaps several hours one day per week) for deep thinking. Protect this time like you would an appointment with a major client because it’s equally or even more valuable in the context of your long-term aspirations. 

Treat your team meetings similarly and ensure that attendees aren’t tempted to be distracted. This might include some basic rules like mobile devices face down and muted, laptops closed unless being used to take notes, and no external calls during breaks – all of which I’ve seen work quite effectively.

If you don’t actively create the right environment for reflective thinking, you’re bound to get distracted by the reactive tasks that interfere with sound decision-making.

Ask Better Questions

The quality of your answers is directly influenced by the quality of your questions. With that in mind, it’s valuable to think about whether you’re asking the right ones to feed more and better insight into your decision-making process. To make this happen, you’ll capitalize on compartmentalizing and the protected reflective thinking time we’ve already discussed. 

As you gather information and prepare to make a decision, high-level, open questions are best to create possibilities and insight. For the application of open questions to personal decision-making, have a look at this article. Back to business, examples of open questions at this stage include:

·       What are we missing?

·       What’s the broader pattern here?

·       Who else should have a voice in this?

·       What are the potential 2nd and 3rd order consequences or benefits to this?

·       How do we feel about this?

A bit deeper into the decision process, you’ll want to shift to more narrow questions as you identify your options and zero in on a specific course of action. Narrowing questions include:

·       Does this choice align with our strategy and objectives?

·       What is the cost / benefit of this option?

·       What is the best- and worst-case scenario associated with this choice?

·       Which options are most favorable for further consideration?

To recap, open questions zoom out to broaden possibilities and expand the arena of thought while narrow questions zoom in to eliminate less favorable options. Regardless of the specific questions you ask, it’s most important to deliberately adhere to this “open then narrow” pattern of questioning to optimize your decision-making. 

Solve the Root Cause, not the Symptoms

I’ve observed brilliant, seasoned leaders consume valuable time carefully considering, debating, and solving significant problems that, in reality, were just symptoms of the real, underlying root cause. High staff turnover is a fantastic example of this! The problem is that high turnover is never the real problem – it’s the symptom of a deeper root cause (in many cases bad management, though there can be a number of other root causes). It’s quite easy to get sucked into this mode because the symptoms of a problem are what create your immediate pain. 

The challenge here is that it’s tempting to address symptoms—the stuff that’s standing in your way right now—as opposed to the underlying problem itself. Though that approach might help in the near-term, it’s rarely sustainable over time. In my experience, symptom solving is like stretching a rubber band. The moment you stop putting energy in and let go of the stretched rubber band, it snaps right back to where it was. On the other hand, if you allocate time for reflective thinking, ask the right questions, and ensure you’re focused on the root cause, you’re positioned to make a better, more sustainable decision about how to proceed. 

Here’s one technique to find the root cause:

When my clients enter into a discussion or debate during one of our monthly or quarterly leadership team meetings, we categorize each topic using the acronym IDS – Identify, Discuss, Solve. This ensures that the team separates the identification of a problem from their discussion about it and the eventual development of a solution – an approach that helps the team zero in on the root cause, as opposed to its symptoms. It’s a simple, highly effective mechanism to keep conversations more productive and avoid the temptations of symptom solving.

Mark Twain once said: “Good decisions come from experience. Experience comes from making bad decisions.” The challenge for you as a leader is to acknowledge your less-than-good decisions, learn from your experience, and continually improve your decision-making process over time. Every decision is an opportunity to learn, provided you recognize the moment.

What’s more, you can get started right away with the techniques we’ve covered here.

When you compartmentalize, protect your reflective thinking time, ask better questions, and solve for root cause you’ll have installed a series of proven techniques that lead to more effective decision-making. And that means better outcomes for you and your team.

If you’d like to explore this topic more deeply, you’ll find additional strategies and tools to improve your thinking and decision-making in my book Activators: A CEO’s Guide to Clearer Thinking and Getting Things Done.

==============================================

Resource Links...

In my work as a business and leadership growth coach, I encounter articles, research, and stories about how leaders learn, grow, and become more effective. As you’ll see below, I share just two or three in each edition of my newsletter - particularly those at the intersection of leadership, business growth, and behavior change.

Why Business Associates May Trust You - or Not - Based on Your Looks (WSJ)

“Earning the trust of your business associates may be easier if you look the part—whether you deserve their confidence or not.

That’s the finding of a recent study published in the Journal of Accounting and Economics earlier this year that looked at how facial features affect business judgment. It found that traditionally trustworthy features can win over people in new professional relationships—but those positive assessments often turn out to be misleading…”

How Julia Child Used First Principles Thinking (FS Blog)

“There’s a big difference between knowing how to follow a recipe and knowing how to cook. If you can master the first principles within a domain, you can see much further than those who are just following recipes. That’s what Julia Child, “The French Chef”, did throughout her career.

The lessons of first principles in cooking are the same for the first principles in any domain. Looking for first principles is just a way of thinking. It’s a commitment to understanding the foundation that something is built on and giving yourself the freedom to adapt, develop, and create. Once you know the first principles, you can keep learning more advanced concepts as well as innovating for yourself…”

==============================================

Next Steps to Accelerate Your Leadership Success...

• Book a keynote or workshop
• Buy my book Activators