7 ways to make decisions when uncertainty is high

It was in the first three months of a merger between two financial services firms.

Both firms were similar making synergies and reduced duplication a logical place to create value. From the start, speed and momentum were key drivers. Planning had begun months before the announcement, a clear end point had been defined, the new leadership team was in place from Day 1. The acquiring party was the parent of the smaller firm, which was half the size of the acquired business.?

Within three months, all of the top 600 leadership roles had been spilled and 300 new managers appointed. Two thirds of the new leaders were from the smaller acquiring organisation. The integration program emphasised communication, the most senior leaders were visible and available. However, the fact of the matter was that the acquired company’s people felt that they had been taken-over and that they were now being led by a bunch of third graders.

It was in this context that one of the most major decisions of the post-merger integration needed to be made. Each company had a number of customer systems, none of which were perfect. The usual analysis was completed. A scan of the market and a review of each of the systems. The acquired company had only recently implemented a new system, which had cost AU$40m. The smaller company had a 30 year old, traction engine that wasn’t sexy, but was reliable.?

The debate about which system to choose raged for more than 6 months.?

Consultants. Meetings. More meetings. People leaving. Toys flying out of prams, left, right and centre.

The subject matter experts all believed that their system was better than the other. The problem was that strengths and weaknesses in each system cancelled each other out, leaving little differentiation.

A decision had to be made. No matter what the choice, there was going to be stiff opposition. Ultimately, the Director leading the merger made the choice. He chose the old system of the acquiring company. It turned out that many of the positive reviews of the new system that had been implemented by the acquired company turned out not to be particularly accurate. The new system had been a dog from the start. However, it had come down to a question of ‘which company was going to win’, not what was the right choice for the future.

It took 2 years from that moment to enhance the old system and migrate millions of customers across. It was a grueling journey but one that had to be undertaken in order to protect the value. It succeeded, but not without economic or human casualties along the way.

The point is – when you are leading large scale change, it is necessary to make difficult decisions. If these are not made, when they need to be made, they can have significant ramifications. Most of the time, decision-making delays will only lead to an even more difficult decision later.

You are a leader. It’s your job to make decisions every day.?

There are however a couple of factors that make decision-making in a highly-complex changing environment, more difficult than the decisions of business as usual. There are significantly more unknowns, you are less likely to have encounted the type of situation before (can’t rely on what worked last time) and the subject matter is far less clear and concrete.

All of these mean that big, strategic change decisions feel higher risk (because the right option is usually less obvious) and their outcomes are less predictable (because there is no reasonable benchmark).

The 7 critical success factors for decision-making

1. Protect value first – Let the strategy be your guide. It has identified where the core value is so the first question that you need to ask yourself is “how does this decision impact the value that you are creating
2. Make the decision according to the right outcome for the company – this helps to bring an objectivity to the decision and moves beyond emotions, sales pitches and arguments. Keep in mind, this does not just mean choosing what will make the company the most money. It needs to be based on an holistic perspective. Long-term and short-term. People and customers.
3. Understand the question and gain insights, not just facts - looking behind the options & scenarios that you’ve been presented – Ask the right people questions like:What is the real problem that needs to be solved?What if we left things the way that they are??What impact would that have?If this were your decision, what choice would you make? Why?What are the potential consequences of this decision?What are the assumptions that are underpinning this decision? How have we tested them?
4. Own the decision & act – until action has been taken, a decision is merely a thought. In order to have decided you need to do something about it. Own and communicate the decision. Every decision has consequences and sharing what the decision was and why you made it will empower people. They might not like it but they can see the rationale.
5. Look for opportunity in everything – how can this decision provide an opportunity for us to learn more, go faster, deliver a higher quality outcome. Even the most difficult and painful decisions, usually have a silver lining. However, if you don’t look, you will only ever seen the rain.
6. Make the decision for better or for worst – recognise that decision making in the highly complex environment of strategic change means taking a risk. Sometimes you will get it wrong and let’s face it – those can be pretty hard lessons. If it does go wrong – accept it, learn and move on. Backing away from the decision, and worse blaming your people for ‘going against your better judgement’ is weak leadership.
7. Circle back – once you’ve made the decision and the team have gone off to implement it, make sure that you come back to it later. What happened after the decision was made? How did people react? Did it build the momentum that we were looking for? What have we learnt since? Does it still feel like the right decision? Circling back serves a number of purposes. It gives the message that you expect your decisions to be implemented. It also signals to your team that your decisions are not random – you don’t just pull the trigger and walk away. Finally, these conversations give you further insights for the next big decision, that is usually only ever around the corner.

The biggest decision-making mistakes that leaders make – how to over-come them

• Deciding not to decide – otherwise known as procrastination. By definition, difficult decisions are difficult. Its why they pay you the big bucks to make them! You need to be honest with yourself and reflect on why you are not making the decision. Is it because none of the consequences are attractive? Do you feel bad because some people won’t like the decision? You feel unsure and the risk of getting it wrong seems too great? There can be many other reasons. However, once you’ve narrowed it down, you can start to deal with it.?Talk it through with someone who is not involved, who can help you to work through the options.?Think of someone that you believe is good at making these kinds of decisions. What would they do? How would they go about getting to the right answer???Imagine that you are advising someone else who needs to make the decision? What advice would you give them and why?Ask yourself “what is the worst that can happen” relative to “what is the possibility if I get it right”? The possibilities will always be greater – you just need to look for them.
• Making a decision from only one perspective – yours. As a leader, you bring a wealth of experience to the role that you have. On many occasions your previous experience will enable you to be better equipped to lead the strategy. However, think that this is all that you need, will bring you underdone. Here’s why I say this. In most cases, experience is made up of a number of things. The situation, what happened, what else was happening at the time, what you did, what others did and so on. When faced with a new situation, if all of these factors are consistent with your previous experience, then it makes sense to apply what you learnt last time, to today. However, the dynamics of a strategic change program means that while some factors may be similar, they are unlikely to be the same as last time. Once you think that you know the answer (because ‘you’ve done this before) you will stop listening to others’ perspectives.
• Seeking false certainty – There is a point at which the amount of information that you have reaches critical mass. Once you go beyond this, you will potentially lose focus and become overwhelmed. The reality is that often, when you are executing the strategy, there is no clear answer. When you accept this, and the risks that come with it, you will have greater freedom. In my experience, what is important is they you focus less on making the right decision, and focus more on making it for the right reasons.
• Defending a decision at all costs – Some leaders, when they make decisions, treat it as though it is something that needs to be defended. However, when you are leading large-scale, strategic change, the more you progress along the yellow brick road, the more you know. What was a huge uncertainty 6 months ago, is a well-known fact today. Sometimes when you have more information, it means that given the benefit of hind-sight, you may have made a different choice. Chopping and changing major decisions on a regular basis is not a good thing to do. It will potentially undermine confidence in your leadership and destabilise your program. However, if you realise that you got it wrong, you need to privately pause and assess. Will changing the decision at this point, create more value (taking into account the emotional and economic costs of adopting a new direction) or is it better to adjust incrementally and deliver according to the current decision.? Acknowledging that you got it wrong is a character building activity and is one of the differences between leaders who reach the Emerald City and those that are found wondering aimlessly along a dead-end yellow brick road.

When transformation success depends on your team mastering every moment, you need the benefit of experience. Kate Christiansen is a seasoned practitioner who has built engaged teams behind transformational ambitions for decades. Learn more here.

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