From Blink to Think: The Art and Science of Decision-Making for effective leadership

“Good decision-making is like a muscle, it needs to be exercised every day.” - John C. Maxwell

As leaders, we are often faced with difficult decisions that require us to act quickly and decisively. In these moments of uncertainty or indecision, it is our ability to make reasonable, informed decisions that can push a business ahead of its competitors and make us great leaders.

Effective leaders also recognise that decision-making is not always a solo endeavour. Collaborative decision-making can provide valuable insights and perspectives that can lead to better outcomes.

Moreover, great leaders understand their own decision-making style and how to leverage their strengths to make the best decisions.

But how do we make decisions? What are the different types of scenarios that we are classified into, and how do leaders make decisions in these scenarios? These are important questions that need to be addressed, and this article aims to explore the different theories and gurus of decision-making.

Exploring Intuition and Its Role in Managerial Decision Making

Erik Dane and Michael G. Pratt's article on "Exploring Intuition and Its Role in Managerial Decision Making" highlights the importance of intuition in decision-making. Intuition is the ability to make decisions based on our subconscious or "gut" feeling. While it is often disregarded in the world of business, intuition has been shown to be an important factor in making sound decisions.

In fact, a study conducted by Dane and Pratt found that intuition can be particularly useful in high-pressure situations, where there is limited information and little time to make a decision. However, it is important to note that intuition should be used in conjunction with other decision-making methods, such as analysis and logic, to ensure a well-informed decision.

The Importance of Seeking Advice

Great leaders understand that seeking advice from others can be critical in making informed decisions. Seeking advice from experts, stakeholders or even employees can provide valuable insights into a particular problem or decision. Additionally, it allows for a diversity of perspectives to be considered, which can lead to more innovative and effective solutions.

Were the Criteria, Objectives, and Alternative Options Explicitly Discussed/Considered?

When making a decision, it is important to consider the relevant criteria, objectives, and alternative options explicitly. This can help ensure that all relevant factors are considered and that the decision is informed and objective.

Did You Use Some “Decision Making Tools”? If So, Which Ones?

There are several decision-making tools available to help guide the decision-making process. These tools include cost-benefit analysis, decision trees, and SWOT analysis. These tools can help organise and structure the decision-making process and ensure that all relevant factors are considered.

The Process of Decision-Making: Individual vs. Collective Process

Decision-making can be an individual or a collective process. Individual decision-making involves a single person making a decision, while collective decision-making involves a group of individuals working together to make a decision. Both have their advantages and disadvantages.

Individual decision-making can be faster and more efficient, as it avoids the need for consensus-building. However, it can also result in a lack of diverse perspectives and can be affected by personal biases.

Collective decision-making, on the other hand, allows for a wider range of perspectives and can result in more creative solutions. However, it can also be time-consuming and can lead to groupthink or compromise.

How Humans Make Decisions: Thinking, Fast and Slow: System 1 and System 2

Humans make decisions using a variety of different processes. According to the book "Thinking, Fast and Slow" by Nobel Prize winner Daniel Kahneman, humans have two distinct systems of thinking: System 1 and System 2.

System 1 thinking is fast, automatic, and intuitive. It operates without conscious effort, and it is the source of most of our everyday decisions. System 1 thinking is essential for survival, as it helps us make quick decisions in response to immediate threats. Examples include - Deciding whether to like or dislike a person based on their appearance or demeanour, Completing the phrase "bread and _____" etc

On the other hand, System 2 thinking is slow, deliberate, and analytical. It requires effort and concentration, and it is used for tasks that require focus and attention. System 2 thinking is crucial for complex problem-solving, planning, and decision-making. Examples include planning a route for a road trip, evaluating the pros and cons of a job offer, deciding which car to buy based on research and analysis of features and prices

It's important to note that these examples are not meant to suggest that System 1 decisions are always intuitive and System 2 decisions are always deliberate. In reality, many decisions involve a combination of both systems, and the balance between the two can vary depending on factors such as the context, the individual's expertise, and the time available for decision-making.

Leaders need to be aware of both System 1 and System 2 thinking, and when to use each system. For routine decisions, System 1 thinking can be effective, but for important decisions, System 2 thinking is essential.

When making decisions, it is important to consider both the rational and emotional factors involved. Leaders need to be aware of their biases and the cognitive traps that can influence decision-making, such as confirmation bias, sunk cost fallacy, and overconfidence.

Leaders also need to understand the context in which they are making decisions.

The Cynefin framework, developed by David Snowden and Mary Boone, offers a useful tool for understanding decision-making in complex situations. The framework categorises situations into five domains: simple, complicated, complex, chaotic, and disorder. Each domain requires a different decision-making approach.

In simple situations, decisions can be made based on established best practices and standard operating procedures.

In complicated situations, experts may be required to analyse and solve the problem.

In complex situations, where the cause-and-effect relationships are not clear, leaders need to experiment and learn from their actions.

In chaotic situations, leaders need to act quickly and decisively to stabilize the situation.

In the disorder domain, there is no clear understanding of the situation, and leaders need to establish a sense of order before making any decisions.

Understanding the Cynefin Framework and the different types of decision-making scenarios can help leaders approach decision-making in a more systematic and informed manner.

Leadership and Decision-Making

Decision-making is a crucial component of leadership. Great leaders understand the importance of making well-informed decisions, seeking advice and considering a variety of perspectives. They also recognise the value of intuition and know when to rely on their subconscious feelings to make sound decisions.

Effective leaders also recognise that decision-making is not always a solo endeavour. Collaborative decision-making can provide valuable insights and perspectives that can lead to better outcomes.

Moreover, great leaders understand their own decision-making style and how to leverage their strengths to make the best decisions. The Wiley Blackwell Handbook of Judgment and Decision Making suggests that individuals can improve their decision-making skills through training, feedback and practice.

To improve decision-making, leaders need to cultivate self-awareness, seek feedback from others, and create a culture that encourages open communication and constructive dissent. They also need to foster a learning mindset and be willing to admit mistakes and adjust their approach.

Decision-making is a crucial skill for leaders, and it requires a combination of rational analysis and emotional intelligence. By understanding the different decision-making approaches, being aware of biases and cognitive traps, and cultivating a learning mindset, leaders can make better decisions and create a more successful organisation.

References

Dane, E., & Pratt, M. G. (2007). Exploring intuition and its role in managerial decision making. Academy of Management Review, 32(1), 33-54.

Gino, F., & Pisano, G. (2008). Toward a theory of behavioral operations. Manufacturing & Service Operations Management, 10(4), 676-691.

Goleman, D. (2011). Leadership that gets results. Harvard Business Review, 78-90.

Kahneman, D. (2011). Thinking, fast and slow. Macmillan.

Liu, S. S., & Lim, R. (2008). Decision making in project selection: An analytical hierarchy process (AHP) approach. Journal of Information Technology Management, 19(4), 31-44.

Mintzberg, H., Raisinghani, D., & Theoret, A. (1976). The structure of “unstructured” decision processes. Administrative Science Quarterly, 21(2), 246-275.

Snowden, D. J., & Boone, M. E. (2007). A leader's framework for decision making. Harvard Business Review, 85(11), 68-76.

Staw, B. M., & Epstein, L. C. (2000). What bandwagons bring: Effects of popular management techniques on corporate performance, reputation, and CEO pay. Administrative Science Quarterly, 45(3), 523-556.

Wiley Blackwell Handbook of Judgment and Decision Making (2015). Edited by Gideon Keren and George Wu. Wiley-Blackwell.