Great Decisions -Learning from the best.

One of the things I am fascinated by is how good leaders (and their teams) make good decisions.

In all my projects and startups, I put a lot of thought on the decision making process, now just about tools and techniques but by making sure the philosophy, framework, principles and values are socialised and understood by everyone.

Allowing people to make "mistakes" is part of "understanding" as it is often thought these steps that they get to truly understand things.

How can you know good from bad if you don't have both to compare.

Thinking about how groups make decisions.

The way Decisions are make in an organisation, family or society is at the heart of how it functions. It's not only about tools, techniques, process or even framework but an underlying philisophy. The degree to which is delegated, decentralised/centralised, transparent, efficient, consensus driven is fundamental to its effective execution. If we feel the decision making process is biased, corrupt, morally unsound or technically wrong, it will affect the faith people have in the institution and its ability to execute.

In my courses and workshops I often cover tools and techniques we can use to make good decisions.

Tools & Techniques

You will probably have come across some of these techniques such as:

• Brainstorming - Team members come together to generate as many ideas or solutions to a problem as possible. The goal is to get creative juices flowing and build on each other's ideas.
• Nominal group technique - Each member silently generates ideas, then shares them verbally with the group. No discussion happens until all ideas are shared. Afterward, the ideas are discussed and voted on.
• Delphi technique - Experts anonymously share ideas/solutions to a problem in writing. A facilitator summarizes them and shares back with the group. Experts refine their views based on others' perspectives. Repeat until consensus is reached.
• Multi-voting/Dot voting - Each member votes on their favorite ideas/solutions using dot stickers or marks. The ideas with the most votes are the ones the group focuses on.
• Decision matrix - Team members give each option a numerical score on different criteria. Weights are assigned to the criteria. The option with the highest total score is selected.
• SWOT analysis - Analyzing internal strengths and weaknesses as well as external opportunities and threats to inform strategic decisions.
• Cost-benefit analysis - Comparing the total expected costs against the total expected benefits for different options to choose the one with the lowest cost versus highest reward.
• Six Thinking Hats - Team members each metaphorically wear a "thinking hat" that represents a mode of thinking (e.g. critical, optimistic, emotional). Allows different perspectives to be shared.
• Pro/con analysis - Making a table listing the pros and cons of each option to compare them.
• Force field analysis - Analyzing the driving and restraining forces that influence a potential decision.
• Stepladder technique - Team starts with two members, who make a decision. More members then join the discussion iteratively to re-discuss the decision.
• Crowdsourcing - Leveraging input from a large, diverse pool of people to generate ideas and make decisions.
• Prediction markets - Setting up a market where employees can trade "stocks" on potential outcomes of decisions to tap into the wisdom of the crowd.
• Pairwise ranking - Comparing items in pairs to determine preferences and priorities for decisions.
• Satisficing - Choosing the first option that meets a basic threshold of criteria rather than the optimal solution.
• Majority rule - Simple voting where the option with the most votes from the team is selected
• Unanimity - The team discusses until everyone agrees on a decision. Prevents a majority ruling without buy-in from all.
• Plurality - Each member votes for their top choice. The option with the largest number of votes wins.
• Approval voting - Each member votes for as many options as they approve of. The option with the most votes wins.
• Dictatorship - One individual makes the decision for the group.
• Democratic vote - The team openly debates options and then votes. The majority wins.
• Weighted voting - Certain members have more votes based on experience/expertise. The option with the highest vote total wins.
• Decision trees - Mapping out potential consequences of different decisions in a tree diagram to assess risk.
• Pilot testing - Trying out options on a small scale first to gather feedback and data.
• Focus groups - Getting input from a diverse set of stakeholders on different options under consideration.
• Consensus - The team works toward general agreement from everyone, not necessarily unanimity.
• Intuition - Using one's personal experience and judgement to make quick decisions based on gut instinct.

Ego Depletion and The Decision Mindset

In my previous articles, I have discussed concepts like ego depletion, mental bandwidth and you may have heard me say

"you can't make a good decision from a bad place".

So not only must the people be in good form to avoid poor decisions and biases but the way the framework and meeting run is fundamental to a good outcome.

So what can we learn from some of the top leaders and entrepreneurs and the processes and systems they have put in place to make good decisions; that you might want to borrow from...

So what can you learn from the best business leaders.

Ray Dalio

Ray Dalio, the founder of Bridgewater Associates, is known for his unique approach to decision-making and management. His techniques, as outlined in his book "Principles," emphasize radical transparency, thoughtful disagreement, and a meritocratic approach to idea management. Here are some key aspects:

1. Radical Transparency: Dalio advocates for an environment where everyone can speak openly and honestly. He believes that transparency fosters a culture of trust and helps in identifying and addressing issues more efficiently.
2. Idea Meritocracy: In an idea meritocracy, the best ideas win out regardless of who presents them. Dalio suggests using tools and processes that encourage objective decision-making and consider the credibility of idea contributors.
3. Believability-Weighted Decision Making: Dalio differentiates between democratic and believability-weighted decision-making. In the latter, the opinions of more experienced or credible individuals carry more weight.
4. Thoughtful Disagreement: Bridgewater encourages employees to have open disagreements and debates. The focus is on understanding each other’s reasoning and perspectives, rather than on convincing the other party.
5. Principles-Based Decision Making: Dalio suggests creating a set of principles that guide decision-making. These principles are derived from past experiences and help in making consistent and efficient decisions.
6. Data-Driven Decisions: Bridgewater uses algorithms and data analysis to support decision-making. This approach helps in reducing biases and emotional influences on critical decisions.
7. Pain + Reflection = Progress: Dalio emphasizes the importance of learning from mistakes. He encourages reflecting on failures and understanding the root causes to prevent future repetitions.
8. The Dot Collector: This is a specific tool used at Bridgewater. It allows employees to provide real-time feedback on each other, which is then used to assess performance and decision-making skills.

These techniques are part of what Dalio calls "radical open-mindedness" and "radical transparency," which are central to his philosophy of continuous learning and improvement. Dalio's approach has been influential, but it's also worth noting that it might not be suitable for all organizations or individuals. Bridgewater's culture, driven by these principles, is known for being unusually direct and demanding, which can be challenging for some employees.

Jeff Bezos

Jeff Bezos, the founder of Amazon, is known for his distinctive decision-making techniques that have contributed to the immense success of his company. Some key aspects of his approach include:

1. Customer Obsession: Bezos places the customer at the center of every decision. He emphasizes understanding and anticipating customer needs, often prioritizing customer satisfaction over short-term financial gains.
2. Regret Minimization Framework: This is a decision-making principle Bezos used personally and professionally. It involves projecting himself into the future and considering whether he would regret making or not making a decision. This long-term perspective guides him to take risks and make bold decisions.
3. Two Types of Decisions - Type 1 and Type 2: Bezos categorizes decisions into two types. Type 1 decisions are consequential and irreversible, requiring careful consideration. Type 2 decisions are reversible and can be made quickly and changed if they don't work out.
4. The "Disagree and Commit" Principle: Bezos encourages his team to voice their opinions and disagreements during the decision-making process. However, once a decision is made, even if they disagree, he expects them to commit fully to its execution.
5. High-Velocity Decision Making: Bezos emphasizes the importance of making decisions quickly to maintain agility and competitiveness. He believes that most decisions should be made with around 70% of the information you wish you had. Waiting for 90% often means being too slow.
6. Long-Term Thinking: Bezos is known for his focus on long-term goals over short-term profits. He believes in investing in the future, even if it means enduring short-term losses or criticism.
7. Encouraging Innovation and Accepting Failure: Bezos promotes a culture of experimentation, acknowledging that failure is an inherent part of innovation. He sees failures as opportunities to learn and improve.
8. Data-Driven Decisions: While intuition plays a role, Bezos often relies on data and metrics to inform decisions, particularly those related to customer behavior and market trends.
9. Writing Culture: At Amazon, meetings start with participants silently reading a detailed, narratively-structured six-page memo. Bezos believes this encourages clarity of thought and a deeper understanding of the topic at hand, leading to better decision-making.

Bezos' techniques reflect a blend of customer-centric focus, willingness to embrace risk and failure, and the importance of speed and agility in decision-making. Like Dalio's principles, Bezos' methods are deeply integrated into the culture and practices of Amazon, contributing significantly to its growth and success.

Other Entrepreneurs, Investors and Leaders

1. Warren Buffett - Economic Moat and Value Investing:Buffett emphasizes long-term value investing. His decisions are based on investing in companies with a strong 'economic moat' (sustainable competitive advantages).He also stresses the importance of understanding the business, investing within your 'circle of competence,' and considering the intrinsic value of an investment.
2. Steve Jobs - Intuition and Focus:Steve Jobs was known for relying heavily on his intuition and focusing intensely on a few priorities.He believed in the power of saying no to thousands of projects to ensure exceptional quality and innovation in the few chosen ones.
3. Elon Musk - First Principles Thinking:Musk uses 'first principles thinking,' a method where one breaks down complex problems into their most basic, fundamental parts and then rebuilds solutions from the ground up.This approach allows for innovative solutions rather than following conventional methods.
4. Sheryl Sandberg - Lean In and Authentic Leadership:Sandberg emphasizes the importance of 'leaning in' to one’s career, particularly for women, encouraging them to embrace challenges and opportunities.She also advocates for authentic leadership, involving openness about one's thoughts and vulnerabilities, which fosters trust and collaboration.
5. Satya Nadella - Growth Mindset:As the CEO of Microsoft, Nadella promotes a 'growth mindset,' an approach where abilities and intelligence can be developed through dedication and hard work.He encourages learning from failures and viewing them as opportunities for growth and innovation.
6. Indra Nooyi - Performance with Purpose:Nooyi, the former CEO of PepsiCo, focused on 'Performance with Purpose,' meaning making choices that benefit consumers, employees, and the planet, while also driving long-term business growth.She believed in integrating sustainability into the core business strategy.
7. Richard Branson - Employee First and Risk-Taking:Branson prioritises employee satisfaction, believing that happy employees lead to happy customers.He is also known for his willingness to take significant risks and for his adventurous approach to business and life.
8. Reed Hastings - Freedom and Responsibility (Netflix):Hastings emphasizes a culture of 'freedom and responsibility,' giving employees substantial autonomy and expecting high performance in return.He believes in rapid decision-making and learning through making mistakes, fostering a culture of innovation.
9. Mary Barra - Customer-Centric and Values-Based (General Motors):As CEO of GM, Barra focuses on customer-centric decisions, prioritizing the needs and safety of the customers in the automotive industry.She also emphasizes decision-making based on a strong set of values, including integrity, accountability, and transparency.
10. Tim Cook - Collaborative Leadership (Apple):Cook focuses on a collaborative approach to decision-making, involving team members across different levels of the organization.He places a high value on consensus and teamwork, contrasting with Steve Jobs’ more autocratic style.
11. Sundar Pichai - Empathy and Inclusiveness (Google):Pichai advocates for empathetic leadership and inclusiveness, ensuring diverse perspectives are considered in decision-making.He emphasizes understanding the user's perspective and solving their problems, aligning with Google’s mission to organize the world’s information.
12. Susan Wojcicki - Data-Driven Decisions (YouTube):Wojcicki, CEO of YouTube, is known for her analytical approach, using data to drive decision-making.She believes in experimenting and iterating based on what the data reveals, fostering a culture of innovation.
13. Howard Schultz - Mission-Driven Leadership (Starbucks):Schultz focuses on mission-driven leadership, making decisions that align with Starbucks’ mission to inspire and nurture the human spirit.He also emphasizes social responsibility and corporate ethics in decision-making.
14. Jamie Dimon - Long-Term Value Creation (JPMorgan Chase):As the CEO of JPMorgan Chase, Dimon concentrates on creating long-term value for shareholders.He believes in thorough risk assessment and understanding the broader economic and financial landscape for strategic decision-making.

These leaders exemplify diverse approaches to decision-making, from client-centric strategies to innovation-driven and values-based leadership. Their methods highlight how different organizational cultures and personal leadership styles can influence decision-making processes and business strategies.

What are your thoughts about the way decisions are made and how transparency, engagement etc are critical to making and implementing good decisions.