Organisational Change Management Volume 2

Elements of Decision-making

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. The elements in an optimum decision-making process are

- realizing that the problem is genetic and can only be solved by establishing a rule/principle

- providing clear definitions of the specifications that answer the problem satisfactorily

- concentrating on what is right before considering compromises, adaptations, concessions, etc to make the decision acceptable

- building into the decision the actions needed to carry it out

- monitoring and evaluating, ie feedback, ascertaining the validity and effectiveness of the decision against the outcomes

- encouraging of disagreement and dissension rather than consensus, ie consider alternatives

. Some questions that need to be asked to determine if the problem is generic or unique:

- Is the situation generic or an exception?

- Is this something that underlies a great many occurrences?

- Is the occurrence a unique event that needs to be dealt with as such?

- Is this a true exception or only the first manifestation of a new generic problem?

Sometimes the occurrence may only be a symptom, ie the manifestation of underlying basic conditions and not the basic cause. Have to be careful that this is not the equivalent of putting "band-aids"on a boil when the boil needs to the lanced!!!!!

Remember: the generic can be answered through a rule/principle, while the exception can only be handled on an as-it-occurs basis. Furthermore, truly unique events are rare and must be treated individually, ie case-by-case.

One of the most common mistakes in decision-making is to treat a generic situation as if it was part of a series of unique events

Generally, all events, except the truly unique, look for a generic solution, ie a rule, a policy, a principle. Once the right principle has been developed, it can be adapted to each situation.

. Some questions that need to be asked to determine the clear definitions of the specifications that answer the problem satisfactorily

- What are the objectives the decision has to reach?

- What are the minimum goals it has to attain?

- What are the conditions it has to satisfy? These are sometimes called the boundary conditions

- What is the minimum required to solve this problem?

- Can our needs be satisfied?

The more concise and clear the goals and conditions, the more effective the decision.

If the specifications are incompatible, the decision will have less chance of being effective.

Defining the specifications and setting the boundary conditions involves more than facts. It is done on interpretation and intuition. Thus it is a risk-taking judgment

. What is right

- need to start out with what is right rather than what is acceptable (let alone who is right) as one will always have to compromise in the end.

- furthermore, you need to know what is required to satisfy the specifications and the conditions. Unless this is done, it is hard to distinguish between the right compromise and a wrong one

- there are 2 types of compromises, ie

"...half of a loaf is better than no bread..."

vs

"...half of a baby is worse than no baby at all..."

Peter Drucker, 2001

The purpose of bread is to provide food and half of the loaf is still food, while half a baby is not a living and growing child; it is one piece of a corpse!!!!!

Furthermore, it is a waste of time to worry about what is acceptable and trying to reduce resistance. Generally, the obstacles that are first thought to be insurmountable are not and others not considered can become insurmountable obstacles

. Converting into action requires answering several distinct questions

- who has to know of this decision?

- what action has to be taken?

- who is to take it?

- what action is required so that people who have to take it can do it?

- who are accountable and responsible for implementing the decision?

. Feedback

- need to test whether the assumptions on which a decision has been made are still valid or whether they are becoming obsolete and need to be thought through again. Time and reality never stand still.

- it is important to build the feedback around direct exposure to reality, ie need to visit the "scene of the action".

. Disagreement

"...Unless one has considered alternatives, one has a closed mind......decisions......are made well if based on the clash of conflicting views, the dialogue between differing points of view, the choice between different judgments. The first rule in decision-making is that one does not make a decision unless there is disagreement..."

Peter Drucker, 2001

- there are 3 reasons for the importance of disagreement

i) it is a safeguard against the decision-makers becoming prisoners of the organisation. The only way to break out of the prison of special pleading and pre-conceived notions is to make sure of argued, documented, thought-through disagreements and dialogues

ii) disagreements provide alternatives from which to choose. Encouraging disagreement reduces the chances of the decision being wrong.

iii) disagreements stimulate imagination. This is important to handle the uncertainty of the future

- alternatives provide a choice, especially if the decision proves deficient or wrong in execution

"...disagreement converts the plausible into right and the right into the good decision..."

Peter Drucker, 2001

- decision-makers need to start out with the commitment to find out and understand why people disagree

- one alternative is to do nothing. What will happen if we do nothing? Will the problem take care of itself? In other words, is the decision really necessary? Despite individual decision-makers differing in style, ie risk-averse, risk-takers, etc, there are some common rules in this situation, ie

"...act if only on balance the benefit greatly outweighs cost and risk. Act or do not act, but do not hedge or compromise..."

Peter Drucker, 2001

. If people demand another study, these 2 questions need to be asked: is there any reason to believe that additional study will prove anything new? Is there reason to believe that the new is likely to be relevant?

. Furthermore, in decision-making, intuition is important as this is based on your experience!!!!

. In decision-making, rapid instinctive decision-making is not traditionally accepted as the best way to make decisions, ie

"...our present business culture believes quick decisions are bad decisions, and that the way to run a big company is to amass data, run the models, do the due diligence and knockout as many imponderables as possible. Instead we need to reaffirm the value of rapid judgments and recognize those styles of decision-making - one based on massing of overt, consciously gathered information and the other based on experience and unconscious thinking - are appropriate at different times..."

Malcolm Gladwell as quoted by Helen Trinca, 2007a

According to Gladwell, there are several aspects to this quick decision making

- need to be an expert with unconscious knowledge, ie possess "at-a-glance"skills

- thinking is mysterious as people are unable to define the steps in their decision-making

- it is a fragile exercise with many factors able to cloud judgment, eg a conscious bias does not necessarily know where a first impression comes from or precisely what it means

- it is frugal, ie more data does not necessarily mean a better decision will be made. In fact,

"...too much information can undermine the judgments. People who are limited to a few key variables have a better capacity to see the truth..."

Malcolm Gladwell as quoted in Helen Trinca, 2007a

. Some general comments on decision-making

- most people are reluctant to change plans, even where there is compelling evidence that they should, ie sunken cost bias, ie a reluctance to abandon a plan of fear of wasting the time and resources already committed. This is most obvious when a decision maker has a vested interest in a particular solution succeeding

- people are overly optimistic and positive about outcomes

- people are most effective when working in an environment that they are familiar with and working alongside people they know

- most people are not good at recognizing when they are over-loaded

- people need to learn more from personal experience and mistakes

- knowing personal details of people you work with helps

- people prefer action rather than preparation

- people take on too much responsibility and micromanage

. In summary

"...a decision is a judgment. It is a choice between alternatives. It is really a choice between right and wrong......but much more often a choice between two courses of action, neither of which is probably more nearly right than the other......executives who make defective decisions know that one does not start with facts. One starts with opinions. These are, of course, nothing but untested hypotheses and, as such, are worthless unless tested against reality. To determine what is the fact requires first a decision on the criteria of relevance, especially on the appropriate measurement......there are not facts unless one has a criteria of relevance. Events by themselves are not facts......everyone is prone......to look for facts that fit the conclusions they have already reached. And no one has ever failed to find facts he is looking for......perhaps the critical question here is, what is the criteria of relevance. This, more often than not, turns on the measurement appropriate to the matter under discussion and to the decision to be reached......traditional measurement reflects yesterday's decision......the best way to find the appropriate measurement is to go out and look for feedback......events are measured in averages......but they are meaningless, indeed misleading, for......management decisions......finding the appropriate measurement is thus not a mathematical exercise. It is a risk-taking judgment. Whenever one has to judge, one must have alternatives from which to choose.......Only if there are alternatives can one hope to get insight into what is truly at stake.......It becomes clear that a decision requires courage as much as it requires judgment......There is no inherent reason why decisions should be distasteful - but most effective ones are..."

Peter Drucker, 2001

(sources: Peter Drucker, 2001; Helen Trinca, 2007a; Rachel Nickless, 2010a)

 

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