While browsing through the B School library the other day, I happened across an article on decision making by Peter Drucker, originally written in 1967. Naturally as this is our business I was curious to see what one of the true masters of management had to say on the topic. Here is the synopsis together with our commentary.
Drucker commences by stating that an effective decision making process must go through some basic steps. These steps will not “make” the decision – it will always be a judgement call – but if the steps are ignored, the decision is not likely to be effective nor right. The 6 steps he recommends are: Continue reading “Drucker: The Effective Decision”
Having trawled through many of the summaries, videos, tweets and other reports on the conference, I am trying to pull together my overall feelings and perceptions about the 2012 Davos conference.
There were hundreds (perhaps thousands) of issues discussed, but the big themes arising were the Eurozone crisis, the jobless situation particularly among the youth, the impact of social media, the questioning of the capitalist system and the gap between the have’s and have-nots (included/excluded; in-system/marginalised). Naturally, there was also discussion around the ubiquitous topics of energy, social entrepreneurship, visions and values.
I had (still have) a level of discomfort about the composition of the gathering. The governments, regulators and financiers, who must hold some of the blame for what is a less-than-comfortable world economic environment, are those selected to discuss the situation and what should be done about it – without much input from the other 99,999% of the world who are trying to muddle through the mess. And doing it at a venue that costs most of the business people about $40,000 to attend the 5 day event!
A classic example, Vikram Pandit (CEO of Citibank), co-chair of the Forum said “Jobs should be our number one priority”. A few stats about Citibank: they took a $45bn bailout, share price has fallen 91% since Pandit took over in 2007; they announced a 4,500 job-cut in December and Vikram received a $3,7m bonus for his 2011 performance. I am sure some must doubt his capability to envision and champion job creation schemes.
Having said that, I do fully support the Forum and believe Klaus Schwab’s initiative is very important. Perhaps there were fewer solutions forthcoming in this round, but at least the debates were had and new ideas put on the table. Furthermore, despite the tough times and apparent insurmountable problems, the almost TED-like feeling of optimism and good-will that most delegates take away has to be a good thing given the power that many of them wield.
One of the sources of optimism and a highlight of the conference, was the input from the 70 YGL’s (young global leaders) who were invited to participate. Many of them with fresh perspectives on issues and with significant successes already achieved, they offered a new energy and challenge to the status quo. I can recommend watching the closing video (Note: WEF web-site sometimes has some technology issues in accessing the videos – keep trying!)where 4 of those YGL’s were on the podium – including a young South African woman: Rapelang Rabana. She was an inspiration, especially in comparison to the tired panel called “Africa: from transition to transformation” chaired by Gordon Brown and with 5 African heads of state including SA’s Zuma – all except perhaps Condè (President of Guinea), were embarrassing to watch as they blamed everyone and anyone (except themselves) for non-delivery on the continent and seemed unable to articulate an inspiring and credible vision for Africa. (The fact that some of these leaders continue to address Gordon as Mr Prime Minister left me wondering if they knew he is one of the millions who has recently lost his job!).
I would encourage Klaus to continue including these Young Global Leader’s and also try and open it up to other inspiring segments of the world population who are making positive changes in the world – after all you don’t have to be in the top 0,001% of the worlds richest or less than 30 years old to “make a dent in the world”.
Another theme that is not new, but is increasing in importance and close to our hearts here at Genesis, is the issue of collaboration in decision making. As leaders become more alert to the ramifications of their strategic decisions and the impact that the outcomes have on many lives across continents and even generations, there is a growing acknowledgement that more people must be included in the decision making process. We are not saying that all decisions should be consensus decisions; in fact, we believe the overlap between consensus decisions and intelligent decisions is probably not that large – but where possible, “outcome-stakeholders” need to give their input. Not only by reminding decision makers about the potential impact of the decision, but frankly many people who do not sit at the boardroom table are able to offer crucial, creative and critical insights into the deliberations that could have a significant impact on increasing the possibility of a good outcome. Given we are in a world where many problems require new and innovative solutions and not simply a refinement of past responses, the broader and richer the input, the more likely we are going to make decisions that take us to new heights in growth and exciting, positive results.
At Genesis, we have been lucky enough to find technology partners who are able to provide solutions that can take us beyond old, stale ways of thinking and more importantly allow us to creatively and rapidly gather rich inputs from a broad range of stakeholders. These inputs are important whether we are solving problems, taking decisions or crafting new strategies – and we would be happy to see how we, or our partners, could help you to gain these benefits. Call or mail me for a discussion or demonstration of some of these tools.
Let me leave this summary with (my interpretation) of the thoughts of 3 of the young global leaders when asked what advice they would give the “older generation” when addressing the tough issues of today:
Listen: to everyone, not just your colleagues in the boardroom. Listen to youth, disenfranchised people, women, customers … really listen!
Do not always think linearly – think divergently and creatively.
Consider new technology and the scalability that can be gained through harnessing some of the tools available.
Teach a man to fish, you’ll feed him for a lifetime. Expose a man to the Internet & you’ll change his life. Rapelang Rabana
Visualisation methods – a useful tool and the steps to excellence.
This short post is part of the build-up to the publication of the third habit “communicate visually and verbally” which covers the topic of visualisation and its applicability to taking strategic decisions.
For some time now on our “useful stuff” page, we have published a periodic table of visualisation tools. However, many visitors do not spend time surfing the entire site and may have missed this excellent graphic developed by visual-literacy that is incredibly rich with information about visualisation tools.
Click on the link below to reach an interactive table. Hover over each “element” and you will see an example of the tool. The categorisation is also excellent.
Genesis Management Consulting frequently use visualisation tools in our problem solving and strategic decision making work; and have proved again and again the power of visualisation for communication, creativity and insight generation. Contact us for further details.
Harvard Business Review article: reducing behavioural problems Kahneman, Lovello and Sibony
HBR, in conjunction with McKinsey, have published an interesting article about reducing the impact of behavioural issues in decision making.
The underlying premise is that it is very difficult for individuals to recognise their own subconscious bias – simply put: we cannot see our own blind-spots. But we are far better at identifying those of others or of groups.
They put forward a check-list of questions that should be asked when a group is putting forward a decision recommendation. We will describe that list below. But first some commentary:
What is good about the article?
Anything that can help us reduce the negative impact of behaviour that we are unaware of is good. As the article says: advice up to now has been more of a case of “forewarned is forearmed” which has shown to do little to have an impact on our behaviours.
Using an external person to question a group is also a great idea (albeit not entirely original – Genesis have been suggesting this in one form or other for years) as it is definitely easier to see someone else’s blind spots than our own.
Having a check-list is a good idea and forces one to go through the appropriate disciplines of asking and challenging.
What could be improved?
We believe that the concept of challenging behaviours is better built into the entire decision-making process – or at least at a number of check-points along the way. Waiting until the recommendation phase is fraught with obvious problems.
The check-list itself should be tailored to best suit the requirements of the situation and the team involved. The generic list put forward is fine, but the emphases may well be in the wrong areas.
Agreeing on who should play the role of “decision-auditor” is critical. A combination of appropriate experience (in the role), expertise in the subject matter (of behaviours and the decision context), independence and authority are all important. Just as we believe the person who ultimately takes the decision should not be the person to drive the decision process (better suited to a “decision coach”), we believe that the decision leader should also not be playing this behaviour-challenge role. After all, they have their own set of behaviours, perspectives and bias to consider.
For those of you who do not want (or do not have time) to read the article itself, here is the 12 point check-list put forward (the article has more detail behind the items as well as the rationale):
Is there any reason to suspect motivated errors, or errors driven by the self-interest of the recommending team?
Have the people making the recommendation fallen in love with it?
Were there dissenting opinions within the recommending team?
Could the diagnosis of the situation be overly influenced by salient analogies?
Have credible alternatives been considered?
If you had to make this decision again in a year, what information would you want, and can you get more of it now?
Do you know where the numbers came from?
Can you see a halo effect?
Are the people making the recommendation overly attached to past decisions?
Is the base case overly optimistic?
Is the worst case bad enough?
Is the recommending team overly cautious?
We do not wish to appear overly critical. The article is important and timely. Furthermore, we have great respect for the authors: Daniel Kahneman particularly is a world-leader in this area. Our comments are merely to assist our clients in taking this good idea into real practice.
And we believe there is free access up until 4th July 2010.
If you would like to discuss how we at Genesis can help to optimise the decision making process in your organisation, please contact Simon Gifford – or have a look around our web-site at (www.genesis-esp.com).
Below is attached a short commentary on an interesting article recently published by strategy+business that discusses whether or not we really do take ethics, social responsibility or the environment into account when making our purchases.
The commentary also asks some key controversial questions about the efficacy of socially responsible programmes – which we hope may stimulate some debate around issues such as women in business, affirmative action and launching environmentally-friendly products.
We continue to use innovatve techniques to spread our work wider than immediate clients. So….. you may click on the link below and download the article by “paying with a tweet” which creates a little buzz around the article by sending out a tweet (if you have a twitter account) or tells your friends about via your Facebook page. It is a small, discrete notice and takes 2 easy, risk-free steps to get there.