The art of decision making
The understanding of decision making has moved far from the classic rational model—which assumed that decision making is a logical process—to encompass the impact of numerous factors. These include the involvement of emotions, energy, physical state, environment, cognitive biases and more.
Social psychologist R.F. Baumeister famously said: “Good decision making is not a trait. It’s a state that fluctuates.” While he said this in a different context, the words capture the capriciousness of decision making which, as we continue to discover, is influenced by many variables.
The interplay of leadership and decision making has been the subject of many studies, given the inherent expectations of quality from leaders. Since the decisions leaders make often serve as benchmarks for others.
Decision-making styles range from authoritarian to consensus building. Research has found that there are more leaders at the extremes of the spectrum than at the consultative median. While every point in this spectrum is relevant based on scenarios and desired outcomes, neither extreme is desirable as the default style for a leader.
It is important to understand the role of power on a leader’s decision-making style—scientific experiments on the impact of perceived power on decision making have thrown up some important results. Being in a position of power has been found to affect the quality of decision making in these ways:
u Power leads to an inflated belief in the accuracy of one’s judgement and knowledge. Most leaders have ascended to power by virtue of the sound judgements they made at various points in their journey. This could give leaders an exaggerated perception of their assessment capabilities and make them less receptive to advice and external inputs.
A paper by Kelly E. See (New York University), Elizabeth Wolfe Morrison (New York University), Naomi B. Rothman (Lehigh University) and Jack B. Soll (Duke University), published in the Organizational Behavior And Human Decision Processes journal in November 2011, provides some interesting insights based on a series of experiments in which participants were given a chance to review their decisions after receiving external advice.
High-power holders underperformed on accuracy tasks since they discounted both expert and non-expert advice, giving higher weightage to their own initial judgement. Individuals who were neutral or non-aligned to the high/low power extremes reached a higher level of accuracy by correcting themselves on the basis of expert advice.
u The need to be seen as powerful makes leaders exhibit amplified confidence in their own views. Confidence is perceived by many as an important attribute of leadership.
Many powerful individuals, then, consider seeking advice to be a sign of weakness and feel compelled to project a firm belief in their own stance. This not only makes the leader less likely to seek advice but may also lead to the suppression of dissent and good ideas from others.
In light of these two points, it is important to note that the other extreme, illustrated by excessive opinion seeking, low confidence in one’s own judgement and frequent re-review, is also detrimental, since it may create an unstable, erratic environment for the leader’s team. Structure and balance are crucial to an effective decision-making process.
u High-power individuals demonstrate lower recall of factors that may inhibit the achievement of the goal. A number of experiments, including one by Professor Jennifer Whitson at the McCombs School of Business in the US, have shown that high-power individuals identify fewer potential obstacles to the achievement of a goal. They are, therefore, more likely to act on goals. This, however, can lead to sub-optimal outcomes if probable constraints are not factored into decision making.
u High-power individuals often experience less uncertainty about their future. This helps them plan for longer-term results in comparison to low-power individuals, who are more easily attracted to immediate gains. However, the illusion of control is a common cognitive bias in high-power leaders that leads to an overestimation of their influence over outcomes and future events.
u Powerful individuals display a higher propensity for loss aversion than gain maximization. Daniel Kahneman and Amos Tversky’s Nobel Prize-winning Prospect Theory: An Analysis Of Decision Under Risk suggests that individuals avoid losses more than they value gains in decisions that involve risk. This effect is often more pronounced in the case of powerful individuals in high-visibility roles since their decisions are typically subject to more analysis and dissection.
The impact of all this on strategic and organizational decision making is apparent. It is important to design a decision-making process that invites consultation but also extracts maximum benefits from the discretionary judgement of the powerful leader.
It is important to keep in mind the suggestions that follow while designing a more effective strategic decision-making process for leaders and organizations:
u Include a formal advice and opinion collection mechanism as the first stage of the decision-making process, before leaders develop or voice an opinion. Leaders feel less compelled to protect or defend an opinion which has not been expressed and will, therefore, be more inclined and able to use the advice and information received.
u Encourage dissenting voices and allow ideas and views to be challenged without reprisal. Create a process amenable to the expression of contrary views.
u Override the latent risk-averse mechanisms of the human brain with structured thinking procedures such as the QuadraBrain Affirmation Ideation technique, which helps override the brain’s natural tendency to focus on what could go wrong by following a series of pre-defined steps that then evolve into spontaneous positive pattern generation to evoke new ideas; and Edward de Bono’s Six Thinking Hats, which uses a parallel thinking process to enhance decision making.
u Actively seek evidence that goes against the initial plan. The process of identifying and listing facts that are contrary to the decided plan reduces the attachment to a tried and tested way of working. It sensitizes us to alternate outcomes and allows us to improvise when necessary.
u Ground judgements and challenge conclusions using systematic questioning methods and tools such as the ladder of inference, which helps us understand how we draw conclusions.
u Encourage experimentation with collective intelligence tools, which can draw attention to biases and help address them.
u Invest in coaching to help leaders recognize and address their underlying need for demonstrating magnified confidence levels. This will also enhance leaders’ self-awareness and create an appetite for honest self-reflection and alertness to bias.
An effective decision-making process not only helps overcome errors in decision making, it also helps to move towards optimal decisions rather than just satisfactory choices.
Shweta HandaGupta is the founder of QuadraBrain® Transformation Solutions. She works with the board level, CXOs and potential leaders as a leadership coach, facilitator and change expert.