Winners take better decisions more frequently

The best companies make better decisions more frequently than their competitors. Any company’s future success depends entirely on the decisions that are made throughout the organisation. Sounds obvious, right? But high quality decision-making should be a crucial part of your company’s culture.

This is not only about the big leadership decisions like acquisitions, expansions or retrenchments. These decisions are often the easiest to take because they are typically reactive, obvious or taken based on deep analysis.

The smaller decisions are, however, equally important. Consider the impact of the tens of thousands of decisions a typical company workforce takes on a daily basis. Deciding not to return a call or failing to allocate time to congratulate a colleague, for example, will lead to lost sales and disempowered teams.

The cumulative impact of these smaller decisions is as important for a company’s success than the infrequent headline grabbing ones.

Decide like Bezos

Take a moment to think about how many decisions are actually needed at Google, Amazon or Tesla for just one of their products. It is mind-boggling how many decisions are required to go from idea to finished product. Do you honestly think this was down to Page, Bezos and Musk overseeing every decision?

Of course not, but somehow these leaders manage to inspire and then trust tens of thousands of people to make consistently good decisions, on behalf of their companies.

So what steps can one take to improve the quality and frequency of decision-making across an organisation?

Step 1 – Find a purpose

If you want everyone to consistently take better decisions, develop a purpose that transcends profit. Discovery Health is a good example: it’s a boring insurance company, but they have outperformed every other boring insurance company in South Africa by many multiples over the last decade. They have obviously taken consistently better decisions than their competition.

The single biggest reason, which stands head and shoulders above any other, must be their purpose. Since inception, Discovery’s purpose has been to make people healthier and improve their lives.

The fact that Adrian Gore and the rest of the leadership team live and breathe this purpose makes the decision-making process so much easier.

Just imagine the conversations: ‘’Hey Adrian, can I have some budget for a driving app?” “Sure, as long as you think it will improve driver behaviours and lead to people living longer, go for it.’’ Or “Hey Adrian, what do you think about offering an equity trading platform for our customers?” “Unless you can show me how this will help people live longer and more healthily, let’s not pursue that one.”

Decisions are emotionally driven

Any company that has a simple, understandable, memorable purpose that resonates emotionally, has a massive advantage when compared to the profit-led competition. It makes decision-making easier, not only because you can always test whether the decision aligns to the central purpose, but because decisions are more emotional than rational exercises anyway.

The best marketers and sales people believe emotions drive everyone’s buying decision, regardless of the product, market or price. A great brand taps our emotions, because emotions drive most of our decisions, if not all.

Staff are therefore a lot more likely to take decisions, especially active decisions that require overcoming inertia to act and do something different, when they are emotionally invested in supporting the fulfilment of a purpose that transcends profit.

 Step 2 – Encourage active decision-making

Many organisations develop a strong purpose, but don’t see much change across the team for proactive decision-making. Purpose provides the North Star, but by itself it’s not going to be enough to inspire your team to take on more active decision-making, no matter how excited they are about being part of something more aspirational than profit.

Leaders will need to introduce mechanisms into their organisations that encourage active decision-making if they want to gain traction.

Let’s first define active and passive decision-making. An active decision requires the decision-maker to take some level of personal risk. For example, an executive assistant who decides that her boss should try a 10-minute Zoom call for her next meeting, rather than the standard one-hour boardroom meeting, would be taking an active decision.

A project manager who decides to switch from a waterfall model to an agile one, would be taking an active decision. In both cases the deciders are taking some level of personal risk.

Active decisions in exponential times

Management might not appreciate the change in format or the project lead might worry that an agile approach will mean missing critical deadlines. Yet it’s these types of active decisions that companies need from more of their staff, more of the time, if they want to thrive in an exponential world.

Just consider for a moment how the fourth industrial revolution is disrupting every sector of business. The companies that seize these opportunities will be the ones that can quickly adapt.

Organisations that promulgate active decision-making across their workforce are better placed to create adaptable cultures that embrace innovation and experimentation as critical aspects of their survival strategies.

Passive decisions kill companies

Unfortunately, most organisations inadvertently nurture a culture of passive decision-making. And passive decision-making is the silent killer for organisations, in the same way carbon monoxide pollution is for people in towns.

If you want to encourage your team to take on more responsibility, you are going to have to create an environment that enables them to make decisions.

Unfortunately, there is no single measure a leadership team can take to activate active decision-making within their organisation.  It is rather the compounding impact of many small steps, which are applied on a daily basis.

Here are a few suggestions from CEOs I’ve consulted with:

• Write an open email to your team explaining what changes you want to see.
• Run a competition for ideas to help the company achieve its purpose.
• Delegate decision-making by only allowing a maximum of two signatures or committees.
• Change incentive schemes to reward people for taking active decisions.
• Publicly praise people who have tried new things, especially when they fail.
• Actively run internal programmes to reduce red tape.
• Ask successful leaders to present to your teams about how they have increased active decision-making.

 

Step 3 – Make experimentation a core pillar of your company’s strategy

Purposeful companies that embrace active decision-makers do better because it provides the opportunity to experiment more.

In fact, if you see every decision as an experiment, it makes it much easier to reduce the fear and doubt that precludes most of us from taking more active decisions.

Imagine telling someone that they will only receive 50 percent of their salary unless they run experiments to increase productivity. And then you tell them that if they want to earn a bonus they must:

• Develop experiments that could be run cheaply and quickly.
• Develop experiments that wouldn’t preclude the team’s ability to run more experiments.
• Run multiple experiments throughout the year.
• Focus on experiments where the learnings were more important than the result.
• Always share findings with colleagues (especially for experiments that failed).

 

And then you tell them that you will protect and support them from the naysayers and anti-bodies within the organisation. Wouldn’t they be more likely to try the Zoom call, and switch to agile, and try hundreds of other ideas to improve efficiency?

Maybe the executive assistant would start exploring using virtual assistants, or robotic process automation for repetitive tasks, or natural language processing solutions for automated minute taking.

Or maybe the project manager might try Holacracy or start using virtual teams, or use the power of the crowd on community platforms like GitHub to develop open-source solutions.

When you look at the most successful companies in the world, you will notice it’s this combination of purpose, active decision-making and experimentation that allows them to adapt and develop new products so quickly.

However, if you want to embrace experimentation and reap the potential rewards, then you are going to have to accept a few uncomfortable truths. Experimentation is a messy affair. It’s not efficient. It loves duplication. It will typically cost money without visible benefits.

You’ll find many key stakeholders don’t understand it and will try to kill it. And your bean counters will hate it most. While most are trying to reduce the resources allocated to experimentation, the right path is to spend more.

Going back to the number of decisions Google, Amazon and Tesla take on a daily basis, imagine just how many experiments they run on the back of these decisions: thousands or even tens of thousands. But the vast majority fail and will never get reported in mainstream media.

So they look like serene swans, gliding successfully across the water, without showing the frantic, unco-ordinated chaos below the surface.

The public always just sees the positive, the products they use or the interviews with these leaders. And that chaos is a 24/7/365 conveyor belt of continual testing, learning, iterating, failing, stopping, pivoting, starting, testing and learning.

As an example, Astro Teller, CEO of the X Company (Google’s moon-shot factory), killed over 100 projects in 2019 alone. But it’s that consistent beat of experimentation that allows for the creation of autonomous steering, Gmail and Alexa. And it can never stop, because doing so would be corporate suicide in a fast changing world.

Now is the perfect time

Purposeful companies take better decisions more frequently. Taking more decisions, more often, allows for more experimentation. Experimentation opens more opportunities and this is why purposeful organisations are more likely to outperform their profit-driven peers in an exponential world.

Don’t search for post-pandemic direction by analysing the numbers or remembering your legacy. Use this opportunity to pivot from the status quo and create an organisation that is more purposeful, more active and more experimental.