Real decision-making is a science. And as a science, it has been studied extensively by psychologists and management experts alike. Yet few have ever tried building a comprehensive framework for guiding leadership on the finer points of executive bias. In an article for Harvard Business Review, Larry Neal and Carl Spetzler discuss the benefits of an organization-wide approach to making decisions.
A Net with Many Holes
As it stands, the greatest bias of business is that it is already good at making decisions:
Without a proven, organization-wide approach, there may be, at best, isolated pockets of high-quality decision-making where individual leaders have elected to take a rigorous, transparent approach.
To use a completely made-up axiom, “A net with many holes catches no fish.” Neal and Spetzler cite transparency and “a common language” as two ways to patch the decision-making network. And quality decisions do keep money from slipping through the corporate net.
Chevron got serious about decision-making in the 1990s with its formulation of Decision Analysis (DA). Chevron took a simplistic status-quo-versus-alternative approach and turned it into a multifaceted analysis of potential outcomes and their associated risks. The six elements of Decision Quality (DQ) are summarized as follows:
- An appropriate frame (goals and variables)
- Creative, doable alternatives
- Meaningful Information
- Clarity about desired outcomes (with all tradeoffs)
- Sound logic
- Commitment to action
The DA process proved a great boon to Chevron over the years, creating a culture of quality decision-making that saved the company billions in expenditures. It even had the effect of uniting divergent views around a common set of methods. Of course, the DA is no remedy for groupthink or autocratic leaders, but it does give teams of decision-makers a uniquely unbiased method for formulating strategy and for seizing upon untouched value.
Read the original article at: https://hbr.org/2015/05/an-organization-wide-approach-to-good-decision-making