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Making Decisions that Matter

How improving executive decision making can lead to better business outcomes


How effective is the C-Suite at making decisions?
A well-run organization must be able to make swift, high quality decisions that support the execution of its overall strategy and meet its financial targets. Yet many executive teams have not established a clear decision-making framework with defined decision-making rights that translate throughout the enterprise.

Too often, unclear decision rights result in misalignment among leaders, causing competition, power struggles and ultimately hindering an organization’s ability to make good decisions.

Why do people regularly see good leaders make bad decisions?
Poor decision processes are further compounded because leaders do not understand their own individual biases in decision making, let alone the dynamics that impact decisions when their leadership team comes together to make group decisions. The recent popularity of books on behavioral economics such as “Thinking Fast and Slow” “Predictably Irrational” and “Nudge” has drawn renewed attention to the flawed nature of individual and group judgment when it comes to making decisions. Behavioral biases can be cognitive or emotional, individual or collective, conscious or automatic...and for a blunder, combine several of them!

Understanding decision-making biases and ways to overcome them can aid in getting decision-making ‘right’ in the C-Suite.

Why is it critical for executives to focus on decisions now?
As the economy recovers and expands globally, organizations face a heightened need for speedy and effective decision-making in order to remain competitive and flourish in the marketplace. But many organizations are ill-prepared to carry out efficient decision-making – leadership turnover remains high, mergers and acquisitions result in an ongoing need for integration, strategy and operating model changes are being implemented to meet shifting consumer demands and the regulatory landscape continues to impose new demands. This continuous turmoil can make it challenging to focus on improving an executive team’s decision making capability.

Deloitte has found that focusing on improved decision making can provide information to leaders about managing the multiple demands imposed by the marketplace, empowering levels of the organization to function efficiently and bringing clarity during a time of competing priorities. Further, improving the C-Suite’s understanding of their potential biases in decision making and arming them with tools to fight against these pitfalls greatly reduces the negative consequences of poor decisions.

Now more than ever it is critical for organizations to establish clear accountability and to formalize a consistent and thoughtful approach to decision-making in the C-Suite, educating executives on strategies to overcome their biases in judgment.

What are the common pain points?
In the C-Suite, the distinction between who is accountable for a decision, who makes the decision and who is involved in a decision can become blurry. Depending on an organization’s size and structure, overlapping responsibilities can result in slower responses to business opportunities, risk of decisions falling through the cracks, or inefficient escalation of decisions to top leadership when those responsible reach an impasse. And even once the necessary decision makers are in the room and ready to provide information on a set of choices, they are often ill equipped to protect themselves against the common biases in judgment that individuals possess. Thus, coaching decision makers on techniques to combat their biases when considering alternatives may improve decision outcomes.

It is important for the C-Suite to address areas of overlap and pain points by effectively setting up a clearly defined and communicated decision rights framework and to establish routines that enable them to correct for cognitive biases in decision-making. Illustrated below are just three scenarios where important decisions often suffer:

  • Set strategic direction and vision for the organization
  • Determine direction for new markets, including growth strategy and merger decisions
  • Define the performance management process to measure and evaluate progress against the organization’s goals

Read more about Making Decisions that Matter.

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