‘The manager’s indecision is final.’ We’ve all worked with people who that joke has been aimed at. But it’s better to be indecisive and right than to be decisive and wrong. That sounds obvious yet it’s astonishing how often businesses rush to judgement - and come to regret it. HERE WE examine how you can make better decisions.
1. Mind the ego empathy gap…
The most common flaw in decision-making is our complete failure to see ourselves as the rest of the world sees us. Management thinkers call this the ‘ego empathy gap’ - our assumption that everyone shares our values, assumptions and ideas. And guess what? They don’t.
You’ve probably never heard of McDonald’s Arch Deluxe burger and there’s a good reason for that: it failed. The idea was to create a gourmet burger that would appeal to the sophisticated palates of Gen X consumers. The problem was these consumers weren’t interested. They regarded the idea as McCheesy. Worse, the upscale burger, created by fine dining chef Andrew Selvaggio, made the chain’s core customers wonder what had happened to ‘their’ McDonald’s. Multinationals have the resources to let data speak truth about the outside world to power. It is harder for SMEs but just listening to external influencers can make all the difference.
2. …and watch out for confirmation bias
The ego empathy gap is reinforced by confirmation bias - our ingrained habit of only considering information that supports our opinion. We can also be quite lazy in our pursuit of information, content to focus on what is readily available rather than asking deeper, challenging - but potentially more rewarding - questions.
In the same vein, we often turn to the nearest available expert to resolve a debate. In some cases, the ‘expert’ isn’t very expert at all, they just happen to be someone the most powerful person in the room happens to know. I have personally been in a meeting where a multi-million pound investment was being assessed and one executive cited his son’s opinion in evidence. This is why many academics argue that having a dissenting opinion - even if it is held by an idiot - in a room improves the quality of the decision made.
3. Waiting and watching
‘When it is not necessary to change it is necessary not to change,” said Lord Melbourne, Queen Victoria’s favourite prime minister. He did have, shall we say, a relaxed leadership style but he had a point. More than 150 years later, a very different leader, Andy Grove, the dynamic founder of Intel, made a point of not making a decision until he was clear about what was at stake.
4. U-turns can be the best maneouvre
Often, we feel obliged to make a call even though there are many crucial factors we still can’t read. How will our competitors react? How reliable is the technology? Is the customer telling us the truth - or merely what they think we’d like to hear? Once a decision has been taken, we are hard-wired to resist a U-turn, even if that is the most sensible decision. Kodak could have saved itself a lot of grief if, after inventing and rejecting digital photography - mainly because its engineers assumed that the public shared their technical expectations - had done what ‘Private Eye’ calls a “reverse ferret” and invested in the technology. Killing the best idea Kodak had had for decades was a decision that didn’t need to be made and all but killed the company.
5. Broaden the conversation
The one advantage SMEs have over such giants as Kodak is that they can open up debate to everyone who has a stake in a decision. There is no excuse - other than old fashioned hierarchical, autocratic thinking - for small businesses to have decision-making silos. Sony’s failure to capitalise on the launch of the Walkman was a textbook example of siloed thinking. The company developed the world’s first portable music player in 1979 - 22 years before Apple unveiled the iPod - and also had, at that time, some of the world’s best-selling music artists on their record label. But the divisions never talked to each other, which created the space into which the visionary Steve Jobs launched the iPod and iMusic. By 2025, analysts predict, Apple Music will be generating revenues of around $7bn.
6. Learn from Watergate
How you frame a decision matters. When you boil it tight down, the Watergate burglary that undid Richard Nixon was simply an attempt by three middle managers trying to get one over on the competition and impress their bosses. The question at the crucial meeting where Gordon Liddy presented his bonkers plan was not ‘Should we do this? But ‘How should we do this?’ Only Liddy was genuinely enthused by the scheme but as he had scaled down the original proposal (which would have cost $1m and involved the hiring of prostitutes) his colleagues felt obliged to make what negotiation experts call a reciprocal concession. One of the White House officials left the crucial meeting saying to himself: “It’s only a third-rate burglary, what can possibly go wrong?”
7. Mind the gap
Are you asking the right questions? In 1986, regional newspaper publisher Eddy Shah did a very brave thing: he launched ‘Today’, the first British national newspaper to print in full colour. In Shah’s view, computerised typesetting had reduced production costs so dramatically he could afford to compete with such established titles as the ‘Daily Express’, ‘Daily Mail’, ‘Daily Mirror’ and ‘The Sun’. He was half-right. National newspapers could be produced much more cheaply but his competitors put their hands in their much deeper pockets and invested in the same technology. They ploughed those multi-million pound savings into marketing campaigns and circulation-boosting promotions which Shah could not afford to match.
His failure to consider how aggressively his rivals would defend their patch - and to understand the importance of marketing - cost him dear. Within four months, he was forced to sell the title which was later acquired by Rupert Murdoch and closed in 1995. Shah’s vision had forced the newspaper industry to adopt colour but he discovered that, although there was a gap in the market, there wasn’t a market in the gap.
8. Think worst case scenario
Many businesses fall foul of what theorists call the ‘planning fallacy’ in which we fall so deeply in love with our new ideas and innovations we make unrealistic assumptions about how they will be received. “If you build it he will come” worked for Kevin Costner in the classic baseball fantasy ‘Field of Dreams’ but it’s no guarantee of success in the real world. We would do better to be realistic, accept uncertainty and consider how we could survive a worst case scenario.
The ‘planning fallacy’ is often exacerbated by what theorists call the ‘endowment effect’ in which we get so attached to our pet projects that we resent any suggestions - even sensible ones - that might improve them. To be fair, it can be hard to distinguish between the ’endowment effect’ and the kind of resolute defence of an innovation that Jobs showed when developing the iPod with Apple designer Jonny Ive.