High-impact Decisions: Getting it right when it counts

Episode #216 High-impact Decisions: Getting it right when it counts

Decision-making is a key part of leadership. Your ability to make high-impact decisions quickly under pressure, and in a complex and uncertain environment is a core capability for senior leaders. If you want to reach the height of your career aspirations, it’s something you need to develop as early as possible.

We make decisions constantly, some big, some small, but all relatively important over time because they have a cumulative effect. But high-impact decisions are a little different – they’re the ones that can mean the difference between life and death… or company dominance and complete collapse.

A little while ago, I came across an article in Fast Company entitled, ‘Three Steps Navy Seals Used to Make Decisions’. My decision-making framework in No Bullsh!t Leadership has eight criteria, so I was understandably keen to work out what I’d included that was superfluous.

Making better decisions faster can make a huge difference to culture, and how your company performs, so it’s really worth making sure your high-impact decisions are as good as they possibly can be.

DECISION-MAKING IS KEY TO SUPERIOR PERFORMANCE

We make decisions every day – a lot of decisions. One often-quoted piece of research says we make 35,000 decisions every day. I don’t know about you, but I find that number astronomically stupid. It implies that we make a decision roughly every two seconds, on average. Now, I must confess I haven’t read that research, but surely it must take into account all of the subconscious decisions that we make – for example, “I’m making a decision to breathe in… now”.

Let’s just say for argument’s sake that we only make a few hundred decisions each day. We don’t think a lot about the majority of them, most of them we make on autopilot. So how do we make them if we don’t think too much about them? Well….habit, inbuilt bias, fear, avoidance, impulse – we basically use our pre-programming. The brain has a lot to manage, so it seeks efficiency. It wants to conserve energy so that it only has to engage on the really critical decisions. It loves to operate in “set and forget mode”.

But of all the conscious decisions we make, I believe that a surprisingly high proportion of them do actually matter. The cumulative effect of every decision we make leads us to where we are – in business and in life. Now, I reckon that until you reach the age of 30, you get a free pass. When you’re young, your brain isn’t fully formed. But by the time you get to 30, wherever you are in life, it’s for one reason and one reason only: because that’s where you’ve put yourself.

I know that’s not a particularly popular philosophy. Being a victim has become part of the social narrative that the vast majority of people buy into, “I would if I could, but I can’t because of X” (just insert your favorite limiting belief here). The problem with this mindset is that it holds you back. It validates your current circumstances, and it stops you from making different decisions. And unfortunately, you’re not hurting anyone but yourself.

Every day you make countless decisions that either keep you on your current trajectory or change it. We all get equal measures of good and bad luck. Just look at anyone who’s successful at anything and know that it’s not luck: it’s work, risk, sacrifice, choice, discipline, struggle. And this comes down to the countless micro-decisions that we make every day. For example:

• Do I get out of bed when the alarm goes off? Or do I hit the snooze button again?

• Do I order the salad or the double bacon cheeseburger for lunch?

• Do I have the difficult conversation I know I need to have with my direct report? Or do I avoid it?

• Do I make the decision that I know is right? Or do I follow the path of least resistance?

In business, our decisions tend to be more conscious and explicit, but they still suffer from the same underlying biases. Many of these decisions are fairly routine, but as you move higher up in any organization, a couple of interesting things happen:

• Every decision you make has a far greater impact on the business and on the people around you; and

• These decisions involve much greater levels of complexity and ambiguity.

Given this context, I have a really strong belief that being a capable and confident decision-maker is a core capability if you want to be a great leader. Your decisions most often result in action, and action results in energy being spent on something. So making sure it’s the right something is key.

THE ANATOMY OF HIGH-IMPACT DECISIONS

Obviously it’s important that we understand how all the little choices we make add up to potentially significant consequences – but in reality, there are big decisions and there are small decisions. So we’re just going to focus now on the high-impact decisions – the ones that really test you… the ones that scare you a little (or maybe a lot)… the ones that you know can potentially have serious consequences if you get them wrong.

You don’t have to be the CEO of a Fortune 100 company to face these types of decisions. The founder of any small business has to make decisions every day, and many of these can potentially make or break a business Decisions about products, markets, pricing, quality, staffing – and many of these have to be made virtually blind with little data or market intelligence.

Depending on your role and level, you’ll have varying exposures to high-impact decisions. Any decision can be challenging because we don’t want to get it wrong. We don’t want to upset the people who don’t agree with it and risk not being liked by them. We don’t want to be seen to be either too authoritative or too indecisive. So making a really good decision can be difficult, not just because of the mechanical challenges, but also because of the psychological and emotional barriers that we have. When it comes to high-impact decisions, these factors are exacerbated.

To make matters worse, high-impact decisions very often come with time pressure and limited information. There’s one really important factor to bear in mind: Your process for making decisions has to be the same, regardless of the decision’s potential impact, regardless of the time pressure, regardless of your own comfort levels, and regardless of your desire to have better inputs.

How much time and effort you put into each step of the process will be determined by your assessment of risk:

• How critical is the decision?

• How easy is it to reverse or adjust?

• Once it’s made, how broadly does it impact the organization?

• How many people are affected?

• Is it within the company’s risk tolerance and appetite?

Knowing the answers to these questions will inform your judgment about how much time, energy, and diligence to put on each of the decision-making steps. For example, deciding to extend the deadline on a project is generally a much lower impact decision than a decision to sack the project manager. That requires real judgment and it requires real commitment.

I often used to tell my senior executives to not be so stressed about making their decisions, and I would routinely say things like, “Look guys, we’re not landing space shuttles here. We’re not performing cardiothoracic surgery. No one’s dying on the table. Just cool your jets.”

But in some situations, the stakes are actually that high, and in some industries people do actually die on the table. The article that I mentioned in the introduction gave an overview of how former Navy Seal Commander, Mike Hayes makes his decisions, and he was in an environment where making life and death decisions just comes with the territory. But Hayes says he uses the same process in business, and it should be applied regardless of whether the decision is a high-impact one or a routine one. He has a three step process for making decisions, both big and small:

1. Gather input.

2. Decide when to decide.

3. Be willing to course correct.

While I suspect this has been grossly oversimplified to comply with the word limit of the article, it’s worth taking a look at a few of the concepts here:

Gather input 

Obviously, we need to gather information to make a decision and consult with other people. But interestingly, Hayes points out the value of using your past experience to recognise patterns. This is critical in any decision-making process: no matter how big or small the decision, using your experience and judgment to put it into context is vital. It’s my strong view that your abstract reasoning capability – that is your ability to recognise patterns and absorb complexity – is one of the key things that determines how successful you can be at higher levels. This is a capacity that can be developed, but it’s closely related to your intellectual horsepower.

People with strong abstract reasoning capability can understand and analyze unfamiliar information to solve new problems. For high-impact decisions, you’re normally dealing with high levels of complexity and ambiguity. Just be careful of confirmation bias here: when you use your existing frames to look at any information, you may try to shoehorn your problem to make it fit a pattern. As Abraham Maslow said, “If all you have is a hammer, everything looks like a nail.” 

Decide when to decide 

This is about having the good sense and judgment to work out when you’re likely to reach the point of diminishing returns. Clearly, you want to have enough time to gather as much information as possible – and of course, enough time to process it properly. But when is enough data enough? When is enough consultation enough? When is enough analysis enough? Hayes points to the value of speed, and the fact that as long as the decision remains unmade, so too does every decision at a lower level that hangs off it. In my experience, speed trumps accuracy every day and twice on Sundays.

Be willing to course correct

This one’s really important and it’s underpinned by the principle of excellence over perfection. Moving forward with purpose, knowing that very few decisions are final, and very few outcomes are fatal will leave the door open to adjust and tweak as you go. Momentum is critical in any business, and knowing that you can decide quickly and adjust as you go is kind-of liberating. Having the humility to admit when you’re wrong is key. So don’t underestimate the power of leaving your ego at the door.

SEVEN TIPS FOR MAKING HIGH-IMPACT DECISIONS

I learned a number of years ago how to make high-impact decisions really well, even under intense pressure. In fact, because of my increased focus and diligence in those moments, I often found that these decisions were even better than the low impact ones that I could take my time over. Here are my top seven tips for making high-impact decisions regardless of which decision-making framework you are using:

1. Understand the risk, but don’t be scared by it

Identifying the risks and accurately assessing their likelihood and consequence is a critical part of making high-impact decisions. This will inform you about where the danger zones are and which areas you need to pay attention to. It also gives you the ability to do sensitivity analysis to test any of the assumptions that underlie your decision.

2. Know your worst case scenario

You’ll get a huge amount of confidence from knowing your worst case scenario. Asking yourself the question, “What’s the worst that can happen?” is actually really useful when you’re making high-impact decisions. It’ll tell you whether or not a poor decision is tolerable in terms of your business’s ability to absorb the downside risk. It’ll also help you to apply any risk mitigation measures, and it’ll ultimately give you confidence that there’s tolerance for a less-than-perfect decision. Otherwise, you can easily disappear down the deep dark hole of paralysis by analysis.

3. Keep speed front of mind

The higher the potential impact of a decision, the more likely we are to procrastinate and avoid it. In some circumstances, we don’t control the tempo. The timing may be driven by an external force like the media, or a regulator, or a major asset failure – but these situations are pretty rare. So it’s important that we are constantly mindful of the impact on our team when we delay any decision more than is absolutely necessary

4. Work hard to get the right information 

This means working out what data you can get and how quickly you can get it. It means consulting the right people, not just anyone and everyone who has an opinion. Understanding the point of diminishing returns will determine how and when you move forward with a decision. You want sufficient input, but not at the expense of the opportunities that are going to pass you by while you wait for it.

5. Look for no regrets moves

There are times when you’ll find yourself in a situation where you can’t move ahead with the decision. For example, when the downside risk is beyond your company’s risk tolerance or a critical external issue needs to be resolved. In times like these, you may choose not to decide straight away until a playing field changes. And in times like these, you need to find ways to keep your people productive on high value work. No regrets moves are those things that your team can focus on that will deliver high value outcomes regardless of your eventual decision.

6. Communicate well with your stakeholders

When you’re dealing with high-impact decisions, you need to pay a lot more attention to keeping your key stakeholders informed. You’re not looking for approval or consensus, but you do need to keep everyone onboard and give them the confidence that you know what you’re doing. Let them know what you’re dealing with, why it’s hard, and which key risks and impacts you are managing. A dialogue with the right people during the process of making a high-impact decision is likely to smooth the eventual path to acceptance and implementation.

7. Ask yourself what you’d do if your life depended on it

With high-impact decisions, it’s even more likely that you’ll try to protect your own personal position, and this is in our nature, right? Putting self interest aside is extraordinarily difficult, but a little hack to help with this is to ask yourself the question: “If my life depended on making the right decision, what would that be?” This will help to bring clarity to what’s right and help you to look beyond your fear, anxiety, and apprehension.

Decision making can be a complex discipline. High-impact decisions can put you in a heightened state of anxiety and make a decision feel even more difficult than it actually is. But doing a few simple things can help to give you the confidence to move forward with strength and clarity. Your decisions will be better and you’ll sleep much more soundly at night as a result.