4 Decision-Making Techniques for Business Leaders
31
Transcript of 4 Decision-Making Techniques for Business Leaders
Contriber on Making Decisions
Some helpful thoughts on the challenges of
making decisions from the team at Contriber.
Written by David Plath and Guerric De Ternay
Cover and chapter illustrations: Vambola Moldov
© 2016 Contriber
Table Of Contents
Introduction
About Contriber
Synopsis by Guerric de Ternay
OODA Loop
Team Feedback
PlusMinusInteresting Technique
Hype Cycle
Includer
Introduction We make decisions every day, all day long. These decisions shape our future,
for better or worse. As such, it pays to become more aware of why we settle
on the choices we do.
With that said, this book will serve as a guide for helping managers and team
leaders make smarter and more informed decisions in the workplace.
Thinking things through
When it comes to making important decisions, it helps to give yourself
enough time to carefully consider the issue at hand—this includes gathering
information, comparing data, and weighing the pros & cons of various ideas.
Our academic schooling has already prepared us to do such things. But, most
people fail to consider that we can become much better with practice. A part
of this practice is about learning to see the bigger picture which, is often
veiled by our cognitive biases. Some of the upcoming techniques will help you
to start addressing this matter.
The rules are constantly changing
We live in a world of uncertainty—because of this, we cannot rely solely on
rational thinking and the logic of statistics to guide our decisions. Information
and insights generated from such processes are very helpful, but good
decisions are not based on numbers alone.
Gut feeling or, what some refer to as intuition, is the other piece of the
puzzle. Intuition can be thought of as an unconscious form of intelligence—a
spontaneous ‘feeling’ that arises from a source comprised of our life
experiences and, what some argue, from our body’s desire to survive. We’ll
talk more about this in the Team Feedback technique.
Decisionmaking is an art form
Rational thinking and gut feeling can be thought of as representing the two
poles of the decisionmaking spectrum—neither should be thought of as
better or worse than the other.
In fact, the two serve to complement one another. As such, it’s not so much a
question of whether to deliberate between choices or to just go with your gut
feeling—it’s more about learning the art of correctly balancing the two.
You are the most important link
We all want to make smarter and quicker decisions. This happens naturally as
we accumulate life experience and begin to believe more in ourselves.
But, we don’t have to wait around to become better decisionmakers. It's
important to think about what we mentioned earlier—how our cognitive
biases affect our perception and how this gets in the way of us seeing the
bigger picture.
Instead of viewing this as a negative, you can choose to see it in a positive
light. In other words, how you see and think about things comprises your
current level of personal power.
Taking action and making those quicker decisions corresponds directly to this
level of personal power—and you can increase it by enlarging your
perspective and honing your ability to perceive more accurately. The
techniques in this book will help you do just that.
About Contriber Who we are
Contriber is an Estonianbased company dedicated to empowering
organizations by providing them with a variety of services and products that
improve the team collaboration process.
We are housed in Contriber Labs, a beautifully renovated building located in
the heart of Tartu, Estonia. Contriber Labs, a business center for IT and growth companies, also serves as a venue for social functions and other local
events.
A strong supporter of the local community, Contriber facilitated Tartu Music
Week 2015 and launched Garage48 HUB Tartu, a community led coworking
space for startups, creative, tech and entrepreneurial people from Tartu and
beyond.
Contriber Founder and CEO, Rein Lemberpuu, was recently named
‘Contributor of the Year’ by the Estonian Startup Leaders Club and also received the 'Startup Community Builder of the Year' award from the
Estonian Business Angels Network (ESTBAN).
Contriber’s goal is to not only help grow the local startup community, but
organizations the world over as well, by providing them with training,
content, and collaboration products to assist in their development.
Products
Includer helps managers and team leaders easily gather feedback about their
ideas to help with tackling problems and making moreinformed decisions.
You can learn more about this product by watching this video.
The bigbrother to Includer is our other software application, Contriber.
Contriber provides online workspaces that help various types of organizations
communicate and collaborate more effectively.
Launched in the summer of 2015, the Contriber workspaces have matured
greatly over the past few months. In fact, EUStartups.com, one of Europe’s
leading startup blogs, just recently mentioned our software in a recently
published article entitled, 10 Estonian startups to look out for in 2016.
Synopsis by Guerric de Ternay
By sharing four decisionmaking techniques, our goal is to help you become
aware of details that you may have neglected or simply couldn’t see while
making a decision or assessing a problem.
Our brain cannot comprehend the increasing complexity of the business
world. Everything moves super fast with so much information.
As a result, we all rely on shortcuts, stereotypes, and biases. These are great
but often lead to make the wrong decisions. We need decisionmaking
techniques to make smarter decisions.
Decisionmaking Techniques Will Make Your Life Easier
● Simplify: Reality can be overly complex. This makes it impossible for
our brain to consider all the variables before making a decision. Using
one of these techniques can help you see things more clearly.
● Structure: These techniques help you to organize your thoughts and feelings. This is helpful in becoming more aware of your internal
decisionmaking process.
● Visualize: Deadlines and other daily pressures often prevent us from
thinking thoroughly about an issue—too many details, not enough
time. Visualizing an issue by putting things on paper can help you
‘compress time’ and extract more insight.
So, without further ado, here are 4 decisionmaking techniques that will help
you become a better manager & team leader!
OODA Loop
Success in business often comes from being one step ahead of the
competition and being prepared to react to what they do. Our fastpaced
business environment requires us to make quick decisions.
The OODA loop will help you understand how to structure your thoughts in
order to make faster decisions.
In a nutshell, it helps you to:
1. Look for the right pieces of information;
2. Make sure that you focus your resources on the right elements;
3. Gain awareness of mental models that might bias your decisions;
Origin
OODA stands for Observation, Orientation, Decision, Action. It is a strategy
concept developed by Colonel John Boyd, fighter pilot and military strategist.
The OODA loop was initially created for military purposes. Its application has
later been expanded to business strategy.
Here’s a good summary of the process in a military context:
“A pilot is constantly going through these loops or cycles in a dogfight:
he tries to observe the enemy as best he can, this observation being
somewhat fluid, since nothing is standing still and all of this is
happening at great speed. With a lightningquick observation, he then
must orient this movement of the enemy, what it means, what are his
intentions, how does it fit into the overall battle. This is the critical part
of the cycle. Based on this orientation, he makes a decision as to how
to respond, and then takes the appropriate action.
In the course of a typical dogfight, a pilot will go through maybe a
dozen or so of these loops, depending on how complicated the fight,
and how fluid the field. If one pilot can make faster decisions and
actions, based on the proper observations and orientations, he slowly
gains a distinct advantage. He can make a maneuver to confuse the
enemy. After a few such maneuvers in which he is slightly ahead in the
cycles, the enemy makes a mistake, and he is able to go in for the kill.
Boyd calls these fast transients, and if you are ahead in these
transients, the opponent slowly loses touch with reality. He cannot
decipher what you are doing, and as he becomes increasingly cut off
from the reality of the battlefield, he reacts to things that are not
there, and his miss reactions spell his death.” (Robert Greene,
bestselling author of Power)
Problems
The OODA loop is a response to two major problems: inwardlooking
strategies and chaotic business environments.
1. Any model of reality is incomplete. You need to continuously refine and
adapt it in the face of new observations. Individuals or organizations
that act like a “closed system” will be left behind because of a
mismatch between their perception and the reality.
2. Similarly to a battlefield, the business environment is so complex and
rapid changing that linear thinking is pointless. If an organization is too
slow and conventional in its strategy, it will find itself far behind
compared to the competition.
Solution
In a competitive context, the goal should be to complete your OODA loop at a
faster pace than the competition’s, and to take actions to lengthen the
competition’s loop.
Here’s how Toyota did it
“Much of Toyota’s competitive success is directly attributable to the
fastcycle capability it has built into its product development, ordering,
scheduling, and production processes. By coming up with new products
faster than competitors do, it puts other manufacturers on the
marketing defensive. By translating a customer’s order into a finished
product delivered faster, it captures large numbers of timesensitive
buyers and puts cost and inventory pressure on other manufacturers.
By continuously bringing out a variety of fresh products and observing
what consumers buy or don’t buy, it stays current with their changing
needs and gives product development an edge market research cannot
match. The faster Toyota can develop and deliver automobiles, the
more it can control the competitive game.
In their ability to preempt new sources of value and force other
companies to respond to their initiatives, Toyota and other fastcycle
companies resemble the World War II fighter pilots who consistently
won dogfights, even when flying in technologically inferior planes. The
U.S. Air Force found that the winning pilots completed the socalled
OODA loop—Observation, Orientation, Decision, Action—faster than
their opponents.” (Joseph L. Bower and Thomas Hout)
So here’s the OODA Loop. The model highlights a fourstage decisionmaking
process loop:
1. Observe: Collect current information from as many sources as
practically possible.
2. Orient: Analyze this information, and use it to update your model of
reality.
3. Decide: Determine a course of action.
4. Act: Follow through on your decision.
Stage 1: Observe
The initial stage of the loop is about looking for new information. That’s
where you’re exploring what you know you don’t know and trying to unfold
what you don’t know you don’t know.
The more relevant information you can gather at this stage, the more
accurate your model of reality will be. Like an air pilot in a dogfight, you want
to capture as much incoming data as possible before making your next move.
Some questions to guide you:
● What's happening in the environment that directly affects me?
● What's happening that indirectly affects me?
● What has changed?
● Were my previous predictions accurate?
● What's happening that may have residual implications later on?
● Are there any areas where my perception and reality differ
significantly?
Stage 2: Orient
The Orient stage is the central piece of the OODA loop. Our inability to
properly make sense of the changing reality is what causes us to make wrong
decisions. When the circumstances change, most of us fail to shift our
perspective and instead we continue to try to see the world as we believe it
should be. We then need to shift our mental models in order to deal with the
new reality.
That’s what the Orient stage is all about. How can we use our internal
influences to see the world more accurately? How can we shape more
accurate expectations for how the world works.
Boyd identified five predominant elements that influence our decisions:
● Cultural traditions.
● Genetic heritage.
● The ability to analyze and synthesize.
● Previous experience.
● New information coming in.
Orientation is essentially how you interpret a situation.
By becoming more aware of your perceptions, and by speeding up your
ability to orient to reality, you can move through the decision loop more
quickly and effectively.
The underlying idea is that if you perceive the wrong threats or
misunderstand what is happening in your environment, you will orient your
thinking (and forces) in the wrong directions and ultimately make bad
decisions.
The quicker you understand what's going on, the better prepared you are to
face the competition. It’s when you can make sense of the environment
faster than the competition, that you build a real competitive advantage.
Keep in mind that you're constantly “reorienting”. As new information
comes in at the Observe stage, you need to process it quickly and revise your
mental model.
Stage 3: Decide
According to Boyd’s concept, decisions are educated guesses, which you base
on the observations you've made and the orientation you chose.
As you keep on cycling through the OODA Loop, and new suggestions keep
arriving, these can trigger changes to your decisions and subsequent actions –
essentially, you're learning as you continue to cycle through the steps.
The results of your learning are brought in during the Orient phase, which in
turn influences the rest of the decision making process.
Stage 4: Act
The Act stage is where you execute what you decided. At this stage, two
things matter. You must translate your decision into action. And you should
implement a way to monitor the flow of action. That’s where you then cycle
back to the Observe stage in order to evaluate the effects of your action on
the environment.
Actions influence the rest of the next loop. Learning from what you and your
opponents are doing, is critical.
Team Feedback Summary
Team Feedback is an approach to decisionmaking that combines deliberate
thinking and intuition. It’s especially helpful in timesensitive situations
and/or when you have limited personal experience to draw upon.
It’s a collaborative approach as well in that it relies on your team’s knowledge
base to make a more informed decision. In a nutshell, you collect feedback
from your team about the issue at hand. Their feedback serves as
guidance—it helps you to zero in on an intuitive understanding of the issue.
With this new insight, you are in a better position to make a good decision.
In other words, you are making a teaminformed gut decision.
In using this approach, you'll be able to…
● Solve issues in a more collaborative way
● Find out about overlooked consequences
● Boost the commitment of your team by letting them be involved in the
decisionmaking process
● Increase your level of personal power
The role of intuition
The dictionary defines intuition as a thing that one knows or considers likely
to happen from instinctive feeling rather than conscious reasoning. Innate knowledge, gut feeling, and trusting yourself are commonly used terms to
describe intuition.
In its purest form, intuition completely bypasses the rational thought
process—you know what choice to make or how to proceed with something
without analyzing data or assessing alternatives. Steve Jobs, CEO of Apple,
was famous for making big decisions in this manner.
Though, much of the current research suggests that decisionmakers take
into account insights gathered from rational thinking processes as well as that
from instinctive feeling. It’s sort of an amalgamation of thinking and feeling,
with the end result being greater than the sum of its parts.
Origin
Lew Platt’s famous quote is the bedrock for the principle behind the Team
Feedback concept—leverage the knowhow of your organization in order to
make more informed decisions.
“If only HP knew what HP knows, we would be three times more
productive.” (Lew Platt, Former Chief Executive of HewlettPackard)
The key to Team Feedback is to expand your knowledge and understanding
on an issue in a very short amount of time. This is perfect for a fastpaced
work environment or when you have to make urgent decisions. It’s also
useful when you feel that you don’t have enough information in hand to
make the smartest decision.
Problem
You’ve been in this situation. You have an important question to answer or
decision to make. But here’s the catch:
● you don’t have enough information or
● you don’t have enough time to educate yourself on the matter or
● you cannot access the information because it’s too timely
When you have to make the decision or solve the problem, you can take one
of two routes:
1. You decide (or rather guess) on your own
2. You leverage the knowhow of your team
The problem with the first solution is obvious—making a guess is not a proper
decision. The problem with the second solution is that it’s time consuming.
Asking your team for their thoughts and feelings about a problem or a
question requires a meeting. You have to find a time when everyone can sit
together. Everyone needs to prepare themselves for the meeting and spend
the entire meeting listening to others’ thoughts on a topic that might not
concern them directly.
Solution
Instead of holding a traditional group meeting, get feedback from your team
more quickly using other means. If you have a question or problem that
needs to be dealt with, then get your colleagues opinions about your ideas
regarding that problem. Your colleagues can suggest new ideas as well.
Putting it into practice
1. List alternatives.
2. Ask your team to expand the list (optional).
3. Ask your team to comment individually on each alternative.
4. Consider the feedback carefully in order to arrive at a feeling for the
issue.
5. Trust your gut to make the best decision.
Tools for getting this done
● Emails
● Individual Meetings (time consuming, recommended for small teams
only)
● Getting a 5min input using Includer
Remember:
● Knowing what your team thinks gives you more clarity. You can take a
step back more easily and get a look at the bigger picture.
● Team Feedback does not make the decision for you. It provides you
with pieces of information that you might have overlooked.
● Besides generating more ideas to solve a problem or make a decision,
you also learn what will be the consequence of that decision for your
team. That’s something valuable for every manager.
PlusMinusInteresting
Technique Summary
The PMI is a simple but useful thinking framework. It focuses your attention
on aspects of a decision that you might have otherwise overlooked.
In a nutshell, it can help you to:
1. Explore overlooked implications;
2. Guide creative work within your team;
3. Identify strengths and weaknesses of an idea;
4. Make smarter decisions by considering more pieces of information on
an idea;
Origin Story of the PMI
The PlusMinusInteresting thinking technique, also known as the PMI, was
developed by Dr Edward De Bono. He designed this technique to help you
challenge your opinions by looking at an idea or a decision from a different
perspective.
De Bono is well known for his work on creativity thinking. He is also credited
for inventing the term “lateral thinking”, an approach to problem solving that
encourages thinking about problems in a creative, nontraditional manner.
Although De Bono’s work has been criticised for lack of research evidence, he
remains a popular thinker on the topic of creativity. And the PMI technique is
still an important success thanks to how simple and actionable it is.
Problem
We often make up our minds based on limited information. Soon after, all our
efforts turn to supporting our decision. That’s what cognitive scientists call
confirmation bias.
We form an initial opinion on an idea, and then, we use all the subsequent
information to support it.
The PMI helps you avoid confirmation biases by exploring the positive,
negative and interesting aspects of any idea.
“Many highly intelligent people are caught in the intelligence trap: they
take a position on a subject and then they use their thinking skill solely
to support that position. The more able they are to support the
position, the less they see any need to actually explore the subject: so
they become trapped into one point of view. The PMI formula forces a
scan. Once a perception has been broadened in this way, the thinker
cannot unthink what is now in front of them.” (Edwards De Bono)
So the PMI is particularly useful if you and your team have already made up
your mind. The technique provides a doublecheck on your decision.
Solution
In a group, the PMI encourages your team members to look at an idea from
more than one viewpoint. The goal is to think more broadly about an issue.
By focusing their attention on different aspects, your colleagues will start
looking at the decision with fresh eyes.
“The PMI serves to bypass our—in De Bono’s view—naturally reactive
and emotional judgements, by allowing a situation to be explored,
whether it is liked or not. In the judgemental stance, any points listed
would only ever be the points which back up the judgement already
made. What is gained by the PMI—especially by looking through the
channel, Interesting—is the exploration of what is beyond acceptance
(making a positive judgement) or rejection (making a negative
judgement). To list points found in the direction of Interesting—though
not necessarily leading to a reversal of one’s opinion—might well lead
to just that. Furthermore, in situations of disagreement, Ipoints might
allow a redefinition of the situation and to the perception of
alternatives not previously observed.” (MM. Portmann & S. M.
Easterbrook)
After using this technique, you should be in a better position to make a
decision about the matter in question.
Putting it Into Practice
Doing a PMI consists of exploring the good points, bad points, and interesting
points of an idea.
There are four steps in the PMI technique:
1. Focus on the Plus Points of the Situation
2. Focus on the Minus Points of the Situation
3. Consider the Interesting Points in this Situation
4. Make Your Decision
Step 1: Focus on the Plus of the Situation
List the positive aspects about the idea or decision under the Plus column.
What is good about it? What are the benefits of it? Why do you like it? Just
write down all the pros that come to mind.
Step 2: Focus on the Minus of the Situation
Under the Minus column, enumerate all of the negative aspects. What are
the cons? Why don’t you like it? What are the potential problems? Don’t hold
yourself. Simply list the negative points.
Step 3: Consider the Interesting Points in this Situation
This step aims at opening your attention to other elements of interest. This
list enumerates points of interest that you should consider. What do you find
interesting about the idea? What are the implications? What else do you
need? What have you observed?
Step 4: Make Your Decision
You didn’t do all this work for nothing. You have to make a decision. Note
that not making a decision is making a decision not to pursue the matter.
Having all the details and important pieces of information on paper will
facilitate the choice that you have to make.
How to Do It?
I recommend you doing it visually. Grab a sheet of paper and draw the three
columns. If you’re working in a group, use a whiteboard.
Remember
There’s one thing to remember. The goal of doing a PMI is not to list, simply,
the pros and cons. Its goal is to help you validate or invalidate your opinion
on an idea or a decision. You have to approach it with an exploratory
mindset. And it will help you come up with helpful information to make a
decision.
Hype Cycle Summary
The Hype Cycle provides a graphical and conceptual presentation of the
maturity emerging technologies through five phases. It helps characterize the
‘hype’ and subsequent disappointment that typically come with new
technologies.
The framework can also be applied to evaluating new projects.
The Term ‘Hype Cycle’ is used to refer to a graphical representation of the
stages of the life cycle of technology that starts from its birth to its maturity
and finally to its widespread usage and adoption.
In a nutshell, it helps you to:
1. Be aware of distinguishing between ‘hype’ and ‘reality’;
2. Find out how relevant an emerging technology is in your industry;
3. Understand where you stand in a new project that you are working on.
Origin
The Hype Cycle was developed by Gartner, an American IT research firm. The
company created the graphical framework as a way for representing the
maturity of emerging technologies in specific industries.
As a simplified and visual way to model reality, the Hype Cycle has inspired
other applications—with novelty as a common denominator. How does a new
concept stand in terms of maturity?
“When new technologies make bold promises, how do you discern the
hype from what's commercially viable? And when will such claims pay
off, if at all? Gartner Hype Cycles provide a graphic representation of
the maturity and adoption of technologies and applications, and how
they are potentially relevant to solving real business problems and
exploiting new opportunities.” (Gartner)
Keep in mind that the Gartner Hype Cycle has an illustrative purpose. It’s a
very simplified view of reality. I’d like to highlight that the Hype Cycle is not
scientific in nature, which makes it a subjective view on where emerging
technologies stand in terms of maturity. Another disadvantage is that the
model is static. There is no information about how technology will move to a
next phase.
The reason we like the Hype Cycle is that it is applicable to any new concept
from emerging technologies to new business ventures or new ideas.
It’s a way to simplify reality. Its role is not to make a decision for you, but to
help you make a decision by knowing where to stand. The added value of this
framework is to raise awareness on some specific points in order to make
more educated decisions.
Problem
“New” gets us excited. Novelty activates our brain’s reward center. That’s the
hype.
When a new technology emerges, it is difficult to understand whether
everyone’s excitement is justified. Is it just the potential of the technology
that creates the hype? Or are they excited because the technology is already
improving our lives?
Solution
The Hype Cycle aims at making us aware that “hype” does not mean “real”.
Applied to technology, the Hype Cycle illustrates that although a technology
got a lot of excitement, it does not work well enough for people to adopt it.
It answers visually, the question: Is this emerging technology relevant today?
This is helpful in making a decision about whether or not to invest in a new
technology. And that is applicable to numerous industries from agribusiness
to advertising.
The Hype Cycle highlights five key phases of a technology’s lifespan. Here’s
how Gartner defines them:
1. Technology Trigger: A potential technology breakthrough kicks things off. Early proofofconcept stories and media interest trigger significant
publicity. Often no usable products exist and commercial viability is
unproven.
2. Peak of Inflated Expectations: Early publicity produces a number of
success stories—often accompanied by scores of failures. Some
companies take action; many do not.
3. Trough of Disillusionment: Interest wanes as experiments and
implementations fail to deliver. Producers of the technology shake out
or fail. Investments continue only if the surviving providers improve
their products to the satisfaction of early adopters.
4. Slope of Enlightenment: More instances of how the technology can
benefit the enterprise start to crystallize and become more widely
understood. Secondand thirdgeneration products appear from
technology providers. More enterprises fund pilots; conservative
companies remain cautious.
5. Plateau of Productivity: Mainstream adoption starts to take off.
Criteria for assessing provider viability are more clearly defined. The
technology's broad market applicability and relevance are clearly
paying off.
How Do You Use Hype Cycles?
The Hype Cycle model is useful to understand the promise of an emerging
technology. It helps you answer the question: Should we make an early move
and invest in this technology?
An example of Hype Cycle is the "Hype Cycle for Emerging Technologies”. It
provides a crossindustry perspective on the technologies and trends that
should be considered when developing emergingtechnology portfolios.
It is also very interesting to see how these move: (Source: https://whatitallboilsdownto.files.wordpress.com/2014/08/downloads.jpg)
Bonus: Measure Your Own Excitement for a New Project
Although it was initially developed to assess how relevant new technologies
are in specific industries, the Hype Cycle can also be applied to new business
ventures. Using his experience investing in hundreds of startups, Paul
Graham, founder of Y Combinator, created the Startup Curve.
The presentation shows the level of excitement and disappointment that
most startup founders go through.
Here’s what Fred Wilson has to say about Graham’s Startup Curve:
“Many people think startups are up and to the right all the time. But
more services exhibit this "startup curve" than any other growth
pattern. Of course, some never get past the trough of sorrow. But
many do. Mostly by staying focused on the problem they are trying to
solve and working diligently to get to the promised land.” (Fred
Wilson, Investor)
People working in startups might also be interested in reading the entire article.
The Story of Our New
Tool, Includer An Application of the Team Feedback Technique
At Contriber, we design tools to empower teams. Our last is named Includer. We built Includer to make Team Feedback easier to get.
It works like this: You enter a question or problem, and then quickly get your
colleagues thoughts and feelings about your ideas regarding that problem.
Your colleagues can suggest new ideas as well.
The result is clearly structured. You can get the whole picture in just a
minute. You couldn’t really do that if you were using email, could you?
Take it to the Next Level
Once your structured feedback arrives, it’s important to remembers Plato’s
quote… “A good decision is based on knowledge and not on numbers.” Numbers do not always tell the whole story and the majority are not
necessarily always right.
In other words, the feedback may be telling you to do one thing, but your
intuition may be telling you to do another. Now’s the perfect time to start
increasing your personal power by ‘remembering’ the tensions that exist
within you—take note of the moment.
Regardless if your decision ends up being the ‘right’ or ‘wrong’ one, you will
have this experience to reference the next time you are in a similar position.
Thank you for reading this book
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