I saw a tweet recently from a business school about “efficiency in decision making”. Efficient decision-making might sound positive but it’s more important to design for effective decision making – the making of good decisions.
The headline worked… I read the article. It gave the example of a door that, although it needed to be pushed, had a handle on it that “communicated” pull. I’ve encountered a similar door in the offices of an innovative company that puts a lot of thought into things including its office space but still has a door in its offices which is glass and has handles to pull on both sides. Every time I went to open it I found myself thinking “is this the pull side or the push side?”… frequently, I got it wrong.
At the best of times, it’s difficult to make optimal decisions. If something as simple as the design of a door handle can cause many people to make poor decisions when there are only two options, how much more significant are the influences of poor organizational design and poor decision-making processes?
Organizational design – which is about a lot more than just structure – is something that is covered in Chartered Business Excellence Professional training and it’s too big a topic to get into here so, for now, I’ll focus on another factor that influences decision making – cognitive bias.
Henry Mintzberg and colleagues have been writing about the “Cognitive School” of strategy since the ’90s and it’s widely accepted that cognitive biases strongly influence decision making. Being aware of the existence of a bias is not enough to avoid its influence. One must, in the opinion of Daniel Kahneman, design systems to help us overcome them.
Last Monday, while hiking in the mountains south of Dublin, I had a conversation on this very topic. A friend was talking about how climbers attempting to climb Everest establish a series of toll gates or “tripwires” to help them overcome commitment bias and force themselves to turn back if they haven’t been making milestones and the risk gets too high. It’s a great example of how we can use systems to help guide decision-making and overcome bias.
Thought on how to design decision-making processes to optimize decision making – including thought on organizational structure – and on how to design operational systems to help mitigate the influences of cognitive bias are investments worth making. Irrespective of if a system is to support investment decisions or other strategic or operational decision-making, to be effective it needs to be well designed. Unless it is, it will drive the incorrect behavior.
Unfortunately, examples of bad systems – in everything from hiring and performance management systems to risk management systems – are found in almost every sector. There is no silver bullet that will ensure an organization will design good systems. However, brushing up on your critical thinking is a good start and this can be followed up with some training on how to make decisions as a team.
The Institute has a short Critical Thinking primer that uses a number of exercises to illustrate that it doesn’t matter how smart a person is, we are all susceptible to the same cognitive traps so we need well-designed systems to avoid them. We also have training for teams to help them learn how to make strategic decisions in the face of uncertainty that uses APEX – our boardroom board game – to create a learning environment.
But, while I mention them, the purpose of this post is not to plug them in particular rather it is to prompt people to think about the need to have well-designed systems in place to support their decision-making. Without them, even if your organization is performing “well enough” at the moment, it is at risk of drifting towards mediocrity.