Senior leadership teams and Boards make important decisions everyday. Some are strategic and long-term; others are operational, financial or people-centred. Some are taken with considerable time and analysis; others need to be made quickly in the face of uncertainty.
Yet the quality of a decision is not determined simply by the intelligence, experience or commitment of the people around the table. Even highly experienced Boards and senior teams can fall into familiar decision-making traps. These are rarely obvious at the time.
The challenge, therefore, is not to eliminate judgement or uncertainty. It is to create an environment in which important decisions are more likely to be properly framed, appropriately challenged and clearly owned.
Here are nine traps that are particularly common:
1.Solving the wrong problem
One of the most fundamental failures is to move into discussing solutions before agreeing precisely what problem or decision is actually being addressed.
A Board may, for example, spend considerable time debating whether to invest, acquire, restructure or enter a new market without first checking they agree on the underlying question. What are we actually trying to achieve, and what problem are we trying to solve?
This can result in extensive analysis and debate without actually much genuine progress.
Better to start by defining the decision. What exactly need to be decided? What is in and out of scope/ What would a successful outcome or result look like?
2. Unclear decision rights
This is about ambiguity about whether or how much a particular leadership group in an organisation’s hierarchy has relevant authority to make a decision, or whether it perhaps has merely a contributory role. This can be an issue on matters where the Board, Chair, CEO, executive team and Board committees all have legitimate roles. Consultation can gradually become confused with decision-making, and accountability can become blurred.
A decision where everyone is involved but nobody accountable is rarely a good decision process.
Better practice: Be explicit at the start about who is accountable for making this decision? Who owns the decision, who provides advice or challenge, who needs to be consulted and who ultimately needs to be informed?
3. Groupthink and excessive consensus
Boards and senior teams rightly value constructive relationships and collective responsibility. However, a desire for harmony can unintentionally discourange challenge.
Sometimes, consensus emerges because everyone genuinely agrees. At other times, though, people agree because the preferred answer appears obvious because a senior individual has expressed a strong view, or because nobody wants to re-open a difficult discussion. The risk is that apparent alignment is mistaken for robust decision-making.
Better practice: Invite challenge before seeking consensus. Make it legitimate to disagree. Consider asking one person to take the role of constructive challenger or to articulate the strongest case against the emerging decision. Or ask the open question: What might we be missing here? What would someone who disagreed with us say on this?
4. Confusing information with insight
More information does not necessarily mean better decisions.
Board papers can become increasingly detailed whilst the underlying decision becomes less clear. Large quantities of data may obscure the few assumptions, risks or judgements that actually matter.
It is vital to distinguish between facts, assumptions, judgements and unknows. They should not all be presented and treated as though they carry the same weight or degree of certainty.
Best practice: Focus information on what could materially change the decision. Make critical assumptions visible and distinguish evidence from management judgement.
5. Anchoring on the first proposal
Once an initial recommendation, forecast, valuation or proposed course of action has been presented, subsequent discussion can become anchored aounrd it.
Instead of asking, “What is the best answer?”, the group starts asking, “How can we make this particular proposal look or work better?”
This is particularly serious when the first proposal comes from a senior or influential executive, adviser or subject-matter expert.
Better practice: Where practical, encourage independent thinking before the preferred option is presented. Ask what the realistic alternatives are and what evidence would cause the group to change its initial view. Ask perhaps “If this proposal had not been put in front of us, what other options would we be considering?”