In today’s business world you need to be decisive.

There isn’t always time for in-depth analysis. Delay and your window of opportunity may close.

Trusting your own judgement inspires confidence.

Your experience and track record have equipped you for leadership.

When important decisions are needed, you need to take decisive action.

But doing this won’t necessarily lead to the results you were hoping for !

McKinsey surveyed over 2,000 executives and found that only 28% of their key decisions were actually “good” decisions, measured by impact on, for example, revenue, profitability, market share and productivity. No surprise, then, that acquisitions regularly fail to deliver expected value; strategies often ignore competitive responses and investment projects are habitually over time and budget.

Why so few good decisions?

The same survey showed that the most important contributor to good decision making was the quality of the process. How leaders make decisions was found to be six times more important than the quality of analysis.

To make better decisions you need to pay more attention to how you make them. In particular, it helps to recognise how your own cognitive biases get in the way of good judgement.

These types of biases have been well researched by psychologists and behavioural economists, notably Nobel Laureate, Daniel Kahneman.

Here are some examples:

• Present Bias: Valuing immediate rewards highly and undervaluing longer-term gains.

• Overconfidence: Overestimating your skill level and ability to affect results.

• Confirmation Bias: Placing extra value on evidence consistent with your strongly held beliefs and not enough on contradicting evidence.

• Escalation of Commitment: Investing additional resources in a losing proposition because of the effort, monet and time you have already invested.

You may argue that when you trust your instincts , you’re making sound decisions based on your experience. But we all have biases that shape how we interpret our experience and influence our future decisions and actions.

To make better decisions, you need to test your assumptions and challenge your own instincts, particularly when your gut feeling is strong. There could be very compelling evidence supporting your preferred decisions or it could be that you just have long held beliefs about what should be done influenced by your biases.

To check your own instincts, pause and be curious.

Ask yourself what’s influencing your decision and invite others to challenge you.

You will improve the quality of your decisions by playing devil’s advocate or inviting others to do that.

Acknowledging you are open to input and challenge is a sign of confidence in a leader.

By doing this , not only will you make better decisions , you also strengthen your leadership credibility.

Curious ?

Click on the link here, to arrange a conversation with me

14th July 2022