Great managers attempt to make the most effective decisions they can on a daily basis and believe that training their team or organizations to do the same will promote growth throughout. There are, however, several key obstacles that alter or hinder the way we make decisions. Our environments influence us as human beings. The people we interact with, the images or videos we see on the television or Internet. Sounds on the radio. Because of these outside influences it can be hard to really make the right choice. What is the right choice?
Psychological Biases are by the far the biggest obstacle when it comes to making effective decisions. Here, decision maker’s ideals are far out of line from the goal, by the way they have gathered and interpreted the information they used to make choices. We all have biases, it is the reason you like what you like. Have you ever rolled the dice and shouted the number you wanted them show, thinking you could somehow influence its outcome? Illusion of control is when someone believes they can influence events even when one has no control over what will happen and when you do that, this is exactly what you are doing.
In the business world this can come in the forms of being overconfidence or over valuing the quality of their work. When someone is overconfident, it can cause their ego to blind them from vital information that can be key to making the correct decision. Too much optimism without enough research can lead to risk investments or decisions that can result in negative outcomes. When a manager or leader overvalues their work, it can lead to false standards and assume that because their strategy was successful this time means it will work every time. This is a trap because not every market is the same, and more importantly not every culture is the same, which would relate if you were a global company or did work overseas.
By changing the way something is phrased or presented can show just how much framing effects can influence decision making. For instance, rather than tell you that you’ll have a 40% chance of loosing your investment, I would rephrase it and tell you that you’ll have a 60% chance that the investment will be profitable. Side note: As must as people say they want to hear the bad news first, no one wants to hear the bad news. But by rewording your idea or proposition into a positive spin, you are more likely to get your desired result whether it is from getting someone to invest in your company or if you are looking to motivate and influence your team. One of the downsides, however, from the framing effects is that a manager can view a problem like one they had before, and thus stop themselves for searching for alternative solutions.
A killer of companies is when managers or the decision makers for the organization discount the future. This is where they value short-term investments, costs and benefits greater than those of long term. I think a good example would be on the Stock Market. Now this is just my opinion and I am not a financial or investment advisor. One thing that I have learned from investing is that when you buy stock from a company you should not look at it like your going to sell tomorrow. Yes there are some stocks that you should but in reality that will only get you small gains. But if you enter the market with the mentality that you are looking to own the company, you will hold onto the stock and watch it rise overtime. If you purchased stock in Netflix or Priceline back in the day and you held onto it till now, you would be rolling in the dough. Well dependent on how much you invested. So in the long run, long-term goals always need to be in place. That is the direction you are leading your company, your short-term goals, while important, only keep you on course while you manage change.
Time pressures are another barrier of making effective decisions. If you haven’t noticed lately but everything went from getting fast to faster to mobile to who knows what is next. Time is of the essence everywhere, but here are some steps you can take to ensure you can keep up while still making quality decisions. Everything has gone mobile in this world. Long gone are the days of an answering machine. Not sure if you still use voice mail but a text message is a much faster way to get ahold of someone. Anyways, if you make fast paced decisions and can think on the fly, it does not necessarily make you a dynamic and effective manager. While sometimes in a crunch you need to be able to think on your toes, you still must think about the quality of your decisions. When you rush, you blaze over analysis, look for ways to avoid conflict of your decisions and more than likely do not consult other managers before implementation. Remember that going to fast can be just as bad as going to slow on the freeway, is the same in making effective decisions. If you want to make the best decisions, you need to plan and be organized. Understand your objective and involve other people. Do research and talk to experts in the field. Most of all, be realistic, value other opinions and attempt to resolve all disagreements.
Lastly, in modern management, more and more companies are making decisions as a group rather than just a single manager. Having the ability to interact socially between your team members is crucial to driving a fast paced and effect organization. There will be bargaining with your team and sometimes politicking. In another post I will go into further detail about how to make effective decisions in groups.