Decision Failure and the Decision Making Process in the Workplace

The Decision Expert Newsletter™ - Volume 2; Issue 2

Avoiding the Blunders That Impede Your Success

Why do half of all business decisions fail? Some fail right out of the box, others can't stand the test of time. Why Decisions Fail (Paul Nutt, Berrett-Koehler Publishers, 2002) reports on a study of nearly 400 business decisions made by senior managers in medium to large organizations. The decisions made were based on a mix of analytical and experimental information, expert opinion, and gut feel. In half of the decisions studied, either action was not taken, or the decision made had no discernable effect on the organization two years later. Of the decisions that failed, resources were expended—time, money, personnel, or equipment—without achieving anything. In other words, half the decisions made were not robust. They were not able to withstand the uncertainty, conflict, or change common in the work environment, or they could not elicit the buy-in necessary to make them stick.

The study found three main classes of "blunders:"

1. Decision makers use failure-prone practices in 2 out of 3 decisions made. Further, there seems to be little insight into the poor track record of these practices and failures are seldom studied.
2. Decision makers base many decisions on premature commitments. In other words, many decisions are actually efforts to justify a premature conclusion, rather than using evidence to select the best action.
3. Decision makers spend time and money on the wrong things—tasks that do not add value to making the best possible decision. Hence, they don't have a strategy to determine what to do next.

So, how can you make decisions that are right for your business? How can you make robust decisions?

The most effective way to counteract these three blunders is to make sure you have a process you use to make decisions. This does not necessarily mean a rigid set of steps that you follow every time, but it does mean formal process that you can fall back on for difficult decisions and relax, as warranted, for easy ones. The process must, at a minimum, have:

1. A method to ensure that everyone on the decision-making team understands the problem—they are working on the same issue, they have bought into the alternatives being considered and they have worked together to generate a set of discriminating criteria. It is imperative that there be more than one alternative to consider. If not, they are not making a decision, but only justifying a manager's pet idea (Blunder 2)
2. A method to manage the evaluation of the alternatives using measures defined by the criteria.
3. A method to combine or fuse the evaluations to develop a shared vision of the value of each alternative.
4. A technique for basing what-to-do-next on the fused evaluation—choose an alternative, refine evaluations, develop consensus, etc. Having a strategy here can defuse paralysis by analysis, relieve waiting for something to happen and counteract Blunder 3
5. Record the rationale behind the decision, not just the result of the decision (the usual practice). This and the previous four items counteract Blunder 1.

Avoid the blunders that plague many decisions in today's business and engineering environments through the development of some simple "decision habits." The new book, Making Robust Decisions, presents a simplified approach to helping individuals and organizations establish better decision processes. Learn more by selecting the link below for more information.

Are you ready to improve the decision-making in your organization? Robust Decisions offers a full range of products and services that allow you to benefit by making the best decision every time. Learn more about how to build a strong foundation that enables individuals, teams and entire organizations to consistently make the best possible decisions. Request more information or call 541.758.5088.

Subscribe

Subscribe to the monthly Decision Expert Newsletter™:

Newsletter Archive

• Decisions made easy
• What makes Bayesian methods hot stuff for making the most Robust Decisions?
• Sometimes Wrong But Never in Doubt (2 of 2)
• Sometimes Wrong But Never in Doubt (1 of 2)
• Are There Truly Any Right Decisions?
• The Use of Belief Maps to Track Predictions for the 2008 Election
• Decision Failure in the Workplace...
• Can Software Really Help You Make Better Business and Technical Decisions?
• Putting the Six Sigma into Design For Six Sigma (DFSS)
• Top Ten Challenges for Making Robust Decisions
• Stuck in 'Analysis Paralysis'?

Learn More

• Accord™ Quick Tour
• Accord FAQ
• Underlying Technology
• Why Robust Decisions
• Webinar Signup

Recent Blog Posts

• Psychology Research Misses the Reasons for Decisio...
• Decision making maturity
• Choosing the best hypotheses
• Event Risk vs Decision Risk
• Evidence Based Decisions
• What is decision making, anyway!
• Most estimates suck
• Decision Anchoring
• Cognitive problems in making decisions
• Bayesian Brain and Bayesian Teams

»  view all posts