Wednesday, December 2, 2009

Which Way Is Up?

This time of year is all about budgets and strategic planning. Usually, you can look back over the previous 12 months to guide you through both of these processes. However, the economic roller-coaster that was this past year is not exactly a guide we want to follow into 2010.

For most of the managers I coach, this year's planning process has been more difficult than ever before. They haven't yet recovered from the downturns of the last 12 months, and now they are supposed to strategically map out a plan for upward growth over the next 12 months? How? Where? Which way is up?

My advice to them is simple: Stop planning; start making good decisions. To be a good manager, you must develop good decision-making skills.

The economic situation we have endured over the last year is a direct result of poor decision-making. According to Thomas H. Davenport in a recent Harvard Business Review article, "In recent years decision makers in both the public and private sectors have made an astounding number of poor calls. For example, the decisions to invade Iraq, not to comply with global warming treaties, to ignore Darfur, are all likely to be recorded as injudicious in history books. And how about the decisions to invest in and securitize subprime mortgage loans, or to hedge risk with credit default swaps? Those were spread across a number of companies, but single organizations, too, made bad decisions. Tenneco, once a large conglomerate, chose poorly when buying businesses and now consists of only one auto parts business. General Motors made terrible decisions about which cars to bring to market. Time Warner erred in buying AOL, and Yahoo in deciding not to sell itself to Microsoft.

Why this decision-making disorder? First, because decisions have generally been viewed as the prerogative of individuals—usually senior executives. The process employed, the information used, the logic relied on, have been left up to them, in something of a black box. Information goes in, decisions come out—and who knows what happens in between? Second, unlike other business processes, decision making has rarely been the focus of systematic analysis inside the firm. Very few organizations have “reengineered” their decisions. Yet there are just as many opportunities to improve decision making as to improve any other process."

Leaders, it's time to get out of the "black box". Empower your managers to make decisions, and teach them how to make good decisions. How? Take a look at your current situation. Does your organization employ a process of good decision making with your managers, or, does it look for strategic plans from managers that follow the "black box" decisions handed to them from above? By exploring how decisions are made in your organization, there are some wonderful tools (i.e., MBTI®) for understanding and developing the processes your managers use to make good decisions that will guide your organization onto an upward economic path.

What are you currently doing to develop and empower good decision-making skills?

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