Big Picture Pressures on Decision-makers - Decision Making for Dummies

Chapter 1

Big-Picture Pressures on Decision-Makers In This Chapter ▶ Identifying the forces putting pressure on decision-makers ▶ Working in a complex, uncertain decision-making environment ▶ Restoring ethical integrity to business ▶ Designing business cultures to make better decisions

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ecisions are being made all the time, every minute of every day, and most of them are made automatically, without much intentional thought.

Subtle yet pervasive forces influence the accuracy of every decision. Most decision-makers aren’t aware of these forces, yet their impact has huge consequences on company fortunes and people’s lives. With each decision, small or big, that you and I make, we shape the experience of life and, more boldly, the design of the world.

In this chapter, I show you how big-picture pressures are forcing business decision-makers to engage in higher-order thinking, to see things from multiple perspectives, and to embrace rather than fear uncertainty and complexity.

More importantly, you discover how adapting to these changes lets you become a leader who is purpose-driven — someone who leads by example, inspires confidence in his or her employees, and creates a working environment that is healthier and gets everyone working together toward success.

Making Decisions in an Ever-Changing World Although believing that your situation or your company’s fortunes are beyond your control may be easier than facing the alternative, the truth is that experiences — yours or your company’s — are shaped by the

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Part I: Getting Started with Decision-Making moment-to-moment decisions. Unfortunately, in business, many of those decisions are made under duress because the fires you have to fight every day can distract you from seeing the situation from a different perspective.

When you’re under pressure, routines — even inefficient ones — can feel like a lifeline.

To move forward, you need to step back from those routine patterns so that you can gain insight and see the opportunities you’ve been overlooking.

The ground shifting beneath your feet Your beliefs guide what questions you ask when you assess a new situation and how you view the information you uncover. They also act as a filter for the ideas that inform your reality. In business and in life, dismissing what doesn’t fit is natural. But in the end, it also makes you resistant to change.

After all, you can’t change what you can’t see.

In this section, I outline the big-picture trends impacting businesses today, explain how traditional beliefs about how business is done collide with today’s reality, and show you what it means to you as a decision-maker so that you can select which beliefs to keep and which to change.

The reliance on intelligence rather than force The first big shift is the growing reliance on intelligence (engaging in a higherorder thinking) rather than force (surviving at any cost) when working with natural resources and human potential. According to the old mindset, resources are unlimited, and waste is considered acceptable, despite the inefficiencies. Because nature’s contribution to the economy is difficult to count, the best solution is to leave it out or dismiss it as an externality. The new mindset says that nature’s resources can’t be counted, but they do count.

The error of the old way of thinking is becoming more evident. One 1997 estimate calculated nature’s annual contribution to the economy at $33 USD trillion!

Companies that value nature’s contribution are far more profitable than those that do not. A fast-growing number of start-ups and private and semiprivate companies in many sectors — even beyond the more obvious sectors like clean technology — readily grasp this concept and are growing rapidly.

Global companies such as Novo Nordisk (http://www.novonordisk.com), Canon (http://www.canon.com), and Unilever (http://www.unilever. com) are examples. Non-profit B-Lab (http://www.bcorporation.net/ what-are-b-corps/the-non-profit-behind-b-corps) has certified over 1,000 companies as B-Corps in 33 countries. B-Corps must pass rigorous social and environmental performance standards to provide consumers with transparent reporting. You’ll find those companies listed at http://www. bcorporation.net.

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The rise of professional networks within and beyond a company’s borders The second big shift affects how employees are viewed. Today, business performance is powered by professional networks that exist both within and beyond a company’s boundaries. These professional networks, which are engaged in achieving a shared goal, extend well beyond the control of internal management and, as a result, require a shift in management style. With technology as a major disruptor of how work gets done, work between colleagues around the globe can now easily take place collaboratively in a flash via a Google hangout, a Skype call, or a custom app on your mobile device.

The old belief that employees are replaceable and have to be constantly told what to do is giving way to the belief that people are knowledgeable and want to contribute their talent. The growing movement for creating great work environments — places that tap people’s potential and creativity, invite and honor their contributions, respect and value them as people, and count social and environmental health as essential — is a natural outcome of the understanding that good decisions and great work comes from engaged employees who work well together and feel good about their accomplishments. Ethical decisions are a natural result of a healthy workplace. Double bonus!

When workplace and management conditions make it difficult, if not impossible, for employees to contribute meaningfully, their talent is repressed as they are forced to fit into preconceived roles, a situation that creates stress-related illnesses that cost companies in the U.S. $300 billion annually.

Unfortunately, workplaces have been slow to adjust, as employee disengagement statistics show. Yet as leadership skills become deeper and more universal (Chapter 13 tells you how to develop these skills), workplace health and — ultimately — workplace decisions will improve.

The changing perception of business’s role The third big shift is the changing perception of business’s role. The traditional view has been that business’s sole purpose is to be an economic engine, to make money. The new perspective is that business is an integral part of society and a subset of the larger ecological system and that it can be a force for good. This purpose can be achieved when companies engage their employees in a higher purpose, one that goes beyond mere profit.

This shift has occurred largely due to the size of the issues demanding solutions, coupled with a deep yearning for meaning and purpose. Addressing these issues demands imagination, collaboration, and the highest level of inspired innovation ever achieved by humanity. In this climate, business as usual isn’t an option.

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Part I: Getting Started with Decision-Making The old way of doing things promotes “either/or” thinking: either profit or doing good (service); either the environment or the economy. This kind of mindset limits companies’ capacity to spot opportunities to adapt to the emerging new realities. So don’t think in “either/or” terms. Instead, insert the word and: profit and doing good; the environment and the economy. See how this little tweak enables you to broaden your thinking?

Companies that recognize they are part of society and have, in addition to their money-making role, a responsibility to the environment, their communities, and so on, are more profitable. Their relationships with employees and customers is genuine and trustworthy; they look after the environment because it is the right and smart thing to do, and they find creative ways to embed social and environmental responsibility into profit-making endeavors. Their comfort with working in unpredictable, complex situations gives them the edge.

The rise of social media A change in the way people communicate and access information brings us to the fourth big shift. Social media and mobile technology is changing how consumers and employees acquire information and make their career or consumer purchases. In short, current technology makes it extremely easy to get information quickly across political and geographic boundaries. The effect is to broaden perspective.

Before social media and modern technology, businesses followed a model in which they produced products (or services) and then coerced customers to buy. The goal was to do whatever it took to compete and win. Today, however, social media and global connectivity enable the consumer to quickly hold companies accountable for the consequences of their decisions.

In this way, consumers are now change agents. They select which companies to support, using apps, like Buycott (http://www.buycott.com), which allow them to buy products that reflect their principles, and they give their loyalty to companies whose ethics and values align with their own. (Buycott is pretty neat: To use the app, you scan a product, and the app tells you which company is behind the brand and cross references this information with causes you’ve identified as important.)

It’s not likely that social media or technology will save civilization, but business owners can use it as a tool to restore transparency and trust in business practices and decisions. You can use it to connect with your customers and employees, build and burnish your brand reputation, and promote customer service by providing meaningful customer interactions and responses to customer comments.

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Businesses aren’t the only ones who need to be careful about the reach of social media. Aspiring employees need to be aware, too. Recruiters and prospective employers often take a look at Facebook pages to see who their applicants really are. Status reports announcing how you blew off an appointment because the sun was shining, as one person did, get you blacklisted by top recruiters.

The need of employees to do work that matters The fifth big shift in the business environment is away from doing work solely to achieve financial security to doing work that matters. This shift challenges the old idea that employees are an asset not much different from other line items on the budget and will do what you tell them out of fear of losing their jobs.

Instead, employees (and customers) today want to be agents for change.

They’re no longer trapped in workplaces that don’t work; they can work anywhere and do rewarding work they love. They move jobs, change careers, and start their own businesses. Younger generations in particular easily adapt, inherently believing that they can accomplish any goal; they want a job that will enable them to be true to their values and to be able to, as one put it, “take my whole self to work.” Companies that acknowledge this shift seek to engage employees and remove built-in corporate cultural barriers that obstruct collaboration or innovation.

A 2013 survey conducted by Aspire, a company that provides executive coaching and development for women, found that 78 percent of female corporate professionals are not setting their sights on the boardroom; instead, they’re considering leaving their current positions to start their own companies.

Assessing what these changes mean to you As the preceding sections make clear, the business decision-making environment has changed. Adhering to a “business as usual” model won’t get you the results it used to. If your company is to adapt to a new business climate, how you make decisions must change to reflect the new realities. Consider the following: ✓ Making changes in the supervisory role: The role of managers is moving from a model in which the boss controls individual and team performance to a model in which the boss’s role is to enable and support teams that self-organize to achieve a shared goal. In this new world, bosses must display a higher level of leadership: You must know how and when to step back, you must stay curious and be able to foster curiosity and creativity in your employees, and you must be committed to removing procedures and processes that block teamwork.

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Part I: Getting Started with Decision-Making ✓ Changing the way you work with employees: Decision-makers must embrace a collaborative style of working with employees. Collaboration frees up knowledge and talent in a way that facilitates creativity and problem-solving. When presented with a goal or a problem, for example, collaborative teams aren’t hemmed in by a rigid process; instead, they can adapt and adjust, as necessary, to dynamic situations.

Embracing a collaborative work style requires a change in mindset regarding your relationship with your employees and how power should be used. Rather than wielding power and control over your employees, you’ll work with them. You’ll also place more trust in yourself and others, based on a genuine conviction that people want to bring their best selves to life, and it’s your job to bring out the best in them. In doing so, you will also discover hidden talents and achieve personal fulfillment as well. ✓ Improving the way you manage risk: Those making the switch away from traditional management roles are better able to manage risk exposure. Being aware that bigger forces are at work gives you the edge and ability to adjust.

If you rely on a command-and-control management style, you can easily become complacent. After all, someone who thinks he’s in control usually doesn’t know when he’s lost it. Market trends and upstart companies with different approaches can fundamentally change the business environment and leave you and your company foundering.

A great resource for ways to integrate smart practices into every aspect of your company is the book Embedded Sustainability: The Next Big Competitive Advantage, by Chris Laszlo and Nadya Zhexembayeva (Stanford Business Books).

Embracing Uncertainty and Unpredictability Humans tend to be apprehensive about — and some outright fear — uncertainty.

Yet uncertainty is often the catalyst that lets you expand your leadership skills, broaden your business thinking, and improve your decision-making. Whether you embrace uncertainty or try to hide from it, one thing is for sure: The business decision-making environment has changed. It is more complex, unpredictable, and ambiguous than ever before. In this section, I share a few things you can do to make dealing with uncertainty easier.

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The acronym VUCA encapsulates the new operating conditions for life and business: volatility, uncertainty, complexity, and ambiguity. Accepting this different reality gives you your edge. Rather than avoiding change, you can stretch into higher potential.

Increase integrity and truth-telling Combine changing societal values with the connectivity made possible by social media, and consumers and customers are able to hold you and your company accountable in ways that were nearly impossible just 25 years ago.

As a result, businesses must be honest, come clean when mistakes are made, and work to earn the trust of not only their customers but also the communities in which they do business.

Notice what is happening on the innovative edges Being in business today means being on your toes all the time! If you’re feeling content and pretty secure, chances are you’re looking for threats in familiar places — and not where they truly exist. Innovative start-ups — not your traditional competitors — are the ones who can change the terrain overnight.

If you’re looking for innovative approaches to management or information on bossless organizations, check out the following: ✓ The Self-Management Institute (www.self-managementinstitute. org): It has practical tools for running flat (that is, no management layers), self-organizing companies. ✓ Cocoon Projects in Italy (http://www.cocoonprojects.com): It has come up with an innovative way to account for value created by each contributor (there are no job interviews) and to calculate valueadded among peers. Cofounder Stelio Verzera’s article, which describes Cocoon Projects’ philosophy, was awarded the Digital Freedom Award by the Management Innovation exchange (http://www.mixprize.org/ hack/liquid-organizations-realizing-next-evolutionarystage-anti-fragility?challenge=18606). To learn more about Liquid Organizations, see http://www.liquidorganization.info.

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Part I: Getting Started with Decision-Making

Don’t limit planning to an annual task Annual planning worked when business environments were more predictable. Today, committing to a year-long plan that ignores changing conditions in the meantime is a fairly high-risk strategy. If your decision-making process is based on old business beliefs, you’ll feel stressed out and under pressure right now. Unless your business beliefs have undergone a radical tune up in the last six months, you’re behind. One option, for example, is to adopt a Lean/Agile (software development) principled approach to change, which uses client/customer feedback and responds to changing circumstances.

Make your decision-making process values-based Upgrade your decision-making process so that it is value-based. In this model, your company must be clear about what its values are and then make every decision in alignment with those values. Values used for decision-making aren’t the glossy ones from the poster pinned to the wall. They declare what is important enough to guide your decision-making and direct how things get done. To discover the difference between belief-based and values-based decision-making, head to Chapter 5.

Cultivate learning and curiosity Organizations that cultivate learning and curiosity as core skills tend to exhibit these characteristics: ✓ They’re flexible. Learning organizations aren’t fixed on concrete thinking, which is a sure-fire way to prevent better decision-making. ✓ They recognize that mistakes are part of the learning process.

Instead of fear-based decision-making, in which judgments tend to center on what someone should have or could have done, the focus is forward-looking. ✓ They use curiosity to open doors to new ideas. Curiosity is a critical core skill in a complex decision-making environment because the complexities don’t show up until the problem you thought you’d solved returns with a vengeance! In companies that don’t embrace curiosity, employees and teams tend to dismiss inconsistencies, even though inconsistencies actually point to things that should be explored to find out what is happening.

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Invest in your personal and professional growth You are the most important part of the equation. The difference between a successful business, one that can adapt to emerging new realities, and an unsuccessful one is your leadership. Do you want to have 12 years of experience, or 1 year of experience 12 times? The beauty of personal growth is that, when facing adverse conditions, you can become more creative.

Developing yourself as a decision-maker gives you increased capacity to regulate and use your emotions as information, to make better decisions under pressure, to understand how your intuition operates and to use it to your advantage, and to expand your thinking so that you can anticipate unintended consequences early on.

Raising the Integrity and Ethics of Business Decisions Although many companies know their markets, care about their customers, and pay attention to doing what is right for all, a few companies have lost the public trust because of their reckless decision-making governed by self-interest. Often the difference between good companies and bad ones comes down to ethics, the moral code of conduct that underpins ethical decision-making.

The public has very little tolerance for unethical behavior: corporate decisions and actions that do more harm than good; that place self-interest over the interests of the communities in which they operate, the environment, or their employees; and that unfairly skew the distribution of wealth. Ultimately, running a company unethically leads to unhealthy workplaces, seriously compromised decision-making, lower profits, and failure.

Ethical companies, on the other hand — those that serve communities, care about their workers, care for the environment, and don’t succumb to narrow and short-sighted thinking — will ultimately supplant their unethical competitors. Restoring trust with employees, customers, and society as a whole starts with recognizing the wisdom behind using business as a force for good.

In this section, I explain what ethical decision-making is and why it’s good for business. Chapter 19 delves into the topic in more detail.

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Part I: Getting Started with Decision-Making

Overcoming factors that lead to unethical decisions Although some business decision-makers are unscrupulous, most don’t start out with the intention to make unethical decisions, but they make them nonetheless. So if the problem isn’t intent, what is it? As I explain in this section, unethical decisions can be a consequence of skewed or narrow thinking, onthe-job pressures, and other factors that you probably don’t realize set the stage for ethical transgressions. Read on to discover what factors often lead to unethical decisions and what you can do about them.

Having too narrow a focus When the focus is too narrow, you pay more attention to the short term rather than the long term, or you’re more committed to meeting financial goals than delighting your customers.

Seeing the big picture is an integral part of making ethical decisions. When you step back, you gain new and wider perspective that can reveal patterns that you may not have noticed before. This broader perspective enables you to see connections between what before may have seemed to be unrelated entities and, as a result, consider the far-reaching implications of your decisions.

You can also see familiar patterns that may indicate that your decision-making is going around in circles and not really producing the change or benefit you were hoping for.

Not linking your decisions to your values Ethical decision-making is rooted in the capacity to anchor decision-making to your values. Doing so lets you know what’s important when things seem uncertain, and it gives you a standard by which to judge the outcome of the decisions you make. Values-based decision-making is different from decisionmaking based on beliefs or assumptions, a topic I discuss in more detail in Chapter 5.

Succumbing to workplace pressures When intense pressure to achieve targets exists, people are tempted to take shortcuts that can compromise standards. To counter this, step back to discover the source of the pressure and identify where knee-jerk reactions to demands have hijacked a more intentional approach to decision-making. Also try to balance short-term thinking with long-term vision and goals. When you include the long term in your decision-making, you tend to make better decisions because you’re applying a broader perspective to the problem.

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Making assumptions When the information underpinning the decision is too limited, you find yourself making assumptions. To counter this tendency, engage customers and employees as active participants in your company’s decision-making. Doing so broadens the information available for decision-making. As a bonus, it also bolsters your company’s value because of the loyal and committed relationships you develop. In addition, making information available and transparent within the company reduces the inclination to make assumptions or act on speculation.

A great way to gain insight is to give airtime to employee ideas that don’t fit the norm. Gary Klein, author of Seeing What Others Don’t: The Remarkable Ways We Gain Insights (PublicAffairs), calls these outlier beliefs: They’re important beliefs that are not firmly supported by current thinking.

Using the wrong metrics to judge success The criteria you use to evaluate success has a direct bearing on what you and your employees pay attention to. Yet as important as it is to measure the right things, many managers and companies unwittingly use metrics that measure the wrong things, are at odds with the company’s stated mission, and, in the worst cases, foster unethical behavior. If, for example, you reward employees only for making budget targets, they may postpone or avoid doing things like updating equipment for safety — a decision that could lead to injuries or death.

To determine whether the metrics you’ve put in place are creating an environment that promotes breaches of ethics, monitor the consequences of decisions. One way is to map key decisions so that you can see the results and consequences. By taking this step proactively, you’ll be able to correct a course of action before it’s too late. In Chapter 19, I share how to set ethical standards and create an environment that brings out the best in your employees.

Designing a healthy decision-making environment If you look back on the best and worst decisions you’ve ever made, you’ll probably discover the same thing I did: People don’t make the best decisions in stressful circumstances. But stressful conditions happen all the time, you say.

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Part I: Getting Started with Decision-Making There’s a difference between a stressful event that must be addressed or resolved (equipment breakdown on your production line is jeopardizing your being able to complete or ship a big order to an important customer, for example) and the stress caused by being in a work environment — often characterized by unreasonable workloads, unsupportive managers, excessively long work days, and so on — that puts employees on high alert 24/7 with no end in sight.

In this type of workplace environment, the stage is set for poor decisionmaking. Inherent to making good decisions is designing the workplace that supports better decision-making. This means converting unhealthy workplaces into healthy ones. Healthy decision-making environments have common characteristics. Here are a few of them: ✓ They instill a sense of belonging and community among coworkers. ✓ The relationships are professional, and the company’s purpose is front and center. ✓ Shared values underpin what is important to the company and its employees, and these values anchor decision-making in both good and tough times. ✓ Leaders exist at every level, decision-making is decentralized, and decision-making processes are in place. Employees at every level take personal responsibility for making decisions and accepting the consequences. ✓ Communication is open and honest, even when the news isn’t good, and any issues are brought forward through informal and formal feedback loops so that adjustments can be made without delay. ✓ Learning — even learning from mistakes — is valued, which, in addition to strengthening the organization’s decision-making, makes it more adaptive and resilient in uncertain and changing conditions. ✓ Complexity and uncertainty are valued, and decision-making isn’t driven by the fear of losing control. Instead, decision-makers engage their and others’ creativity to actively respond to new challenges.

A company with a healthy decision-making environment is the kind of company that creates value through its relationships with employees, customers, suppliers, and stakeholders. Rather than being too big to fail, it is too valuable to fail. In Chapter 2, I show you how to set up a company for effective decision-making. In Chapter 12, I show you how to strengthen internal and external relationships, and in Chapter 19 I explain how to upgrade your company’s culture to support ethical decision-making. Restoring trust and ethical integrity in business is the way in which your business can do business more intelligently and intuitively and become a force for good.

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