Nothing is more difficult, and therefore more precious, than to be able to decide. | ||
| --Napoleon Bonaparte[1] | ||
Business managers make many decisions. Among them are many simple decisions that they make easily during the day. There are also more complex decisions where many parameters need to be considered, many of them riddled with assumptions and uncertainty. Usually these decisions are strategic, such as selecting a market strategy, choosing an acquisition target, or opting for an integration strategy for two companies. These decisions require analysis of financial data, evaluation of marketing assumptions, assessment of team capabilities, and much more.
Usually, these decisions are not only complex but also difficult because they often carry an enormous degree of risk for a decision maker, both business and personal, and often, they cannot be easily reversed. Sometimes the decision is made even more difficult when the decision maker's team is not in agreement on the strategy, and it's even more difficult when the rational mind says one thing but your gut another.
In this spectrum of decisions, from simple to difficult, I focus on the ones that require a “Let's think about it” response from a decision maker, the ones from the middle of the spectrum to the most difficult. I am especially interested in decisions that experienced decision makers consider most difficult, the ones where, in the process of trying to arrive at a solution, a person has exhausted common methods of resolving decision difficulties and yet has not reached a clear solution. Methods used might have included talking to team members and trusted advisors, collecting additional information, using analytical tools, and considering pros and cons of each alternative.
By focusing on the most difficult decisions of experienced decision makers I interviewed, I wanted to understand how they come to regard some decisions as difficult and why. My aim is practical in nature. Understanding difficulties can be instructive in learning to overcome them. Because we often get “stuck” in making decisions, I wanted to know why this is the case and how we can get “unstuck.”
The process of making difficult decisions requires from a leader focused mental energy, a “vision” power, and an ability to transcend the present and at the same time be realistic about the abilities of the leader and his or her company. Experienced decision makers have developed their own unique methods of overcoming decision difficulties as well as their own unique ways of making difficult decisions. I compiled these precious ideas and incorporated them into the decision-making technique described in this book.
In discussing past business decisions, I not only asked about the perceived decision difficulty at the time of the decision but also probed for root causes behind this perceived difficulty.
In the interviews, leaders commonly cited difficulties that were vague, such as “It just didn't feel right,” “All solutions had risk involved, and we were trying to figure out the consequences of all options; it was tough, and I felt anxious,” or “It just wasn't clear; all options under consideration somehow did not address our main need.” I had to dig deeper by asking “why” a number of times to actually get at the reasons behind the difficulties.
It was also common for a decision to have a number of difficulties associated with it, such as “I was very emotionally vested in the situation and could not sleep nights. We were under enormous time pressure—we needed to do something urgently! We also had to invest money that we did not have at the time—very risky… and the whole thing was not clear at all.” In those cases, I had to ask a lot of questions before we could identify the main reason why the decision seemed difficult.
I grouped root causes behind decision difficulties into five major categories:
Lack of a clear objective
Lack of clear constraints
Difficulty in dealing with emotions (such as fear, guilt, and regret, or emotions resulting from a disagreement)
Lack of a clear perspective (frame)
Difficulty in selecting from among options
Let me demonstrate the categories through examples. In each example, I highlight the perceived difficulty or difficulties that the interviewee stated initially during the interview.
An ignorance of means may minister To greatness, but an ignorance of aims | ||
| --Elizabeth Barrett Browning[2] | ||
In many cases, the situation forces the decision maker to evaluate options—“Should I do this or that?”—without consciously recognizing it. The following example demonstrates this phenomenon.
John stated his difficulty in making this decision as follows: “It was difficult because I was about to lose all the work we put into building our company over these years. Naturally, I was emotional and wanted to set it right immediately. It was not clear how to proceed in order to fix the situation.”
What is John's objective in making this decision? His objectives could have been as follows:
Maximize financial benefit from his overall investment, first in TRL, and then in MPC.
Save the company by embarking on a different strategy.
Do something, because the situation is getting worse.
The problem was that John never asked himself this question. If he had the first objective, the ousting of Todd was not the solution—selling the company was. With his relationships in the industry, Todd would have been the most instrumental agent for such a move. In retrospect, John believes that selling the company would have been the right option that would have satisfied all parties concerned.
John's objective was not the second one, either. It is true that at the time of the decision, he was thinking about saving the company. However, he readily admits that he did not have a clear strategy for how to save it. The best way to describe his objective at this time is “Something needs to be done.”
Essentially, the situation itself—a deteriorating financial position, for which current management was to blame, and the board's conviction that because John had made the company profitable, he could also reshape it for the future—imposed solution options by forcing John to decide quickly and consider only obvious options that were available to him. If he had taken the time to define his objective, his decision would have been different. He would have talked to Todd and convinced him that the company needed to be sold while it had strong profitability and strong intellectual capital. Now, in retrospect, he believes that this is exactly what he should have done.
Over the first year after becoming a CEO, John experimented with different growth options. However, the revenue kept sliding, slowly but surely. He had to execute several layoffs and finally sold the company for much less than the value at the time of his initial decision to take the CEO role. He now believes that he made a “wrong” decision by taking the company's helm.
John is not alone. The tendency to “plunge in” to the solution before defining the decision and its objective is one of the main traps in decision-making[3]. Most people spend too little time and effort on the task of specifying objectives. Granted, it is not an easy task—identifying objectives is an art[4].
In my work with business executives on their current decisions, I selected several easy ways to quickly identify the main decision objective. I have also seen that Clarity State has a major impact on clarifying the objective in the mind of a decision maker. I will discuss both topics later in the book.
| --Ovid[5] | ||
Clarity of an objective is very important, but unless all major parameters of the decision are added to the objective, the decision is not well defined. When this is the case, it's likely that the solution will not be clear. Decision makers describe the difficulty of such situations as follows: “Something was bothering me. I felt that I was missing something important, but I wasn't sure what it was.”
Constraint is a condition that a decision maker imposes on a solution. Any parameter that is worth considering, any discomfort area related to the decision, and any difficulty can be defined as a constraint. Because decisions usually have a number of objectives, secondary objectives can be defined as constraints as well. The problem is that in real life, decision makers rarely clearly identify major parameters involved in a decision.
Unfortunately, when you have a missing constraint, several things can go wrong with the decision: some options may look possible when in reality they are not, certain options may not be considered at all, and the decision may not become clear overall for a longer period of time.
There is also a problem of perceived constraints—parameters that are addressable in ways unrelated to the decision. Accepting such constraints into the decision definition carries the danger of unnecessarily limiting the scope of potential solutions.
I found from interviews that a number of areas related to decision-making are commonly overlooked. The following list is just a sample of such areas:
Conflict with corporate culture—. A decision maker “sells” himself or herself on a course of action that is in conflict with how the company operates in accordance with its unwritten rules.
Availability of people critical to the venture—. A manager launches a new initiative, assuming incorrectly that certain people are available for this effort.
Realism of the proposed solution—. The organization's ability to execute the solution.
Internal conflict—. Rational reasoning says one thing, but the decision maker believes it is wrong somehow.
Biased assumptions—. People's reactions, market assumptions, cash requirement projections, and other parameters of the decision may be based on old patterns that have changed or are changing.
Personal issues—. A decision maker might have a personal objective that is not consciously taken into account and that might be in conflict with the proposed business strategy.
I discuss some of these areas in more detail in Chapter 7, “Escaping Handcuffs—How to Achieve Clarity of Constraints.”
The following example demonstrates how reaching clarity on one such critical parameter helped a CEO take a better course of action.
What was Alan's objective? It's clear: “Grow the business through finding and acquiring a good company that has products with certain functionality.” Even though Alan's initial description of the decision's difficulty was that it just did not feel right, the actual difficulty was the concern that his senior management team was not ready to integrate this acquisition successfully. In fact, he did not have a person to run the acquired company. The clarity of this constraint enabled Alan to move forward with the acquisition but with a management arrangement different from what he previously envisioned.
Alan is not alone. In fact, in at least a quarter of business decision cases, decision makers found new constraints while contemplating their current decisions in the Clarity State. This highlights the problem—some parameters of a decision are elusive. Personal interests, for example, are often not taken into account. Concerns related to a decision are usually present, but decision makers rarely take time to verbalize them.
I discovered that being in the Clarity State helps in identifying and clarifying such elusive parameters, as you will explore later in the book. When such parameters are clearly identified, more options might become available, certain options may become feasible when they were not before, or the whole decision may become clear.
| --Seneca[6] | ||
It was rare to discuss a difficult decision during an interview in which a decision maker was not involved emotionally. I found that a range of negative emotions were involved: fear, guilt, frustration, and regret. There were several cases where an already complex decision was complicated by a disagreement within a management team, with the board, or with investors.
In many cases, the decision had serious personal implications. Decision makers believed, some consciously and at the time of the decision, others subconsciously and in retrospect, that if a wrong decision were made, it would adversely affect their career. Such realization added more stress and anxiety to the decision-making process.
The following is just one demonstration of how emotionally difficult some decisions can get.
Talking about his final decision to leave the company, George assessed the difficulty in the following way: “I felt that I was asked to carry out a course of action that I did not feel was right. I was making a tremendous positive impact on the company on the operational side, but this internal conflict and the conflict with investment bankers made it difficult for me to run the company productively.”
You can imagine a CEO who would have gone through the trials and tribulations of George's experience without getting emotionally involved. But it is hard to stay emotionally uninvolved when one's job satisfaction, success, and personal compensation are at stake. Having a disagreement with a major stakeholder in the company also adds a load of emotional burden to the decision maker.
The subject of dealing with emotions in decision-making is mired in a number of cultural beliefs. I review the recent science findings vis-à-vis these beliefs and discuss a number of techniques that decision makers found instrumental in dealing with emotions utilizing the Clarity State in Chapter 8, “Balancing Mind and Body—How to Learn from Your Emotional Cues.” Chapter 9, “Pick a Fight!—How to Get the Most Out of Clashing Opinions,” is devoted to dealing with disagreements and leveraging them as constructive tools to reach clarity.
It's all in the way you look at it.
Unknown
According to Kahneman and Tversky, psychologists who pioneered the Nobel Prize-winning research on integration of decision-making concepts into economics, a frame is “the decision-maker's conception of the acts, outcomes, and contingencies associated with a particular choice[7].”
As we discussed earlier, in many cases, a situation imposes a frame of reference, and a decision maker “falls” into this frame, which may allow only certain options as solutions. In essence, you “become framed” right there and then, as the following examples demonstrate.
Initially, during the interview, Dan stated the difficulty of this decision: “The whole situation was adversarial from the beginning. We were not given an opportunity to discuss the situation, and we were given an ultimatum to resolve the situation with a very short timeline. We had to act. Building a new plant seemed the best alternative.”
Were there other options? Yes. Shortly after the new plant construction started, his company acquired another business with production facilities that could have accommodated the production volume of his main plant and provided the educated labor to do it. Therefore, in theory, the company could have looked for such acquisitions when faced with the initial EPA dilemma.
A decision objective defined too narrowly is another very common way to become “framed,” as the following example shows.
As you can see, clarity of perspective is very important in reaching the right decision. Finding the right angle of looking at the problem can open additional options or provide ways to look at the current options in a different light.
The problem, of course, is that when a decision maker is “framed,” he or she is usually not aware of this fact. In my work with decision makers on their current business decisions, we utilized the Clarity State to identify a current decision frame and develop alternative frames. In over 30 percent of business decision cases, decision makers found a different perspective or a new frame while contemplating their current decisions in the Clarity State by utilizing the technique described in this book. Chapter 10, “Everything Is Relative!—Why the Right Frame Is Critical,” and Chapter 11, “Becoming a Frame Artist—How to Master Clarity of Perspective,” present strategies that decision makers found effective in working with frames.
In each action we must look beyond the action at our past, present, and future state, and at others whom it affects, and see the relations of all those things. And then we shall be very cautious. | ||
| --Pascal[8] | ||
Most decisions do not have many options. However, often a decision maker is faced with several options that are all possible and potentially good courses of action, as in the following example. On the other hand, sometimes the choices are all “terrible.” Finding a way to choose the right path becomes a daunting task.
During the interview, Jack assessed this decision difficulty: “This was a make-or-break decision for the company. The stakes were high, and yet I was not sure how to proceed. I spent countless hours thinking and talking to people about it.”
Jack remembers the moment when this decision became clear to him. He realized that the crux of the issue was that he needed to focus on ways to attract new customers and satisfy their needs. It's not that existing customers were not important; they were, but there were ways to bridge them to the new platform. If the company could not attract new customers quickly, it would start losing market share. As soon as he focused on this critical parameter, a solution became clear.
As you will see later, one of the ways to select an option from among a number of good or bad options is to find the crux of the issue, as Jack did in this example. Identifying a crux usually points you to the right solution instantly.
I discuss how Clarity State can be instrumental in identifying such a crux—or a critical parameter—in a decision in Chapter 11. I use Jack's decision and other similar cases in Appendix B, “Additional Tips on Reducing Decision Complexity,” to demonstrate how such complex decisions can be made simpler by creating decision layers. Chapter 12, “Bull's-eye!—How to Align with the Right Outcome,” is devoted to techniques of utilizing the Clarity State for selecting the right solution option.
Table 3-1 shows the causes of decision difficulty by the frequency of occurrence in the sample of 115 business decision cases gathered from CEOs during interviews.
Table 3-1. Types of decision difficulty prioritized by the frequency of occurrence
Priority | Types of Difficulty | Occurrence (%) |
|---|---|---|
1 | Lack of a clear perspective | 30% |
2 | Lack of a clear objective | 25% |
3 | Difficulty in selecting from among options | 17% |
4 | Lack of clear constraints | 15% |
5 | Difficulty in dealing with emotions | 13% |
During interviews, as I was asking decision makers to discuss their difficult decisions, I also asked questions about how they usually overcome such difficulties. I asked them many questions, including how they deal with emotions, what they do to generate more options, how they identify the main objective, and how they resolve the situation when something is bothering them about the decision but they do not know what it is.
The innovative ways that decision makers devised for overcoming decision difficulties and making difficult decisions collected during interviews were built into the Clarity State Decision-Making technique that you consider in the next chapter.