Decisiveness drives success for companies
Tuesday, August 26, 2014
Some people really struggle with making decisions. Some people just can't make up their minds. Neither can some companies. But if they knew what their indecision was costing them, would they change how they operate?
In 2001, Ram Charan, a former faculty member at Harvard Business School wrote an article titled, "Conquering a Culture of Indecision." In it, he talks about companies that have successfully created frameworks for decisive action.
Highly marketed and distributed, this article was published in the April 2006 issue of the Harvard Business Review and met with many accolades. However, it's almost 10 years later, and the problem exists even more profoundly today.
Indecision or lack of decisiveness is costing companies thousands of dollars every day. Opportunities are being lost, productivity is waning and the morale of millions of leaders and employees is eroding. Not to mention that actual bottom-line results that are being affected.
According to business and economic analysts, the cost of lost opportunities and lackluster productivity in North America is somewhere in the billions of dollars. Indecision affects companies across markets and industries.
For example, a large national construction company said the following when talking about decision-making and a recent project that was on the table: "We (company execs) dropped the ball. By taking too long to make a decision, we lost out on the entire bidding process which could have been worth over $2 million to our bottom line last year."
History is full of stories such as this. Take for example the following cases, taken from an article on Digg.
1. The forgotten player.
In the late '70s, Kane Kramer came up with a device that would now be known as an MP3 player. His sketches from 1979 show a credit card-sized player with a rectangular screen and a central menu button to scroll through a selection of music tracks using arrows for left, right, up and down.
In 1988, on the brink of commercial success, the company was split by a boardroom coup. Distracted and unable to form a consensus on how to raise money in time to renew patents across 120 countries, Kramer watched as the technology became public property. The iPod became the world's fastest-selling electrical equipment ever.
2. The literary agent.
The first agent to whom J.K. Rowling sent "Harry Potter and the Philosopher's Stone" rejected her in little more than a day. Her second agent, Christopher Little, was turned down by 12 publishers before Bloomsbury said yes a year later.
3. The squashed Beatles.
In January 1962, The Beatles were turned down by Decca Records because they were considered too similar to the Shadows. They signed with Parlophone and became the world's most famous band.
4. The forgotten genius.
Nikola Tesla, a Serbian immigrant to America, invented the modern electric power system, the fluorescent bulb, neon lights, the speedometer and the basics behind radio, radar and the microwave oven. Others made millions from his inventions but he was paid a flat $216,000 fee.
5. The other Bill Gates.
Software genius Gary Kildall invented the first operating system for PCs in the early 1970s but missed out on supplying IBM because he went flying instead of meeting company bosses. Bill Gates later sold IBM the MS-DOS system.
Fill in your company's lost opportunity costs here: _______________________
What's made the problem worse is that employees today are living in fear. Talk of recession, downsizing and rightsizing has caused them to become paralyzed when it comes to making decisions and taking action. Ask anyone at your office if they consider themselves decisive, and you'll likely be met with sweaty palms, racing pulses and the response of "Why do you ask?"
No one wants to be held accountable for what might be considered a wrong decision. So how do employers and managers promote an environment of decisiveness? In our work with hundreds of companies during the last 30 years, we have identified the following five keys for driving decisiveness at work:
- Foster a company culture of open, honest and candid conversations
- Clearly articulate the issue that needs a decision
- Remove fear from the equation
- Utilize a coaching approach to problem-solving and decision-making
- Reward decisiveness and action at all levels
Foster a company culture of open, honest and candid conversations
The first step to achieving this type of organization is to recognize that a company's culture is largely defined by the personality and style of its leadership team. Strong charismatic leaders who are candid and open often engender the same in their staff. The opposite is also true. Secretive and insecure leaders foster the same in their company cultures.
When good secure leaders gather a group together to discuss challenges and opportunities they are careful to allow everyone to share their opinions and thoughts. Positive or negative, each team member is given ample room to voice his/her concerns or ideas.
A good leader encourages feedback and actively listens to his team. He does not support any negative feedback and therefore teaches his staff through example to do the same. These types of companies and conversations build trust among the team and ultimately confidence in the individual who has a thought or idea to share.
Insecure leaders do the opposite. They tend to surround themselves with people who say one thing, but do another. Ultimately a decision that gets made in the boardroom gets derailed on the shop floor, because no one felt he/she could speak up and disagree. Instead, they manage to put up roadblocks and share their negative opinions behind closed doors.
For example, one of the companies we recently worked with had a large sales team. The president, instead of working through and with his management team, felt compelled to go directly to the sales staff. The sales manager felt these actions severely undermined him, which made him react even more forcefully and critically of his team.
The salespeople felt they had the president's ear and started bypassing their manager to complain. As the scenario unfolded, the level of disengagement increased, and finally the entire sales team spiraled into self-destruction.
While the president's motives started out innocently enough, it took a huge disaster to force him to rethink his leadership style. He now works daily on encouraging open forums for discussion instead of one-on-one, behind-closed-door conversations.
But deciding to become an open and honest company doesn't just happen, or make it true. Learning how to "live it" is where the real brilliance and solution lie.
Clearly articulate the issue that needs a decision
Once trust has been developed among the staff and leadership team, successful companies have developed strategic frameworks and methodologies for identifying issues and articulating the big picture. What is the real issue at hand, and how does it affect the company's goals and the day-to-day operations of its staff?
For example, when articulating an issue or problem, most people will automatically start questioning the validity of the issue internally. They typically ask themselves three things:
- Why does it matter?
- How does it affect the company?
- How does it affect me?
While there are hundreds of models for decision-making available, most can be distilled down into five logical steps and two intuitive steps.
- Gather the information and establish the facts.
- Analyze the facts.
- Seek the opinions of others (but be careful who you get involved).
- Weigh the merits and likely outcomes of alternative actions.
- Make the decision most likely to produce the desired outcome.
- Sleep on it — if possible.
- Do a "gut" check. Does it feel right?
Companies and the people who lead them could be so much more successful in their decision-making if they focused more energy on the intuitive aspects.
Face it, we are intuitive beings. Philosophy defines intuition as the act by which the mind perceives the agreement or disagreement of two ideas. Intuition is not something you can teach, it's a source of knowledge from within that everyone has, no matter their age. Learning how to listen and act on it is where the real challenge lies.
Children can offer some enlightenment on this subject. Watch a young person whose been put into a situation where he/she doesn't have the intellect or experience to navigate from. Intuition is the default, and it's because intuition is a survival skill available to everyone.
If you've ever heard that small voice inside that told you to "wait one more day," "turn right," or "make the call now" and disregarded it, I'm certain you found yourself regretting that decision. Feelings don't lie, but they do offer us an opportunity to learn to trust ourselves.
Remove fear from the equation
Employees today are nervous. Lurking around every corner is the idea that a decision they make or don't make could cost them their jobs, their dignity and potentially their lifestyle. Is it any wonder that the majority of staff vacillates when it comes to speaking up at work? Good, effective leaders know how to cultivate an atmosphere of safety and candor.
Candor is defined as the ability to speak freely without reservation in a straightforward, informal and honest manner. If employees feel safe to express their ideas and opinions, the company could produce better decisions and ultimately more positive results.
Creative agencies and their leaders do this extremely well. Brainstorming sessions are designed to be open forums for creative thinking. No matter how "out of the box" an idea appears, it is not dismissed until it's fully explained, explored and dissected. Creative agencies promote a "no sacred cow" philosophy, meaning that any concept can and should be equally analyzed and cultivated in order to produce the best decision possible.
Successful leaders are those willing to accept insight and feedback from a variety of sources, orthodox or not. If everyone — janitor to mailroom clerk — feels safe and valued enough to offer their opinions, the potential solution to an issue or problem would more readily be found. Concepts and perspectives that might otherwise be left untapped represent lost opportunities for countless companies.
However, leaders also need to know when to draw the line on including others and seeking opinions. Sometimes, in their resolve to be open and inclusive, even collaborative leaders can mistakenly feed the indecisiveness of their team. Too many opinions, ideas and perspectives muddy the water and staff begins to question whether they have gathered "enough" feedback.
Instead of actively soliciting opinions of those outside of the decision-making team, simply "allowing" other influences to introduce themselves should become part of the company culture. Fostering a safe atmosphere will begin to transform the company's ability to gather, process and act on information.
Predisposed ideas and great solutions will no longer be kept hidden from those needing to make good, fast decisions.
Utilize a coaching approach to problem-solving and decision-making
A coach style, unlike a typical boss or supervisor, leads through collaboration more than with directing. Coaches ask questions in order to cultivate a deeper level of thinking and problem-solving.
Questions open up new insights while leaving the team's dignity intact. For example, Ram Charan tells the following story in his article.
Not long ago, I observed the power of a leader's dialogue to shape a company's culture. The setting was the headquarters of a major U.S. multinational. The head of one of the company's largest business units was making a strategy presentation to the CEO and a few of his senior lieutenants.
Sounding confident, almost cocky, the unit head laid out his strategy for taking his division from number three in Europe to number one. It was an ambitious plan that hinged on making rapid, sizable marketshare gains in Germany, where the company's main competitor was locally based and four times his division's size. The CEO commended his unit head for the inspiring and visionary presentation. Then he initiated a dialogue to test whether the plan was realistic.
"Just how are you going to make these gains?" he wondered aloud. "What other alternatives have you considered? What customers do you plan to acquire?" The unit manager hadn't thought that far ahead. "How have you defined the customers' needs in new and unique ways? How many salespeople do you have?" the CEO asked.
"Ten," answered the unit head.
"How many does your main competitor have?"
"Two hundred," came the sheepish reply.
The boss continued to press: "Who runs Germany for us? Wasn't he in another division up until about three months ago?"
Had the exchange stopped there, the CEO would have only humiliated and discouraged this unit head and sent a message to others in attendance that the risks of thinking big were unacceptably high. But the CEO wasn't interested in killing the strategy and demoralizing the business unit team. Coaching through questioning, he wanted to inject some realism into the dialogue.
Speaking bluntly, but not angrily or unkindly, he told the unit manager that he would need more than bravado to take on a formidable German competitor on its home turf. Instead of making a frontal assault, the CEO suggested, why not look for the competition's weak spots and win on speed of execution? Where are the gaps in your competitor's product line? Can you innovate something that can fill those gaps? What customers are the most likely buyers of such a product? Why not zero in on them? Instead of aiming for overall market-share gains, try resegmenting the market.
Suddenly, what had appeared to be a dead end opened into new insights, and by the end of the meeting, it was decided that the manager would rethink the strategy and return in 90 days with a more realistic alternative. A key player whose strategy proposal had been flatly rejected left the room feeling energized, challenged and more sharply focused on the task at hand.
Think about what happened here. Although it might not have been obvious at first, the CEO was not trying to assert his authority or diminish the executive. He simply wanted to ensure that the competitive realities were not glossed over and to coach those in attendance on both business acumen and organizational capability as well as on the fine art of asking the right questions.
How many times does your job provide you with the opportunity to coach others towards a more successful outcome? And how do you learn to coach?
First of all, a leader must understand the personality and styles of those around it. This can be done and should be done at the onset of a team member's career with the company. However, the level and depth of understanding continues as the team works together. Knowing how and why someone thinks and behaves a certain way is tremendously valuable to a company and its decision-making ability.
Reward decisiveness and action at all levels
While indecision has a huge price tag, decisiveness pays off handsomely for those people and companies brave enough to stand up and take action on their decisions. Think about the companies and people we noted at the beginning of this paper, the Parlophone Records, Bloomsbury Publishing, Bill Gates, etc. They were willing to act quickly and therefore reaped the rewards.
But rewards aren't only monetary. Good leaders reward their team with other valuable things. Acknowledgement, increased responsibility, more opportunities for growth. These are all things that employees want and need. In fact, money is often the ancillary reason a person chose their profession or took a specific job. Following are some of the top motivators we've identified:
- The feeling that they can succeed and will be supported in that drive for success
- Access to leaders, managers and mentors who foster loyalty and camaraderie
- The opportunity to be part of teams and projects that matter to them
- The opportunity to learn new things on a consistent basis
- The ability to exercise their creativity
- The feeling they have a "voice"
- Being recognized both privately and publicly
Strong decisive leaders know what "currency" each of their team members likes to be paid in, and they design their feedback accordingly. They reward their staff for taking decisions, even if the result of that decision isn't positive.
As you can see, being decisive is a powerful advantage to many people and companies, while indecisiveness is a virus that can spread rapidly. How would you rate your organization?
Do you follow the five steps for successful decision-making? Do you foster an open and candid atmosphere, removing fear from conversations? Do you trust your team to make decisions and guide them through questions and curiosity instead of criticism? Do you reward them accordingly?
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