Elections. AI transformations. Regulatory changes. Geopolitical tensions. Today’s leaders face unpredictable disruptive events that can overturn the old certainties.
The problem is not that these unpredictable events happen; the problem is that when they do, organizational leaders often freeze or panic and then falter through the uncertainty that follows.
Business leaders obsess anxiously over uncertainty, which is understandable but rather unhealthy. Unfortunately, that panic leads to inaction at best and dysfunctional responses at worst, which can hurt a company’s trajectory.
This anxiety about being unable to predict the future too often leads to decision paralysis — constantly waiting to make decisions, or making incomplete decisions, as we assume we will know more soon, and then we can decide and make moves.
Here are four ways to disrupt the habit of decision paralysis.
How to Prevent Decision Paralysis
- Make decisions based on your beliefs, not just on facts.
- Identify different types of decisions, like no-regret decisions versus decisions you might regret.
- Ask yourself whether a decision will make or break you.
- Classify what a good decision looks like in your organization.
Align Your Team on Beliefs
When I watch leadership teams struggle to make decisions, it’s almost always because they haven’t aligned their beliefs. In this context, a belief is your stance on how you see trends shaping the environment for your decisions.
In decision making, the typical practice is to identify trend-changing consumer preferences, macroeconomic concerns and upcoming regulations, and then jump to conclusions about what this means for your business. We then continue making decisions to track metrics for those conclusions.
Great decision making happens when a team debates about and aligns on their beliefs. How do we see these trends playing out, and how critical will they be to us? This is one of the biggest differentiators of high-performing companies: They make decisions based on beliefs, not just facts.
This sounds like an odd claim to make. Don’t we want more data-based decision making?
Yes, data matters, but we cannot assume past and current trends will continue into the future.
Strategic choices are about making sense of data, how it fits with other data and then using this to inform your beliefs about what’s going on now and what will shape the future.
As a team, articulate your beliefs. Where do you see macro conditions, regulation, consumer sentiment or industry consolidation going over the next two to five years? Are you aligned on beliefs or are there disagreements? When you’re not aligned, that’s OK, but it means you need to test these beliefs in the market before further committing to your decisions.
Distinguish Between Decision Types
Most companies distinguish between big and small decisions but not types of decisions. Jeff Bezos used decision distinction at Amazon, referring to decisions as either Type One or Type Two.
Type One decisions are one-way doors, meaning once you walk through you cannot go back to where you were before. Most decisions are Type Two decisions, or two-way doors. If you make a suboptimal Type Two decision, you can walk it back.
Each decision type requires a different process. You should make Type One decisions more slowly with greater rigor, whereas you can make Type Two decisions more quickly and trust them to more individuals and smaller groups.
Another distinction I love, and a strategy power move, is identifying no-regret moves. Massive layoffs are a move you may regret, but cutting an under-performing product that has never validated assumptions can be a no-regret move.
Ask at each decision point if this is a no-regret move and quickly execute all that are. Use a flip chart (virtual or physical) to track these and start moving on them, regardless of where you are in your strategy cycle.
Look for Kickers and Killers
As a team, stop asking, “What could happen?” Instead, ask two critical questions: “What could break us?” (a killer) and “What could make us?” (a kicker).
Visualize the varying strategic consequences from your decisions as a bell curve. With clear strategic choices and disciplined execution, most outcomes will fall under the fat middle with familiar consequences and medium to high likelihoods.
Killers and kickers lie at the edges of the bell curve of probabilities. Think through vulnerabilities (killers), and once you identify them, ask:
- What would have to be true for this vulnerability to be exposed?
- What do we have to do to make ourselves more robust?
To identify the positive outliers that could give you a kicker, ask, “How could we win big?”
Most companies spend disproportionately less time identifying possible upside kickers than downside risks. When considering the bell curve of options, we rarely explore the kickers or killers.
Explore the upside potentials with the same attention as the downside potentials, if not more, and then set yourself up to take advantage of these possible opportunities and start making small decisions to learn, test and eventually exploit them.
Codify What a Good Decision Looks Like
If you asked five leaders in your company what makes a good decision at your organization, would they all answer the same way? Reinforcing what makes a good decision at your organization is one of the most powerful ways to boost strategic agility.
High-performing companies codify the features of a good decision, which then empowers team members around the globe to make them more quickly and confidently.
Your codified good decisions should fit your context and culture, but some common variables to consider include the following.
- Whether it’s in line with the company’s beliefs.
- Use of data (do you need to use it, how much and from what sources?).
- Time taken to make it (hours, days or weeks).
- Who needs to be involved?
- Whether it’s clear about the most critical assumptions.
- If the most critical assumptions need to be tested first.
A good decision tends to open up rather than close down future options, so you’re keeping more opportunities open rather than closing possible future choices. And you should take a different approach to your no-regret moves than decisions based on untested beliefs or possible big kickers or killers.
What makes a good decision will vary by company, and that is OK. What is not OK is being unclear.
Facing the unknown can lead a team to decision-making paralysis — a constant holding pattern. In today’s ever-changing world, you must create robustness in your decision-making approach so your team can move forward.
