BusinessPeople In BusinessEffective decision-making

Effective decision-making

What sets effective business leaders apart from more run-of-the-mill managers is, above all, good decision-making. Making decisions promptly and communicating them clearly helps you shape - rather than merely respond to, events.

A decision is a choice between different courses of action. If you fail to make such choices – or fail to let people know what’s been decided – then at the very least you create a dilemma for members of your team over what to do. Other problems may swiftly follow.

Fortunately, a good business decision is not the same thing as a perfect decision. It is often more valuable to pick a promising course of action and act on it without delay, than to agonise over finding a better solution and end up acting too late or not at all.

The military is well aware of the importance of taking decisions fast enough to affect the outcome. Commanders, like managers, can be paralysed by uncertainty. Or they may have the opposite problem – an over-abundance of data that is equally overwhelming.

The military has been at the forefront of systems to help commanders make better decisions fast. One such system, with an appropriate mnemonic, is the four-step Observe-Orient-Decide-Act loop, devised by John Boyd of the US Air Force.

Here are Boyd’s four OODA steps applied to business:

  • First you ‘Observe’ your opponent’s action, or the problem (for example, customer behaviour) that requires a decision. This involves listening to your own team, searching for relevant outside information, and reviewing the results of your previous actions.
  • Second, you ‘Orient’ yourself, comparing what appears to be going on against your own experience, your team’s capability and your organisation’s culture.
  • Third, you ‘Decide’ on the most appropriate response.
  • Fourth, you ‘Act’, such as conveying to a colleague exactly what you want done and why.

Boyd’s key idea is not the steps themselves, but his insistence that the cycle should be immediately repeated. Action is not the final step, but the trigger to a new Observe, Orient, Decide and Act cycle.

The point is to keep the tempo of decision making up, so that you take decisions faster than the problem can evolve or your competitors can respond. You keep doing this until the problem or opponent is dealt with.

This doesn’t mean you personally have to take every decision on your own. Decisions on some topics should be delegated to members of your team.

This gets the point of decision closer to the action, which often speeds things up. Delegation is worth doing anyway because it develops people’s skills and frees up your time.

With other decisions you may find it best to refer the problem sideways or up. Don’t be afraid to do this – another department (for example, personnel or finance) or a more senior manager may have more appropriate experience, authority or contacts. In this case your job is to route the problem to where the organisation is best equipped to deal with it.

But what you can’t do as a manager is duck your responsibility to either make a decision yourself or move it on promptly to where a better decision can be taken.

FURTHER READING

Air Force strategist John Boyd was behind not just the OODA loop, but also the whole concept of ‘Agility’. This has now spread from the military into general business parlance.

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