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Who are Decision Leaders?

Decision leaders are companies that treat decisions as strategic assets.

That is, they train their people on how to make decisions in a systematic way, using appropriate tools that they customize to their needs and environment. They also learn from past decisions and capture this knowledge for the next generation of employees. They track and measure decision outcomes and, when necessary, they loop back to adjust original decisions. Empirical studies show that, compared to peers, decision leaders experience:

  • Improvement of close to 5% across financial metrics such as profit, revenue and shareholder return

  • Less time spent on making decisions

  • Less time wasted on unused analysis and analytics

  • Improved employee engagement

Why we need to get better at organizational decision-making

Research in organizations worldwide reveals the following unhelpful, biased behaviors as common in business contexts*:

  • We overestimate the likelihood of positive events and underestimate that of negative ones

  • We place extra value on evidence consistent with our favorite belief and not enough on evidence that contradicts it

  • We strive for consensus at the cost of a realistic appraisals

  • We focus too narrowly on our own perspective ignoring how others would be affected

  • We overestimate our skill relative to others and our ability to have an impact on future outcomes

  • We assume that everyone has access to the same information

  • We value immediate rewards very highly and undervalue long-term gains

  • We pay attention to historical costs that are not recoverable (sunk costs) when considering future options

  • We prefer the status quo in the absence of pressure to change it

*This list is not exhaustive.

Systematizing decisions

To become a decision leader, there is one critical action that companies must first take. Systematize decision-making. Systematizing decisions has many advantages that outweigh the cost. To name a few,

  1. Systematization improves the decision-making process by reducing bias and noise. Examples of biased behaviors are those above and include confirmation bias, overconfidence, present bias and groupthink. Noise is the unwarranted variation in decisions from various decision-makers while the information remains the same. For example, insurance claims officers faced with identical claims situation are expected to treat the situation in a similar way. But what happens in fact is that judgments are often influenced by irrelevant factors such as mood, time of day and the weather.

  2. Systematization allows employees to learn from past decisions and retains these learnings even when employees move on, thus making the knowledge available to future employees.

  3. Management, clients and other stakeholders increasingly demand transparency and accountability in decision-making.


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