Do You Have the Right Decision Making Culture?

Do You Have the Right Decision Making Culture?
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Decision Making Culture
With the advancements in data analytics and artificial intelligence, more leaders are asking about the pros and cons of a fact-based vs. an intuition-based decision making culture.  Why?  Because it is the responsibility of leaders to build effective decision making capabilities throughout their organization.

And thanks to advances in technology and big data, a recent survey by Vantage Partners found that 85% of companies are trying to be make more data-driven decisions, but only 37% have been successful.  What makes sense for your organization?

Defining Workplace Culture
We define workplace culture as the way work routinely get done in an organization.  Our organizational alignment research found that culture accounts for 40% of the difference between high and low performing organizations.  Culture can be measured by understanding the way people think, behave and work along with the known and unspoken values and assumptions that drive key behaviors – especially how and why decisions are made.

Defining Effective Decision Making
While there are many types of decisions, we define effective decisions as those that deliver the intended outcomes and desired impact alongside the right levels of strategic alignment, cultural integrity, speed, quality, trust, and confidence.  We have found that there are four common stages to effective decision making:

  1. Framing: Agreeing upon what is being decided and the kind of decision being made.
  2. Engaging: Identifying stakeholders who will be most impacted, have a vested interest, and have influence over the decision.
  3. Gathering: Collecting relevant data, understanding the story the data is telling, and considering alternatives without bias.
  4. Committing: Empowering those who need to implement the decision.

Two Main Decision-Making Approaches
How your company approaches and makes decisions, especially when the stakes are high and the information is inadequate, describes your decision making culture.  We find two primary ends of a spectrum with respect to how companies make decisions – each with its advantages and drawbacks depending upon the corporate strategy.  The spectrum ranges from a fully fact-based to a fully intuition-based decision making culture.

A Fact-Based Decision Making Culture
A culture that strongly relies upon facts when making decisions tends to primarily:

  • Require thorough and extensive data analysis to make decisions
  • Formally collect and record most activities throughout the organization
  • Analyze the pros and cons of each detail before deciding
  • Rely on facts, figures, and evidence
  • Encourage debate and question assumptions

Examples of common fact-based decision making cultures include biotechnology, finance, and medical device companies.  Even sports teams (think about the movie Moneyball) are beginning to rely more on data to increase revenue, construct rosters, improve player performance, and prevent injuries.  When more data can help you select the right option, fact-based decisions can be effective.

An Intuition-Based Decision Making Culture
A culture that strongly relies upon intuition when making decisions tends to primarily:

  • Utilize discussions to make decisions
  • Socialize information on activities through personal interaction
  • Consider few if any key facts when making decisions
  • Rely on personal opinions – especially of experts

Steve Jobs is often quoted saying that intuition is “more powerful than intellect.”  Virgin Group founder Richard Branson says: “I rely far more on gut instinct than researching huge amounts of statistics.”  There is a growing body of anecdotal evidence and research that suggests intuition is a critical aspect of how many leaders make effective decisions.

Examples of common intuition-based decision making cultures include fashion designers and creative marketing agencies.  Often drawing on information and experiences that people already know, even intuition and gut feel is somewhat data-driven.

Which Decision Making Culture is Best for Your Organization?
First, we do not believe that one type of decision making culture is better than another.  It depends on the type of decision being made and on the specific goals of the organization.  The key is to align the way you make decisions with the strategy you are trying to execute.

Once your strategy is clear, there are three overarching questions that you should ask to identify the best decision making culture for you and your team. To best execute your strategic priorities, should your decision making methods require:

  • Extensive Analysis (fact-based) or Extensive Discussion (intuition-based)?
  • Formally Collected Data (fact-based) or Socially Collected Data (intuition-based)?
  • Facts and Figures (fact-based) or Gut Feelings and Personal Opinions (intuition-based)?

The Bottom Line
In the end, the process of decision making is both an art and a science.  At the organizational level, leaders should agree on the type of decision making culture that best supports the overall strategy.  At the decision making level, make sure people know the what type of decision is being made, who needs to make it, why it matters, to whom it matters, and the different roles people will play.   Then create a plan to ensure commitment and follow through.

To learn more about being improving the grace, speed, and quality of your decisions, download 3 Steps to Set Your Team Up to Make Better Decisions

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