How to Avoid Making Bad Decisions During Change

A man backs away in fear of Avoid Making Bad Decisions

Avoid Making Bad Decisions
Decision making can make or break a company.  We would all like to avoid making bad decisions.  Rarely, one hopes, do bad decisions end in a disaster like the one pictured above. But they do cause a rash of problems.

Avoid Making Bad Decisions about Organizational Change
And, in the corporate world, bad decisions around organizational change initiatives can lead to epic business failure. Managing change is difficult enough but don’t make it even more challenging by sending the company in the wrong direction by poor decision making.

Emotional Bias, Decisions and Risk
As much as we would like to think that decisions are made purely rationally, decision makers are human beings after all. We are all subject to emotional biases that taint the process. Let’s face it – decision making is a messy but critical skill for business leaders.  The bigger the decisions around major change, the greater the risk if they are wrong.

The hope for leaders is that, if they are aware of the emotions that get in the way of sound decisions and well-managed change, they can better account for and avoid them.

Three Feelings to Pay Attention to Avoid Making Bad Decisions
From our over two decades of change management consulting, we share a list of three feelings that color the way we make choices around change and some consequences of those decisions:

  1. Beware of the Bias of Overconfidence
    We all like to think we’re better than we actually may be. We see our abilities through rose-colored glasses. In business this can lead to unrealistic and foolish optimism.Remember the deal the chairman of Time Warner made to merge with America Online? He was so confident in the deal he had crafted that he decided not to place a limit whereby he would have the option to revisit terms if stock fell below a certain level.  Soon thereafter AOL shares dropped 50%. Time Warner was out of luck.

    In decision making, the overconfidence bias measures the difference between what people really know and what they think they know. And experts suffer more from the overconfidence effect than laypeople because they consistently forecast no better – but with a higher degree of certitude.

  2. Avoid the Bias of Motivated Reasoning
    Confirmation bias (or motivated reasoning) is a tendency to search for or interpret information in a way that incorrectly confirms one’s preconceptions. It leads decision makers to actively seek out and assign more weight to evidence that endorses their hypothesis, and ignore or under-weigh evidence that could disprove their premise.For example, GM failed to recognize the trend toward smaller cars. They had an edge with their large models and believed that they could continue to “win” because that is what they wanted to believe. This bad decision making culture resulted in their 2009 bankruptcy.  Could this have been avoided if GM had not ignored information which challenged their preconceived notions?
  3. Be Careful of the Bias of Faulty Framing and Anchoring
    A framing bias occurs when people react to a specific choice in different ways depending on how it is presented. In general, people tend to circumvent risk when a positive frame is presented but pursue risks when a negative frame is presented.An anchoring bias occurs when people rely too heavily on the initial (or only one) piece of information offered when making decisions.

    Good decisions are based on good information. But what happens when the information is poorly framed or anchored in a predetermined reference point?

    For instance, when negotiating, the initial price usually sets the baseline for the rest of the conversation.  Because of this, prices that are lower than the initial price seem more reasonable even if they are actually higher than what the products or services are truly worth.

    An example in business is the decision of the London executive of Decca Records who rejected the Beatles when they auditioned there.  He framed his remarks around his belief that “groups were out” – especially those with guitars. Or consider the decision Coca-Cola made in introducing the New Coke. They had run numerous taste tests but never asked if their tasters really wanted to replace the old with the new.

    Both executives used the wrong reference point to make their faulty decision.

Three Steps to Improve Your Decision Making

  1. Follow a sound decision-making process so you don’t leap ahead to conclusions without careful evaluation.
  2. Invite colleagues to challenge your thinking and to represent another opinion.
  3. Minimize overconfidence, motivated reasoning, and faulty framing so that the decisions you make and the changes you propose propel your business toward a healthy, robust future.

The Bottom Line
To avoid making bad decisions during change, think carefully about how you structure your communications and initiatives because people will naturally “anchor” whether you want them to or not.  Watch out for emotional biases as you make decisions and plan for change.

To learn more about managing organizational change, please download 5 Science-Backed Lenses of Change Leadership

Share:
Facebook Twitter Google+ Email LinkedIn

Comments are closed.

Avon’s success is dependent on strong relationships among our Customers, Representatives, Associates, and outside resources we hire to help us meet our business objectives. We were very pleased with the results from working with LSA Global to design and facilitate a custom program for our events management team. LSA demonstrated responsiveness, flexibility, and an innovative approach to working with us.

Deanna Rudnitsky
Senior Manager, HR Destiny Sales Region

LSA’s Employee Engagement Consulting and Survey work has provided critical visibility into: how well our people are holding up under the general economic environment, as well as, the specific challenges that face biotechnology companies in their efforts to discover and develop new medicines; their level of alignment and commitment to XOMA’s Vision and mission critical strategies; how leadership practices and management systems support an environment that engender commitment, and the specific actions that our leaders can take to improve on areas that are important to our people. I highly recommend LSA’s employee engagement solutions.

Chris Wells
Vice President, HR and IT

The Managing Virtual Teams program was extremely valuable. Your consultant/ facilitator’s fundamental knowledge of Synopsys as a company provided an incredible base to build upon while tackling the complications of managing and working with globally distributed teams. My team walked away walked away with highly useful practices and tools. It was an excellent use of our time.

Debra Martucci
Vice President, Information Technology

LSA Global’s consultant brought a fresh perspective to our behavioral based interviewing strategy for two key executive positions we needed to fill, and their consultant helped us develop questions that produced a much deeper understanding of candidates’ capabilities. I am confident that the two new executives joining our organization have the right skills to add significant value. Throughout the process LSA was also very responsive in dealing with short lead time requests.

Because of the unique nature of our business, Excel is a core application in our accounting organization. After three attempts to find an Excel consultant who is capable of helping our finance team integrate advanced applications into our work processes we found LSA and Alex. He was not only a “Real” Excel expert but was masterful in helping us identify where to use Excel applications in our processes to increase our group’s efficiency.

SPO Partners & Co
Kim Silva, CFO

LSA has become the gold standard in team building and management training at Genomic Health! I have a hard time finding facilitators that come close to their level of customization, expertise and experience.

Emily Couey
Director of Human Resources

“We turned to LSA to help us custom design and deliver a leadership and management development curriculum to help drive performance. They have done an excellent job diagnosing the business situation, designing an approach that fits our culture, and delivering a first class solution.”

Sally Buchannan
VP Human Resources

We signed up with LSA early on–as their 22nd Member! Since then, our organization’s learning needs have increased and decreased and increased again with the changing times. The beauty of the LSA business model is its flexibility…when we needed to supplement our own internal resources, we used LSA services knowing that we could depend on the outstanding quality of the leadership development and management training programs they provide.

Margie Bunting
HR Manager

The Next Generation Management Development courses have helped me communicate more effectively with my peers and teammates. By utilizing effective communication techniques such as clarifying and confirming, and asking open ended questions, I have been able to clarify and understand information in situations where I would have otherwise asked limited questions and made false assumptions.

Robert Breckner
Firmware Engineering Manager

LSA exceeded all my expectations. We interviewed 7 potential training and consulting partners and selected LSA due to their expertise, flexibility, and breadth and depth of solutions. We were able to construct a management training course from the modules most appropriate to our needs, and are able to provide additional training from their well developed portfolio of experts. Our managers galvanized as a team throughout the session and are better prepared for the rigors of a competitive market.

Mitch Mandich
CEO

Edify

SeaTel has found our partnership with LSA Global to be very valuable and beneficial. We turned to LSA to customize a supervisory/leadership solution to meet our needs. LSA delivered a customized top quality solution. I’d recommend LSA Global to any company looking for a best-in-class training and consulting partner.

Kortney Riddle
HR Manager

I am very impressed with the quality of work and talent. LSA did a great job of listening to my needs and providing the exact management training program expertise I needed to get the job done.

Don Pryor
Director, Business Planning & Analysis

LSA helped change our entire culture around meetings, making them more effective and efficient, thus enabling us to concentrate on driving more business.

Terry Wassman
VP of Human Resources

The refreshing thing about LSA is that they focus on understanding our business situation and helping me succeed instead of selling a product. With over 150 experts, they are an invaluable resource that helps me deliver higher quality results faster. I recommend them to anyone looking to improve the performance of their workforce.

Stacie Rodgers
VP of Human Resources

Cutera

I’ve partnered with LSA Global at two companies now, and I consider them a valuable and trusted training and consulting resource. They recommended just the right solution to address our management development needs and have wonderful facilitators that match YuMe’s culture and style of our management team. I would highly recommend LSA Global to any company wanting to deliver quality learning solutions with a valuable learning and development partner.

Maya Paul
HR Director

The LSA Global team was very receptive and flexible to our needs every step of the way. Their staff and facilitator demonstrated attention to detail, responsiveness, and professional courtesy. The participants were thrilled with the outcome and rated the communication skills workshop and the facilitator as ‘Excellent’. I’d highly recommend working with the LSA Global team to meet your professional development needs.

John Mastrorilli
FRDP Leader

Intuit

Evaluate your Performance

Toolkits

Toolkits

Download key published insights and tools from industry experts highlighting best practices in the areas of talent, strategy and culture.

More

Health Checks

Health Checks

Want to know how you stack up against leading organizations?  Receive a complimentary benchmarking analysis courtesy of an LSA Expert.

More

Whitepapers

Whitepapers

Get up to speed on timely solutions critical to your business. Published by LSA Experts based upon client feedback and key industry trends.

More

Methodology

Methodologies

First we identify the key metrics you want to improve. Then we assemble a dedicated team of elite experts who have successfully solved similar problems with similar clients.

More

Blogs

Stay up to do date with the latest information on how we help high growth companies align their culture and talent with strategy.

More

Case Studies

Client Case Studies

Real world consulting and training approaches from LSA projects, providing insights on how your company can outperform the competition.

More