History is cluttered with blunders on a colossal scale, whether they be military (such as the Charge of the Light Brigade) or managerial. The Independent on Sunday ran a series where business people admitted to the worst decision they ever made. And all their bad decisions were remembered with appalling clarity - the embarrassment, the financial loss, the meeting with the hysterical boss.
For anyone in business, decision-making is a vital part of the job. Indeed, one definition of management is deciding what to do and getting it done. So, no matter what the business, decision-making matters. A decision is a commitment to action. The importance of making the right decisions has led to the growth of a lucrative industry. There are many academics and consultants, and some charlatans, who earn their livings from instructing people on how they could make the right decisions every time.
Theories abound. There are a host of handy hints and techniques. There is, for example, something called a 'decision tree' which is used by people tortured by indecision. The tree charts all the possible outcomes of a number of different options as well as their likely outcomes. Each of the chain of events is then given a probability and monetary value. The manager, undaunted by the number of charts, is then expected to make a decision. The tree may be highly accurate, but hardly provides for speedy decisions.
There are other approaches. Social scientist Herbert Simon has been studying the decision-making process for many years. Using computers to simulate thought patterns, Simon has defined three steps towards making a decision. The first is intelligence, identifying a situation which calls for a decision. The second is design, conceiving and developing alternative courses of action and assessing their implications.
Finally, there is choice, selecting which of the alternatives to proceed with. The trouble with Simon's analysis is that humans are less reliable than machines. Given a neat process, they will insist on doing all three stages at once or missing one out altogether.
In the past, decision-making was regarded as an innate skill that you either had or didn't have. But, given practice and awareness, effective - or at least improved - decision-making can be learned. Untrained decision-makers make a number of common errors which prevent them from getting it right time after time. They are not earth-shattering. The fact is that we have all, at one time or another, made a bad decision than can be attributed to one of the traps.
- Only fools rush in - The first common error is plunging in, rushing and acting on the first idea that comes to mind. For business people intent on being people of action, it is a tempting option. People are impressed by the immediate decision. Responding quickly, they argue, is what running a business is all about. If it's the wrong course at least you find out fairly quickly and can set off down another route. The trouble is that decision-making by trial and error can be an expensive, not to say time-consuming, means of reaching the right decision.
- Solving the wrong problem - Linked to the first common error is setting out to solve the wrong problem because you have approached it with predetermined ideas. The history of business is littered with people who did not remove the blinkers. They carry on trying to solve the old problems while their eventual conquerors are looking at things differently and coming up with solutions appropriate to the times. In effect, they refuse to accept changes in circumstances. 'Heavier than air flying machines are impossible,' announced Lord Kelvin in 1895. While he was considering airplanes as impossible, others were inventing them.
- Being too inflexible - If you define the problem too strictly you eliminate a wide range of possible solutions. Alternatively, you might be overly influenced by the views and prejudices of others you talk to. Listening to the views of others is valuable, but there's not much to be gained from blindly following someone else's ideas.
- Overconfidence - We have to believe in our own judgment, yet we forget the many mistakes we have made, the decisions that have misfired. The truth is that we are not always right. Overconfidence has been ruthlessly punished in history - look at Pearl Harbor.
- The convenience route - Using rules of thumb or the most conveniently available information to make a decision is a sure way of getting it wrong. This is reality here is of an overall problem of not being systematic, not keeping track of the developing decisions.
