#SH302: Long-Term Decision-Making

The best way to predict the future is to create it. ~ Peter Drucker

Taking the long-view is not easy. In fact, it’s far easier to think and act in the short-term. In life and business, the easiest decisions are the ones made about what to do now versus what to do that will make the biggest difference in the future. Albeit difficult, it’s an essential leadership competency, but as Hammond, Keeney, and Raiffa (2015) put it: “the need to make a difficult decision puts us at risk of anxiety, confusion, doubt, error, regret, embarrassment, [and] loss.”

The magnitude of the choices we face, the more people they impact, the longer range gains or losses they ultimately influence all play a role in the level of stress a leader feels when trying to make that big decision. At TheSchoolHouse302 we’re not proposing to completely rid your leadership woes with long-term decision-making, but rather we invite you to use our model to help you frame your thinking when these decisions are looming. This will certainly help the future of your company in terms of the way in which you interact with the consequential decisions that leaders have to make, and so we introduce a four-point model for long-term decision-making:

Have Foresight.

Leaders who keep the long term in mind are preparing for possibilities, not certainties. ~T.A. Frank

Being able to think into the future to make important decisions about the present is as imperative for leaders as any other skill in the book. Making the right prediction with foresight for the unknown is a quality that the greatest leaders of all time have exhibited with seemingly natural ease. Think Steve Jobs, Ray Dalio, and Elon Musk. With that said, the ease in which they appeared to have foresight might have been more about practice and strategy. Research on making quality predictions reveals that it can be a “learned skill,” whereby practice is critical to getting better and more accurate at it, but there’s one aspect of it that doesn’t take much practice at all, which is simple deliberation (Frick, 2015). Leaders who take time with big decisions allow themselves the space needed for clarity and foresight. In fact, Saffo (2007) says that forecasting the future effectively requires leaders to think twice as far back into the past as they do into the future. That’s where time equals foresight because leaders have to go slow with decisions that impact the organization in the long-term, reaching into the past to rely on patterns.

Practical Advice: Don’t rush with long-term decisions. Recognize when you’re making a decision that has short-term implications versus long-term consequences. In the short-term, your decisions can be quick, even in a “blink” as Gladwell tells readers about “thinking without thinking.” But, when decisions are long-range, it’s time to slow down, going back to the rest of the model to consider options, using principles, and tackling tough times with a team approach.

Think Options.

Panic causes tunnel vision. Calm acceptance of danger allows us to more easily assess the situation and see options. ~ Simon Sinek

Leaders who spend time thinking about long-range decisions should practice the disposition of simply being “less certain” altogether (Frick, 2018). When given a decision with multiple plausible outcomes, people who think about all of their options at once versus considering choices one at a time fair 22% better in terms of coming to the most objective and best answer (Basu & Savani, 2017). “Janusian thinking” is one’s ability to entertain two contradictory and opposing viewpoints simultaneously before selecting one or even arriving at a theory whereby both are incorporated into new and innovative thought process (Michalko, 2012). In about half of decisions made, according to one study, people observed and considered options sequentially and not all at once with equal consideration (Basu & Savani, 2017). When leaders are able to compile and compare options for long-term decision-making, the result is a far more objective and thoughtful answer for the future of the organization than when ideas are presented one at a time or in a sequence that doesn’t involve holistic thinking. Considering all of the options at once is a serious advantage for leaders faced with future-driven challenges and something that is required for effective long-term decisions.

Practical Advice: When your team is presenting options, don’t begin to consider one or another as dominant until all of the options are on the table. Practice asking: “are there any other options we should consider as we make this decision?” to force your team to present everything first before dialogue ensues. Typically people begin to rank and “like” items as they’re unraveling, but great leaders reserve judgement until they have all of the information they need to make a decision.

Use Principles.

To be principled means to consistently operate with principles that can be clearly explained. ~ Ray Dalio

Organizations driven by a clear vision and core values are certain about where they are heading; however, great leaders understand that the how can take many turns while pursuing the destination, especially over time. Principles serve as beacons to guide decision-making (Dalio, 2017) and to help steer the ship in the right direction. Collins and Porras (1994) detail the early stage of when companies begin sliding and loosing their foothold within their market, which happens mostly due to complacency and entitlement. People fail to remain sensitive and aligned to what made them successful in the first place–their principles. Principles are the backbone of the organization and serve as the litmus test for critical decisions that may be difficult.

Merck, a global leader in medicines and vaccinations, made a principled value-driven decision when it decided to manufacture Mectizan, knowing that the costly production and manufacturing would not yield a profit. Dr. Vagelos, former president and CEO, realized that Merck had the ability to cure river blindness, which is predominant in third world countries (particularly Africa). The disease afflicts the eyes with lesions and itching and can cause blindness. The challenge Merck faced, as described by Dr. Vagelos, is that the very people who needed the drug couldn’t afford it. Despite the potential financial losses and the burden that the company would shoulder, the final decision was to produce the medicine for anyone who needed it. (N.Y. Times, 1987). As a company, Merck went back to their principles. With a vision that starts with “to make a difference in the lives of people globally…” and a mission that says “…save and improve the lives around the world” they simply couldn’t stay true to their principles if they only made decisions based on financial gains and losses along. From a business perspective this decision was incredibly risky, yet Dr. Vagelos put those in need above profit. Having principles is what grounds leaders to be able to make the right long-term decisions, even when it’s not the obvious one.

Technical Tip: Having principles is one thing. Writing them down and sharing them widely, ensuring that they guide the organization, is another. Sharing your principles, both personally and for the organization, helps leaders hold themselves and other accountable to the decisions that get made, especially when tough long-term decisions arise. Write down you principles, post them in your most important spaces, and always go back to them as decisions are being made.

Be Responsive.

Truly successful decision making relies on a balance between deliberate and instinctive thinking. ~Malcolm Gladwell

For the above qualities to be leveraged for their greatest effectiveness, leaders have to remain sensitive to the behaviors that limit employee and organizational productivity. Silos and groupthink are two common traps that limit any leader’s responsiveness, which results in decisions being made in a vacuum and teams shutting off from one another. To prevent this from happening, great leaders are responsive to the people they serve, and they keep that as a focus in every interaction with employees or customers. Great leaders know how to break down silos with teamwork and how to break groupthink with a systems approach. They also know what they need from their people so they respond appropriately to support their people so that everyone is delivering their best results.

The challenge in being responsive to the people is in the ability to see and hear all of the opportunities that are presented in order to support and grow the organization. This means staying attune to the threats that people may pose as well. Responsiveness may at first appear to be contradictory to long-term decisions, as if it means to be reactive in the short-term. However, the responsiveness we are championing requires leaders to fully understand the people they serve and respond in ways aligned to the principles and values that guide the company. Being fully responsive is calculated, whereas quick reactions can be careless. Kim Winser OBE, the first female board director of Mark & Spencer and the founder and CEO of Winser London, created a company on a model that is “nimble, responsive, reactive.” Winser’s digital business model is designed to maximize the power of technology while creating a brand completely focused on the consumer. What sets them apart, among other things, is the level of responsiveness Kim has to her employees and their products (Education Trust, 2017). She allows employees to work remotely and she hires team members straight out of college. This gives the company both a “youthful edge and an innate understanding of the digital world.” Being responsive to the people in the organization, the primary customers, and the established values, allows leaders to make better decisions for the long-term. It requires leaders to listen, slow down to weigh options, and build new teams to address problems that, if left unsolved, may pose crippling long-term issues.

Technical Tip: Successful leaders surround themselves with individuals who work toward the effective fulfillment of the vision through a knowledge and sensitivity to trends, risks, and opportunities. Great companies maintain a pulse on their core business and they are keenly aware of their strengths, weaknesses, opportunities, and threats (SWOT). A SWOT analysis is a great technique to evaluate a company’s health and well-being. Make sure you’re using a model like SWOT when you’re responding to the people. Typically SWOT is used for events, programs, circumstances, and initiatives, but our tip is to also use it with employees, employee engagement, employee retention, and customer needs.

That’s TheSchoolHouse302 model for long-term decision-making. We hope that you use our practical advice and technical tips in your organization so that you can lead better and grow faster through stronger long-term decisions. We contend that if you have foresight, think options, use principles, and act responsively, your long-term plans will be far more successful. If you want professional development on decision-making for the leaders in your organization, don’t hesitate to contact us, we can help.

Let us know what you think of this #SH302 post with a like, follow, or comment. Find us on Twitter, YouTube, iTunes, Facebook, & SoundCould. And if you want one simple model for leading better and growing faster per month, follow this blog by entering your email at the top right of the screen.

TheSchoolHouse302 is about getting to simple by maximizing effective research-based strategies that empower individuals to lead better and grow faster.

Joe & T.J.

References

Basu, S. & Savani, K. (2017). To make the better choices, look at all your option together. Harvard Business Review.

Dalio, R. (2017). Principles: Life and work. New York: Simon & Schuster.

Can you be agile and responsive and still play the long game? (2017, November 23). Retrieved March 23, 2018, from https://medium.com/love-the-dont-know/can-you-be-agile-and-responsive-and-still-play-the-long-game-39ad25dacfee

Collins, J. & Porras, J. (1994). Built to last: Successful habits of visionary companies. New York: HarperBusiness.

Frank, T. (2017, July). Keeping Your Eye on the Long Term in a World of Short-Term Pressures. Retrieved March 11, 2018, from https://www.drucker.institute/monday-issue/keeping-your-eye-on-the-long-term-in-a-world-of-short-term-pressures/

Frick, W. (2018). 3 ways to improve your decision making. Harvard Business Review.

Frick, W. (2015). What research tells us about making accurate predictions. Harvard Business Review.

Gladwell, M. (2007). Blink: The power of thinking without thinking. New York: Little, Brown and Company.

Hammond, J., Keeney, R., & Raiffa, H. (2015). Smart choices: A practical guide to making better decisions. Harvard Business Review Press.

Michalko, M. (2012). Janusian thinking. The Creativity Post.

Merck Offers Free Distribution of New River Blindness Drug. (1987, October 22). Retrieved March 19, 2018, from https://www.nytimes.com/1987/10/22/world/merck-offers-free-distribution-of-new-river-blindness-drug.html 

Saffo, P. (2007). Six rules for effective forecasting. Harvard Business Review.

 

5 thoughts on “#SH302: Long-Term Decision-Making

Add yours

  1. It’s pretty much a forgotten art in education, thinking long term. Your advice to consciously distinguish between short-term and long-term is indespensible, as well as the advice to hold-off on judging ideas in the consideration stage.
    Keep writing…I’m your newest follower.

    Like

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