Making Brilliant Decisions in Turbulent Times

Russ W. Rosenzweig

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Using groups to enhance decision-making

Perhaps, since we ought to be so distrustful of our own decision-making ability, we should entrust important decisions to peers and friends. Possibly. It is often a good idea to use peers and mentors as sounding boards before making important decisions. But in fact group decision-making can be counter-productive. Beware the perils of "groupthink."

Irving Janis first defined groupthink as a phenomenon that takes place when cohesiveness, insulation, and stress leads a group to reach consensus too quickly, often supporting whatever their leader had initially advocated. The groups then focus almost exclusively on information that confirmed their opinions.

In these troubled times, it is natural for groups to seek out and embrace conformity. This is understandable, so long as we work hard to ensure that the convergence to consensus is not too rapid. Carol Hymowitz nailed it in her November 13, 2001 Wall Street Journal column: "Leaders need loyal followers, especially in times of crisis. Yet what distinguished great from merely competent leaders is the ability not just to tolerate but to seek out and encourage dissenting ideas from a diverse group of people."

During a recent consulting engagement with ExxonMobil, my colleagues at Round Table Group created a "knowledge exchange" to seek out and identify new ways to cut costs and to outsource non-essential business functions. We turned groupthink on its head by seeking out the expertise and opinions not only of internal ExxonMobil specialists, but also by taping into Round Table's network of 4000 professors. We institutionalized the process of networking and idea sharing by also including outside parties such as venture capitalists, startups, logistics professionals, industry executives tackling similar issues, etc. Simple web-based tools were introduced to memorize and codify the insights.

Round Table Group's approach was a new approach to innovation for ExxonMobil that resulted, initially, in a cacophony of perspectives. But this "creative abrasion" developed into a rhythm of searching, exploring, and synthesizing - cycles of divergent thinking eventually converged, resulting in superior decision-making. Journalists have been using similar group information-gathering processes for years. Why shouldn't all professionals?

Making faster decisions in turbulent environments

Turbulent environments where the business outlook is murky and shifts daily create an additional imperative to make not just good decisions, but fast decisions. We as busy professionals have a tendency to make fast decisions by skimping on analysis, limiting conflict, and mandating decisions based on gut instinct. But recent research by Kathleen Eisenhardt and others suggest that that there need not be a tradeoff between fast decision-making and good decision-making. Her research debunks a number of "myths" about making fast decisions in turbulent times:

• The myth of limited information. Conventional wisdom suggests the need for traditional processes of strategic planning. But these can be time consuming and quickly obsolete in fast-changing situations. Today's technology allows us to use real-time information on firm operations and the competitive environment.
• The myth of few alternatives. Conventional wisdom suggests that we develop a single alternative while moving to a second only if the first fails. But this limits confidence that the best alternatives have been considered. Rather, we should build multiple, simultaneous alternatives. Broad and many; not deep and few. This permits quick, comparative analysis while bolstering our confidence that the best alternatives have been considered
• The myth of haphazard advice. Most fast decision makers rely on a two-tier advice process in which all executives offer some advice, while focusing especially on one or two close mentors. Slow decision makers typically have no one in this counselor role.
• The myth of conflict. Another myth of fast decision-making is that conflict slows down the pace of choice. Fast decision makers, though, know how to gain the advantages of conflict without delaying their decision process. At ExxonMobil, we called it "conflict with qualification." The company eagerly sought out the diverging opinions of Round Table Group's experts, but always had the final word in the decision process.

Conclusion: Create Your Own Tools

What are the flaws in human decision-making during turbulent times and how do we overcome them? I have hazarded some guesses, less in the hope of resolving the questions than with the intention of clarifying them and bringing the subject to your attention. The tools that I proposed work because thoughtful people asked why stumbling blocks exist and then came up with some creative ways to overcome them.

Managers should not only apply these tools, but they should create their own. The key to being an effective toolmaker as well as a tool user is designing tools based on a thorough understanding of the problem. I urge you to identify and reflect upon some of the tools you have learned in your career, and to become a toolmaker by conveying them to yourself and to others.

Let us conclude where we began: back to the subject of trust. I believe that by "distrusting our own judgments" and by using tools to make better decisions, we paradoxically become more true to ourselves. Surprisingly, we then in turn become more trusting of our peers and colleagues. This little insight might just help us make these turbulent times a little less turbulent. I leave you with Polonius's wise advice to Laertes in Act 1, Scene 3 of Shakespeare's Hamlet:

"This above all: to thine own self be true, And it must follow, as the day the night, Thou canst not then be false to any man. Farewell. My blessing season this in thee!"