Most managers would claim to have good strategic decision skills. It’s a little like asking people whether they consider themselves to be good leaders, or effective managers – virtually no one would say that they were not!

But what does it really mean? What can get in the way of making effective strategic decisions that benefit your organisation in the long-term? Is it possible that you are sabotaging yourself or applying the wrong criteria to your decision-making?

Dr Srini Pillay says that for many managers, that is almost certainly the case. And he’s worth listening to. The Assistant Professor of Psychiatry at Harvard Medical School, he spent many years studying brain imaging at McLean Hospital, Harvard’s largest independent psychiatric hospital. He combines that knowledge with analysis of organisations and is a regular contributor to the Harvard Business Review. For strategic decision-making skills, Pillay warns against being complacent and counsels focusing on skills development.

What should be a rational decision – which marketing strategy to follow, whom to hire, who would make a good partner – often fails. But why? Isn’t it simply a case of weighing the available evidence and then making a reasonable decision?

The problem is, says Pillay, that rational thinking is subject to bias and inherent self-sabotage. Building managerial skills requires you to be aware of what the Nobel Prize winner for Economics, Daniel Kahneman, terms ‘cognitive biases’ – fundamentally, the comfort zone of your own beliefs.

A typical problem occurs when a team has “fallen in love with” its internalised theories. This can lead managers to unconsciously ignore or reject advice that contradicts the organisation’s theories. Alternatively, they might place too much emphasis on data or comparisons that appear to support those theories.

Kahneman points out that a McKinsey study of 1,000 business investments showed that when companies worked to counter the effects of cognitive bias, they showed a rise of seven per cent in return on investment.

Problem solving requires a 360° perspective, and that means accepting that your own experiences and outlooks might affect your decision-making skills. It’s also why a key skill nurtured by leaders is to seek advice from peers (and anywhere else it’s readily available: good leaders are voracious readers and net-workers).

We’ve highlighted the “confirming evidence” trap (selecting evidence that reinforces our choices rather than looking at everything without preconceptions). Pillay gives two more examples of what our prejudices can lead us into:

  • The status quo trap – sticking with today’s norm rather than looking for a solution – which Pillay compares to moving deck chairs around on the Titanic rather than jumping over them to reach the lifeboats
  • The sunk costs trap – what non-economists would call “Throwing good money after bad”; this sees managers sticking to an existing strategy against the evidence, when the rational thing to do is to pull out before your organisation or team is completely drained of resources.

Pillay proposes a handy mnemonic that allows you to stress-test and question your strategic decisions as rationally and objectively as possible – it’s called TRICK :

  • T wo-tiered approach – run your decision past a small group of people who share the organisation’s values and standards
  • R apport with strategic team and implementers – make sure you are consulting with and getting feedback from those closest to your decision
  • I nvolve all from management to customer – make sure you are on the same page as all those affected by your decision
  • C ause and effect – make sure that by making your decision you will achieve the effect you intend
  • K ahneman – use his perspective to watch out for the hidden enemy of cognitive bias

Such an approach will be a boon to your career development and means your decision making will also be far more closely aligned with how your brain really works.

Check out our strategic decision skills courses here.

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