You have seen how your biased decision making leads to 70% failure in strategic initiatives and how the behavioural strategy process can save you by using the methods in the four steps above chronologically. But what on earth is pre mortem tests, when do you use wisdom of crowds and why would stretch targets help you???
Well, firstly the decision making process above is not just designed for strategy – it is designed for good decisions. Period. But not all methods are made for all types of decisions, so here are three examples of relevant methods for each starting with the most demanding that we use for strategy and ending with simple ones that you should use every day. You are welcome;)
For each step it is important to remember why you are doing it. In the first step you want to broaden perspectives, because people have a tendency to only look at the options that you already know and typically no more than two – but research shows that this leads to bad outcomes in 50% of decisions. By applying stretch targets in a process you force a discussion on much more different and dramatic options instead of the typical old standards. For example if you ask how your company can grow next year, you are likely to hear something like “push lower prices, increase marketing and channels”. Not very inspiring nor great advice. But what if you ask what it takes to double your business in three years? That’s a very different conversation!
In the second step you want to facilitate a debiased decision. Yep, just that. Obviously this is the most complex area and involves tons of big and small tricks with all the biases involved, but if you want to try a quick and dirty one that cuts across all our biases, use wisdom of crowds. It has been proven that experts are excellent at explaining the facts of the past but are no match for a group of average people in guessing the future – simply use the average of the group:)
In the third step you recognize that you might need to double check a few things before making the final decision, as your overconfidence might otherwise get the better of you – it is so easy once a decision has been reached and the big kahuna at the end has nodded to just press ahead with all the excitement at your back, but don’t! Instead why not try the devils advocate, where you assign 1-2 persons to look for flaws in the decision. The assignees avoid the typical risk of being labelled party poopers, and for better or worse people are great at that game!
The final step is recognizing that for all your preparation you may miss something, something may change or something was not clear at the time of decision – not least because of your limited processing capacity and unwillingness to change once committed to a decision. Before you bet the farm on that decision run a pre-mortem test. When things have gone wrong, you run a post-mortem to see what went wrong. In a pre-mortem you look ahead at the challenges that could cause everything to fail, and create a plan to navigate around them.
There you have them – four easy to apply tricks in day to day decision making to minimize the risk of big mistakes. And when you need to make that major strategy decision call us…