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Untangling your organization's decision making

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https://www.mckinsey.com/business-functions/organization/our-insights/untangling-your-organizations-decision-making

mckinsey.com

Untangling your organization's decision making
It's the best and worst of times for decision makers. Swelling stockpiles of data, advanced analytics, and intelligent algorithms are providing organizations with powerful new inputs and methods for making all manner of decisions. Corporate leaders also are much more aware today than they were 20 years ago of the cognitive biases-anchoring, loss aversion, confirmation bias, and many more-that undermine decision making without our knowing it.

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The ABCDs of categorizing decisions

The ABCDs of categorizing decisions
  • Big-bet decisions: infrequent and high-risk - from major acquisitions to game-changing capital investments;
  • Cross-cutting decisions: frequent and high-risk - think pricin...

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Approaching big bet decisions

  • Appoint an executive sponsor to work with a project lead to frame important decisions for senior leaders to weigh in on;
  • Break things down (with decision meetings at each...

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Approaching cross-cutting decisions

  • Identify decisions that involve a cross-cutting group of leaders, and work with the stakeholders of each to agree on what the main steps in the process entail.
  • Work through a...

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Approaching Delegated decisions

  • Delegate more decision.
  • Avoid overlap of decision rights.
  • Establish a clear escalation path.
  • Get people to  take ownership of the decisions.

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Default options

Deciding is too much effort so we’re likely to just stick with the default or safer option if it’s already been chosen for us. 

When we get offered too many choices, the same...

Best decision making happens in the morning

This is when serotonin is at it’s natural high, which helps to calm our brain. Thus, we feel less risk averse and so we can face risks and make harder choices.

The part our bodies play in decision-making

If we’re feeling hunger, thirst or sexual desire, that can actually spill over into the decision areas of our brains, making us feel more desire for big rewards when we make choices. 

This can lead us to make higher-risk choices and to want for more.

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“The biggest risk is not taking any risk. In a world that is changing really quickly, the only strategy that is gu..."

Mark Zuckerberg, CEO of Facebook

Skills Needed In Digital Leaders

  • Work together, complement each other, and function as a team.
  • Able to operate on and enable environments that are more dynamic, team-centric, and connected.
  • Lead and build teams and partner with the broader ecosystems, keep people connected and engaged, and drive a culture of innovation, learning, and continuous improvement.
  • Lead a workforce that includes contractors, the contingent workforce, and crowd talent.
  • Understand how different business functions, industries, and technologies come together to form solutions.
  • Comfortable and competent with risk-taking.

Demographics And Leadership Destiny

Millennials expect to be developed via opportunities, mentoring, and stretch assignments. However that is hard to come by in top-heavy companies. 

Most millennials think their roles provide little development while most companies report they have excellent or adequate programs for Millennials.

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The Pressure Of Time

Most leaders have familiar approaches to managing time: setting goals, planning, delegating, tracking commitments, and creating to-do lists. While these approaches do help in self-organization, the...

Sustainable Productivity

Instead of increasing the number of productive hours, we can focus on getting the right things done in a timely way. We also need to restore and balance ourselves, our colleagues, family and environment, instead of a neurotic or pathological focus on deadlines.

Find out what's truly important to us and use the finite resource of time wisely.

Phantom Workload

Phantom workload looks like real work but results in massive unproductivity and even conflict in an organization. The pressure to meet unrealistic expectations causes a vicious cycle of further workload.

Leaders need to take a hard look at what is being avoided or not addressed. Facing difficult tasks that were 'swept under the carpet' earlier strengthens them further to make hard decisions and face difficult people and situations.

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