Leadership Teams, Decision-Making and the Power of WRAP.....
How to make good decisions is a subject that has always fascinated me. Much has been written about the arguments for going with your ‘gut’ rather than a long drawn out process, but sport will teach you that in order for the gut decision to work, you need to be so familiar with the environment and subject matter that you can recognise patterns (this is why Federer has moved to the correct position to return the serve almost before his opponent has actually hit the serve).
Where decisions require more deliberation, the stats across sectors do not augur well for our ability to go about it in the correct way. One study of corporate mergers and acquisitions showed that 83% failed to create any value for shareholders.
For many of the clients we work with key decisions are taken by the leadership team as a whole, rather than the ultimate leader. There are of course many reasons for, and benefits of, this process, particularly where the leadership team is well-constructed, diverse, and able to engage in open and robust discussion.
However, having all these factors in place doesn’t guarantee good decision-making. This is where a simple but effective framework, devised by two of our favourite business and academic authors Dan and Chip Heath, brings huge benefit.
In their book, Decisive – How to Make Better Decisions – they highlight the challenges involved in personal, business and career decisions. Sticking with business/organisational decisions, the brothers quote research carried out by Oliver Sibony, a Director of McKinsey & Company, who looked into the flawed decision-making process in businesses. Sibony uses this analogy to highlight the weakness of the process in most organisations: imagine walking into a courtroom where the trial consists of a prosecutor presenting power point slides. Using these slides, she demonstrates in a pretty compelling way why the defendant is guilty. The judge then challenges some of the facts of the presentation, but the prosecutor has a good answer to every objection. So the judge decides, and the accused man in sentenced. That wouldn’t be due process would it? So why would this process be acceptable in any other key decision-making situation?
We have so many biases when it comes to decision-making which can mean that we get it terribly wrong. Why a process? because understanding our shortcomings is not enough to fix them. Does knowing you’re shortsighted help you see better? Similarly it’s hard to correct a bias in our mental processes just by being aware of it. Where we have big decisions to make, why would we not do our best to get it right, using all the available research and insight into what drives a good decision-making process?
So what’s the solution offered by the Heath Brothers? A simple framework, which is of course mostly common sense, backed up by a huge amount of empirical evidence. And for which, as ever, strong understanding and rigorous application are key. The framework is aimed at avoiding the four villains of decision-making.
So what are the 4 villains?
• You encounter a choice, but narrow framing it makes you miss options. So….
Widen your Options. This part of the framework helps you understand how important it is to expand your set of choices, and how to do so. Paul Nutt, acclaimed expert in this field of decision-making, found in one piece of research that ‘whether or not’ decisions failed 52% of the time over the long term, compared to 32% of the decisions with two or more alternatives.
• You analyse your options. But the confirmation bias leads you to gather self-serving info. So….
Reality test your assumptions. This section helps you get outside your head and collect information you can trust. The use of questions here is key, with one powerful example being ‘What would have to be true for this to be a good decision?’
• You make a choice. But short-term emotion will often tempt you to make the wrong one. So…
Attain Distance before Deciding. This part of the framework helps you understand how to overcome short-term emotion and conflicted feelings to make the best choice.
• Then you live with it. But you’ll often be overconfident about how the future will unfold. So…..
Prepare to be wrong. This section looks at how to plan for an uncertain future so that we give our decisions the best chance to succeed, including the use of pre-mortems and setting tripwires.
The four steps are sequential, but you don’t have to rigidly follow the order. For example, in the course of gathering information to Reality Test your Assumptions, you might discover a new option that you hadn’t considered before. Other times you may not need all of the steps. At its core, the WRAP model urges you to switch from ‘auto spotlight’ to ‘manual spotlight’. Rather than make choices based on what naturally comes to your attention – visceral emotions, self-serving info, overconfident predictions, and so on, you deliberately illuminate more strategy spots. You sweep your light over a broader landscape and point it into hidden corners.
Due to client demand we have recently added this Module into our High Performing Teams Programme – if you would like to find out more, please get in touch