Leadership in the Moment of
Decision
Leaders collect vast amounts of
knowledge, but if there is one area of expertise they must develop, it is the
art of making the judgment call. Decision-making doesn’t come from models, it
comes from practice.
Darius was the head and part owner
of a large Indian FMCG company. The company’s share in the Indian market had
started dwindling steadily with the arrival of global competitors in the late
1990s. Darius knew that his products were seen as crude with basic packaging
and the only positioning they had was that they were cheap.
He knew he needed a more
sophisticated understanding of market segments and he needed to create an
understandable and compelling value proposition for his segments. Darius knew
enough marketing to understand what was needed, but he was no expert. He was a
finance guy through and through. So he hired a consulting firm to help make
product-positioning choices. The firm worked closely with Darius over several
months. After showing him the results of customer interviews, they worked with
him to design segments, talked through activation strategies and presented a
detailed plan for creating and executing a marketing strategy for each of the
products.
According to Darius, that was the
easy part. The way he saw it, the decision to take action would always come
down to a roll of the dice. He understood conceptually that the marketing
principles on which the plans were built, in practice, explained limited
amounts of the variance in the outcome he sought. He had all the data he could
reasonably ask for. Now he had to make a choice.
Over the years I have worked with
hundreds of people in Darius’ position. Most of them frame their problems in
very similar ways. ‘I know what the data say and what the experts say they
mean. I now have to make a choice. Do I go with the received wisdom or do I go
with something else? And if so, what?’
Models outmoded
Much like Darius, many leaders are
handed reams of models to help them make decisions. In consulting and even in
business schools, there are models for everything; hiring a person, launching a
product, entering a market, acquiring a company. But would you use a model if I
told you it explained only 20 percent of the variance in success and failure?
What about 5 percent? Our models explain maybe 10 percent, if we’re lucky.
To be fair, this is not a bad thing.
By following the model in a hiring process, we are significantly improving upon
pure chance and nothing else we have tops the latest evidence-based model in
beating chance. There’s no doubt that you’re better off knowing what little the
models do explain than not knowing it. But there are very few serious leaders I
have met or read about in the course of my career, who are willing to follow the
dictates of any model without question. Outstanding leaders know how to
complement evidence-based models with judgment.
Throughout my time in the classroom
with senior executives it has become quite clear to me that my participants
sought this expertise more than any other, the expertise of making the judgment
call.
So how can you hone the skills of
sound judgment? It turns out that the answer is simpler than you think. You
develop expertise in making “the call” just as you would develop any other form
of expertise. Above all, you practice.
Learning how to learn
The literature on expertise is
clear. If you teach people new models of expert behaviour, their performance
might worsen. Teaching them to behave like other leaders doesn’t work either.
People can only learn like experts. Therefore, how do I teach judgment? I focus
on four areas:
Practice
If you want to become an expert
tennis player, violinist, gymnast, you will practice. Why would it be any
different for a leader who makes judgment calls? It isn’t. But the problem with
business leaders practicing in reality is that, well, it’s real.
The best way to practice without
making high stakes errors is with simulations. Business case studies are a
great tool for this job. Of course, people who know case analysis in its
conventional form spend more of their time trying to guess the point the
professor wants to make, than trying to practice their decision-making ability.
I ask managers to come equipped with data about their own situations so that
they can practice making decisions about their contexts, thereby keeping their
deliberations real.
Practice can also be made a habit.
Some of the most successful leaders I have seen practice all the time. Have you
ever felt flattered because a successful CEO seemed to be very interested in
your conclusions on some subject? Did you get the impression that she was
probing your assumptions, trying to really understand how you came to your
conclusions? Well, she was probably practicing how she would make the very
decision that you had just made.
Try it yourself. Get into
conversations with people you think know something about their subjects. Probe
their beliefs. Understand how they draw conclusions and ask yourself whether
you would make similar decisions.
Feedback
Leaders and managers I meet express
frustration at the paucity of objective feedback on the judgment calls they
make. Darius went ahead and made the changes recommended by the consultants.
The first year did not go well and many of Darius’ detergent and soap brands
lost market share. Where did it go wrong? This was unclear, as market feedback
is often noisy, making it hard to pinpoint the error.
Reflection
Much has been said about the fact
that the leaders of today are incentivised to act and not reflect. Less is
spoken about the fact that gaining expertise seems to be premised on
reflection. However, how do you reflect? It’s easy to mistake judgment for
reflection. “You know, I thought about it and I concluded that I didn’t like what
you said.” That’s judgment and possibly carries information for the person upon
whom the judgment has been delivered, but it has less value as reflection.
Reflection begins when you think
about what the judgment you made, says about you. What is it about you that
caused you to dislike what you heard? What does your dislike say about you as a
person?
It is important to understand that
reflection is not cognitive, but a reflex. Much as the tennis player does not
think as she heads back to the middle of the baseline after being drawn to one
corner, I encourage managers to strengthen the reflex of reflection.
Coaching
Many senior executives have
considered getting an executive coach for themselves. Several websites list the
advantages of getting a coach and many senior executive education programmes
will include some form of coaching for their participants.
I frame coaching much the way Tim
Gallwey did in The Inner Game. Gallwey suggests that the role of the
coach is to ask – what is the goal you have set for yourself; how do you see
your reality; what options are you considering for reaching your goals, and do
you have the will to see them through?
As the frantic hustle and bustle of
work can very often leave executives little time to recall the original reasons
for embarking on a course of action, I invite my participants to practice the
skills of coaching with other participants, virtually all the time. A
conversation at the bar about a difficult professional relationship becomes an
opportunity for coaching. The recipient can then engage in the reflex of
reflection and examine their reactions to the coaching questions they are
asked.
Narayan Pant, INSEAD Professor of Management
Practice, The Raoul de Vitry d’Avaucourt Chaired Professor of Leadership
Development and Programme Director of the INSEAD Advanced Management
Programme |
No comments:
Post a Comment