Decision making practice

In practice, managers rarely use formal tools. Instead, there are three questions they ask themselves, which normally yield a practical answer:

Is there a pattern I recognise here?

Pattern recognition is what managers refer to as intuition or experience. Unlike intuition, pattern recognition can be learned. Pattern recognition is simply a matter of observing what works and what does not work in different situations. If you recognise a familiar pattern, you will be able to predict what actions will work or fail. You will appear to have intuitive business sense.

Pattern recognition comes into play when the manager realises that they are going to be responsible for making a decision. It is a familiar pattern, it is normally an easy decision.

You can observe and learn from everyday sitions to build up your knowledge of what does and does not work in your own organisation. You may not have the luxury of reviewing 65 years of people managing conflicts, negotiating, influencing people or problem-solving, but good observation builds our skills, helps your pattern recognition and lets you appear to have excellent business sense and intuition.

Pattern recognition can be acquired and learned in a range of decision making conditions:

  • Competitive reactions. Long-established competitors know how one another will react, without the need for collusion, which would break antitrust laws. In many markets, there is a price leader from whom all competitors take their cues. If the leader raises prices, everyone else will follow. If there is a temporary price reduction for a promotion, competitors ignore it. If the price reduction is permanent, competitors follow. This makes pricing decisions across companies very simple: it is called follow my leader.
  • Buying decisions. Top clothing buyers can look at a rack of clothing and cost each item accurately, enabling them to negotiate well with their suppliers. This is the same skill that real estate agents have. They have seen hundreds, or thousands, of properties in your area and will know quickly and accurately how much your property is worth. Art experts at the main auction houses have the same knack, based on pulling up years of experience. Intuition comes from experience.

Managing people, including bosses, is largely about pattern recognition. You have to learn quickly what turns people on and off in terms of working style, risk appetite, people versus task focus, process versus outcome focus and more. No pattern is the right pattern: from a manager’s perspective, the point is to learn what works with different people.

If a decision fits into a familiar pattern, then most managers have the confidence to make it. The P&G brand manager will approve the development of a new campaign based on judgement, without recourse to expensive and time consuming market research. You can normally decide by recognising a pattern.

Who does this decision matter to, and why?

Decision-making is as much about politics as it is about reason. You need a solution that leads to action: the perfect solution that is not acted upon useless. Decisions lead to action only if people support them. This means that you have to ask “who?” as much as “what?”.

There are essentially four possibilities here, with a different outcome, in terms of decision making.

  • The decision is most important to a team member. If possible, back the team member. Coach them and encourage them to arrive at a decision. Do not let them become dependent on you for making all their decisions: they will not grow professionally and you will die under an avalanche of requests for decisions.
  • The decision is most important for one of your bosses. If you understand their agenda, it should be clear what the preferred decision is: frame the problem and the solution, and sell it to the boss. If the choice is unclear, work through the issue with the boss.
  • The decision is important to another colleague. Long term, managers need alliances and supporters across an organisation, so talk to the colleague and find manually advantageous solutions. Help them: win a friend.
  • The decision is important to you and to your agenda. If the choice is obvious, decide. If it is not, get help.

This is decision-making that is free of any problem-solving skills. The key skills are understanding the agendas of bosses, colleagues and your team, and framing  the decision to support those agendas. For this reason, many decisions emerge gradually over time. A consensus slowly builds, small actions are taken, which favour one choice over another, and, gradually, a preferred course of action emerges. This fits with the apparently chaotic schedule of many managers: lots of small interactions over the day help them understand one another’s agendas, sell an agenda, gather information and migrate slowly towards a series of decisions.

Does someone know the answer anyway?

Management is a team sport. You cannot be expected to know all the answers, but you will be expected to find all the answers. That means working with your colleagues on solutions.

For more complex decisions, you may not know the answer. But many different individuals in finance, marketing, operations, IT, sales and HR will hold part of the answer. They each hold one piece of the jigsaw and your job is to put the pieces together. This is both an intellectual process (discovering the best answer) and a political process (building a coalition in support of the emerging answer). This can take time. It may require several iterations before you can find a consensus, the solution that aligns all the different agendas.

It’s better to build an agreement to the decision before the decision-making meeting. Carry out the initial conversations in private. This is critical. As soon as anyone has taken a position in public, they will feel the need to defend it at all costs, rather than lose face by changing their position. In private, you can have much more open and flexible conversations: real issues can be discussed, agendas can be aligned and commitment can be built. The more you listen, the more you will understand the politics of the decision and the views of different stakeholders. You will gain more insight into the nature of the decision: you will understand better what the real challenge is, what the different options are and the consequences of each option. The more you listen, the more likely it is that a consensus will emerge around one preferred solution.

The final decision-making meeting still has relevance, but it is not about making a decision. It is about confirming in public to all the stakeholders that there really is consensus and agreement. It builds confidence and legitimises the consensus you have secured already in practise.

Owen, J., 2006. How to manage. Pearson Education.

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