Leadership: when flipping a coin is not enough

Published: 2011-08-28   please add a comment below

Every thriller includes a chase, in which the hero makes a split-second, life-and-death decision to take this alleyway and not that one. In business, the stakes are seldom so high but there are plenty where outcomes can make or break your career. Tomes have been written on decision-theory but my six thoughts below are simpler – prompted by Seth Godin’s blog* a while back arguing for coin-flipping as sometimes equally effective (and much less costly).

Please call to mind a decision you have to make in the next month or so and check it as follows!

1. Scope the stakes. What’s the potential impact? Is the decision an M&A company-maker; a big capex proposal; a maintenance expenditure; or, something more trivial? The higher the stakes, the more the decision merits planning and analysis. So, what percent of your decision’s potential value will you invest in the decision process itself?
2. Understand the timeframe. Sometimes even huge decisions need rapid action. A takeover offer or mishap can descend without warning. Someone has to take control – delegating everything else. How long can your current decision legitimately take? Remembering that speed is sometimes worthwhile for its own sake, if any decision is better than none.
3. Define your criteria. Don’t start analysis (gathering data, experts or work teams) until you’ve defined the decision’s “must haves” and its supporting “nice to haves”. I’ve known situations where after months of work an option has been discarded because it failed a “must have” that could have been recognised on day one. PLEASE write down those criteria!
4. Gather and stress-test both data and advice. Seek widely and ensure you have a mix of the right technical, commercial and other inputs. Also, some doubters to balance the gung-ho supporters. If necessary, appoint someone to play the devil’s advocate.
5. Allow your subconscious to help. Too many of us get consumed by the chase and its detail. Step back and let your mind do some unheeded processing – by day or overnight. On a recent project, I thought I had things clear – albeit with some niggles. Next morning, I woke with the complexity removed and a shorter, sharper solution.
6. DECIDE. Each decision comes with risks, so evaluate them, then act. On big ones, delay has clearly identifiable costs – of idle money, people or plant. On small ones, more time frequently provides no more certainty – but blows out the decision cost.

Finally, as Seth Godin stresses, a coin flip is sometimes as good as you can do. For your new ground-breaking product or software, there may be no pricing comparison in the market. Who’s to say $50, $100 or $1000 is right. In such cases, do your thinking but equally recognise that your ultimate decision can never be fully rationalised.

* http://sethgodin.typepad.com/seths_blog/2011/04/insist-on-the-coin-flip.html

Dr. Timothy Pascoe AM
PhD (Cambridge), MBA (Harvard), BE & BEc (Adelaide)
Creator, V|E|C|T|O|R Leadership^®