Business Transformation Requires Transformational Leaders

The Making SMARTER Decisions with Data framework is a collaborative data-informed decision-making approach that incorporates tangible business value, unknown and unknowable data, intuition, human emotions, actionable insights, and meaning-making. It is particularly useful in uncertain, fast-changing, turbulent times — our business climate for the foreseeable future.

Decision making in complexity is not difficult, just different. Old tools based on searching for certainty and finding the best answer must give way to a new set of tools based around iteration, experimentation, and adaption. Leaders need to expand their decision-making toolbox. They need tools that allow for a rapid situation assessment so they can make a decision (right or wrong), then adapt that decision as it plays out in the real world.

Complex times require leaders with more than just knowledge, insight, and skills; they need the temperament to remain calm and collected as they apply analysis and judgment to high-stakes decisions. This Advisor reviews the ingredients of good decisions and explores how decision making can go wrong.

If we think about hierarchies, we will see their effects and try to improve them. If we instead think about value streams, we will see the effects of value streams and try to improve them. Hierarchies are a structure we use to organize our people; value streams represent the actual work we’re doing. Let’s explore the difference that shifting our focus creates.

Cutter Expert Paul Clermont helps us understand how and why capable, experienced people often make poor choices. He describes familiar pathologies like confirmation bias, groupthink, and the tendency to double down on failing courses of action in which we have invested heavily. Clermont argues that challenging market conditions sometimes exacerbate our tendency to make these types of mistakes, rather than bringing out the best in us. He provides four guidelines for enhanced critical thinking, arguing that leaders need to be more inquisitive, humble, diligent, and skeptical.

Dave Martin, Tony Ponton, and Kim Ballestrin explain that humans crave certainty, and we desperately want to be right the first time. They argue that trying to be “right” can lead us astray in highly complex environments. Thus, we must become comfortable with ambiguity, especially with the notion of arriving at a partially correct decision. Next, we need to select the appropriate measures to track our progress. Are we on the right track or not? Once we have additional information, we can adapt our decision and refine our course of action. This iterative process serves us well in complex situations for which our predictive powers are simply far too limited.

Cutter Fellow Noah Barsky outlines 10 unconventional rules for helping us identify critical risks. He argues that we should not relegate risk management to our compliance or legal departments. On the contrary, we need to transform the mindset that says risk management and mitigation are the responsibility of specialists within specific functional areas. Instead, it must become everyone’s responsibility. Many risks remain stubbornly hidden in organizations. Barsky closes his article by suggesting, quite astutely, that we need to “listen to the kids” in our enterprises.

The best leaders recognize that they don’t have all the answers. They acknowledge the limits of their expertise and understand the need to marshal the collective intellect of their teams. As Peter Drucker once said, “The most common source of mistakes in management decisions is the emphasis on finding the right answer rather than the right question.” So what can leaders do to gather input from a diverse array of sources? How can they generate and critically evaluate options? What does it take to uncover and assess hidden risks? In this issue of Amplify, we explore these questions in depth.