How to make the right business decisions
Written by Michael Vaughan
The Millennium Project (www.millennium-project.org) is an undertaking of the United Nations that began in 1996. Its audacious goal was to create a global collective intelligence system to improve the prospects for the future of humanity. There are now 40 countries taking part in the project, each represented by think-tank futurists, scholars, business planners, and policy makers who work for international organizations, governments, corporations, non-government organizations, and universities.
Every year, the Millennium Project releases an annual “State of the Future” report. The report discusses 15 global challenges facing humanity. At first glance, it is unexpected that “Capacity to decide”—that is, decision making—finds a place on the same list of global challenges as clean water, peace and conflict, and energy.
I believe this is because poor decision-making is becoming a rampant global issue. Poor decision-making creates a vicious cycle—that is, when poor decisions are made, this reinforces an already present anxiety about decision making. As a result, a great deal of time is wasted on undoing or justifying poor decisions, which again creates more anxiety about decision-making. This cycle continues and further reinforces an individual’s fear to make important decisions.
In business, this cycle results in employees becoming less likely to step up, share innovative ideas, or solve problems. Furthermore, the impact of the inability to make decisions is not just constrained within the walls of organizations, it consumes every aspect of our lives—and it's getting worse.
For the past decade, The Regis Company has researched and tested various techniques in our simulations to identify how an individual makes decisions to determine whether those techniques could modify behavior. We hope to find ways to measure thinking capabilities, tendencies, and practices pertaining to decision-making.
The simulations have been most helpful in understanding the limitations that all people have to varying degrees when making difficult decisions. For example, a common tendency is for participants to fixate on the immediate information within their purview. Even when we provide them with cues into potential future issues or market shifts, they gravitate toward the here and now. When the decision becomes complex, we literally see people shut down and resort to guessing.
Is it possible to improve decision making skills?
Angelika Dimoka, director of the Center for Neural Decision Making at Temple University, conducted a study that measured people’s brain activity while they addressed increasingly complex problems. Using functional magnetic resonance imaging (FMRI) to measure changes in blood flow, she found that as people received more information, their brain activity increased in the dorsolateral prefrontal cortex, a region behind the forehead that is responsible for decision making and control of emotions. But when the load became too much, it was as though a breaker in the brain was triggered, and the prefrontal cortex suddenly shut down. As people reached information overload, Dimoka explained, “They start making stupid mistakes and bad choices because the brain region responsible for smart decision making has essentially left the premises.” This may also explain why people become increasingly frustrated and anxious. Since this region of the brain also controls emotions, an individual’s attitude worsens as decision making worsens.
Now, it’s time for the good news. It is possible to improve decision-making. However, it is not possible to teach people to become better decision makers by describing decision-making processes, providing checklists, following procedures, or punishing failures.
Human dynamics are some of the main contributors to pushing well-intentioned and thoughtful people down the path of poor decision making. Understanding the following list of human factors—we call them “derailers”—can help hone decision making skills:
Biases filter our experiences and affect the way we understand the world around us, allowing us to see what we want to see. It is a human tendency to draw a conclusion without considering all of the evidence. As we gather information, our brains naturally reference memories and facts to interpret it based on what we already know. A simple fact is that the information we receive is rarely entirely accurate, complete, or unbiased. In reviewing the information to make a decision, it is important to consider the likely accuracy of the data, what might be missing, and what biases exist in the observer or reporter.
The more choices we’re given, the more tired and less effective we become. The human brain has limited resources and energy to expend to make each choice. In the time between getting up in the morning and going to bed in the evening, an average person makes thousands of decisions. Each choice we make chips away at our mental energy. When it comes time to make important decisions, we may be mentally and emotional depleted, leading us down the path of least resistance.
With so many demands surrounding us all the time, it’s tempting to try to do it all, and all at the same time. The truth, however, is that multitasking actually slows people—and organizations—down. Our brains are optimized to focus on one task at a time. Spreading our attention across multiple tasks becomes draining and leaves little energy for those tasks that matter most. To make quality decisions requires quality thought and that comes from paying attention.
Fear appears more and more at all levels in organizations, and, in fact, it is the most common thing getting in the way of quality decision making. Fear of failure, fear of making the wrong decision, and fear of our own inadequacy all affect the actions we take and decisions we make.
Noise presents itself in multiple ways. World noise is the constant onslaught of news about collapsing governments, wars, uprisings, and acts of terrorism that shape our thinking. Organizational noise comes in endless streams of reports, metrics, memos, slide decks, e-mails, tweets, messages, and posts. At the individual level, there is internal noise, which manifests from our biases, fears, and competing priorities.
To improve decision-making requires an awareness of the impacts of the human dynamics in relationship to the underlying system dynamics. In other words, to improve decision-making skills requires an environment in which participants can practice making decisions in the context of real-world situations, and then have time to reflect and adjust their decisions relative to actual or anticipated outcomes.
About the author
Michael Vaughan is the author of The Thinking Effect: Rethinking Thinking to Create Great Leaders and the New Value Worker. He is the CEO and Managing Director of The Regis Company, whose leadership programs are designed to fundamentally change the way leaders think. Vaughan is a leading authority on serious games and business simulations and holds degrees in cognitive science and computer science from Colorado State University. For more information, please visit www.thethinkingeffect.com
Marketing matters: from IBM to Kyndryl
Prior to joining Kyndryl as Chief Marketing Officer, Maria had a 25-year career at IBM, most recently as the tech giant’s CMO where she oversaw all marketing professionals and activities across North America, Canada and Latin America. She has held senior global marketing positions in a variety of disciplines and business units across IBM, most notably strategic initiatives in Smarter Cities and Watson Customer Engagement, as well as leading teams in services, business analytics, and mobile and industry solutions. She is known for her work with teams to leverage data, analytics and cloud technologies to build deeper engagements with customers and partners.
With a passion for marketing, business and people, and a recognized expert in data-driven marketing and brand engagement, Maria talks to Business Chief about her new role, her leadership style and what success means to her.
You've recently moved from IBM to Kyndryl, joining as CMO. Tell us about this exciting new role?
I’m Chief Marketing Officer for Kyndryl, the independent company that will be created following the separation from IBM of its Managed Infrastructure Services business, expected to occur by the end of 2021. My role is to plan, develop, and execute Kyndryl's marketing and advertising initiatives. This includes building a company culture and brand identity on which we base our marketing and advertising strategy.
We have an amazing opportunity ahead at Kyndryl to create a company brand that will stand apart in the market by leading with our people first. Once we are an independent company, each Kyndryl employee will advance the vital systems that power human progress. Our people are devoted, restless, empathetic, and anticipatory – key qualities needed as we build on existing customer relationships and cultivate new ones. Our people are at the heart of this business and I am deeply hopeful and excited for our future.
What experiences have helped prepare you for this new opportunity?
I’ve had a very rich and diverse career history at IBM that has lasted 25+ years. I started out in sales but landed explored opportunities at IBM in different roles, business units, geographies, and functions. Marketing and business are my passions and I landed on Marketing because it allowed me to utilize both my left and right brain, bringing together art and science. In college, I was no tonly a business major, but an art major. I love marketing because I can leverage my extensive knowledge of business, while also being able to think openly and creatively.
The opportunities I was given during my time at IBM and my natural curiosity have led me to the path I’m on now and there’s no better next career step than a once-in-a-lifetime-opportunity to help launch a company. The core of my role at Kyndryl is to create a culture centered on our people and growing up in my career at IBM has allowed me to see first-hand how to prioritize people and ensure they are at the heart of progress in everything Kyndryl will do.
How would you describe your leadership style?
I believe that people aren't your greatest assets, they are your only assets. My platform and background for leadership has always been grounded in authenticity to who I am and centered on diversity and inclusion. I immigrated to the US from Chile when I was 10 years old and so I know the power and beauty that comes from leaning into what makes you different from other people, and that's what I want every person in my marketing organization to feel – the value in bringing their most authentic self to work every day. The way our employees feel when they show up for themselves authentically is how they will also show up for our customers, and strong relationships drive growth.
I think this is especially true in light of a world forever changed by the pandemic. Living through such an unprecedented time has reinforced that we are all humans. We can't lead or care for one another without empathy and I think leaders everywhere have been reminded of this.
What’s the best leadership advice you’ve received?
When I was growing up as an immigrant in North Carolina, I often wanted to be just like everyone else. But my mother always told me: Be unique, be memorable – you have an authentic view and experience of the world that no one else will ever have, so don't try to be anyone else but you.
What does success look like to you?
I think the concept of success is multi-faceted. From a career perspective, being in a job where you're respected and appreciated, and where you can see how your contributions are providing value by motivating your teams to be better – that's success! From a personal perspective, there is no greater accomplishment than investing in the next generation. I love mentoring younger professionals – they are the future. I want my legacy as a leader to include providing value in work culture, but also in leaving a personal impact on the lives of professionals who will carry the workforce forward. Finding a position in life with a job and company that offers me a chance at all of that is what success looks like to me.
What advice would you give to your younger self just starting out in the industry?
I've always been a naturally curious person and it's easy for me to over-commit to projects that pique my interest. I've learned over years of practice how to manage that, so to my younger self I’d say… prioritize the things that are most important, and then become amazing at those things.