Strategic decision making is a team sport. The team approach benefits are well known. There is nothing as rewarding as working with a motivated, talented team that knows what it is doing, why it is doing it, and how it is going to measure success. There is nothing as frustrating as working on a team that does not know what it is doing, why it is doing it, or how it is going to measure success.
You have probably seen some familiar failure modes if you have worked on strategy teams. Lack of experience is a common weakness. People are good at their jobs but they are not good at working with a team on a complicated, cross-functional project. Often teams fail because they try to include everything. They are afraid to leave something out. They fail to focus on the 20 percent of the issues that impact success or failure.
Teams get better resullts if they have a coach. A coach is someone with experience who can help select people; frame problems; pick the right process; apply the right tools; facilitate learning; and manage projects. Someone who knows how to communicate with executives.
What kind of decisions require teams? In 2008, McKinsey Consulting surveyed over 2000 executives from a full range of industries, regions, and functions. The survey revealed that half of the strategic decisions faced by the executives dealt with expansion or investment in new and existing products, services, or geographies. This would include decisions like, How do we want to capitalize on Artificial Intelligence? Do we develop an iPad? Do we manufacture the iPad in the US?
These decisions are usually made by teams made up of people from multiple functions: research, engineering, marketing, sales, manufacturing, public relations, and legal. Often they require participation by people from many different countries and cultural backgrounds.
Decisions can be classified along two dimensions: technical complexity and political/social/emotional complexity.The decisions in the McKinsey survey tend to be high on both dimensions. The technical dimension is the domain of decision engineers. They are trained to deal with complex, dynamic, uncertain systems. It takes a decision coach to master the political/social/emotional complexity.
Let’s take a situation that could happen in almost any company today. Suppose the executive team in your organization has just returned from a one-week whirlwind tour of Silicon Valley. The executives visited Google, Facebook, HP, Intel, and Apple. They visited accelerators and incubators. They talked with venture capitalists and professors. They are convinced that your company has to “get on the bus.” They want to dip into the Silicon Valley zeitgeist. They know they have to do something but they do not know what or how.
Your CEO has decided to form a team to develop a “Silicon Valley Strategy.” She has selected the people from marketing, sales, R&D, product development, and manufacturing. She wants a couple of people from overseas to participate.
What happens next might go something like this. The team gets in the same room at the same time (which is a nontrivial exercise.) They get a pep talk from the CEO. She appoints the VP of Marketing to be the team leader. The CEO promises she will implement the team’s recommendations. The CEO says she wants the recommendation to be based on valid information and it must have the personal commitment of the team members. Then she leaves. What happens next? How does the team get from the kick-off meeting to a recommendation? How do we get clarity of action with good alignment?
An experienced decision coach knows exactly what to do in situations like this. A coach brings four things to a project: process, tools, facilitation, and project management. I will expand a little on each of these.
Process is the answer to the question, “How do we do things around here?” All organizations should have a widely accepted process for making strategic decisions. Edwards Deming, the father of the quality movement said, “If you can’t explain what you are doing as a process then you don’t know what you are doing.”
The appropriate process depends on the complexity of the decisions we are making and who needs to be involved. I have found the Collaborative Design Process to work best across the spectrum of product planning, corporate strategy, and even public policy decisions. Your organization may have a different process for strategic decisions.
The Collaborative Design Process has four clearly defined phases: framing, alternative generation, analysis, and synthesis. This process evolved from work done at Stanford University and by teams at the Strategic Decisions Group (SDG) in Palo Alto, California. It was honed at General Motors and several other international corporations in the 1990’s.
For decisions that are complicated technically and organizationally we need a process that balances advocacy and inquiry. Advocacy is about standing up for our interests and beliefs. Advocacy is important, however, too much advocacy can be a problematic. When solving tough problems we want to balance strong advocacy with strong inquiry. We want to have a process that allows people to present balanced arguments, remain open to alternatives, and accept constructive criticism.
A strong process will blend good analysis with synthesis. This is the essence of design thinking. Steve Jobs called synthesis, “Connecting the dots.” Many truly innovative approaches are hybrid strategies that combine the strengths of several very different approaches. Apple Computer, for example, is a hybrid. The company combines the strengths of a hardware company and a software company. We need a decision process that blends analysis and synthesis.
A decision coach can help executives choose the process that is appropriate for the situation. In some cases a well-facilitated meeting with the right people is all that it takes to reach clarity of action. In other situations it can take months and hundreds of hours of meetings, information collection, and computer modeling.
The better known strategic decision making tools are computer-based models, sensitivity analysis(tornado diagrams), scenarios, and decision trees. There are other tools that professional decision engineers use frequently. They include framing hierarchies, decision diagrams, strategy tables, and expert assessment. The tools most commonly used by decision professional professionals listed in the figure on the right.
Selecting the right tools is not always easy. Choosing the wrong tools can waste a team’s valuable time. I have watched teams struggle with detailed accounting models that did not address the real issues; issues like technical success, market share, or price. An experienced coach can help overcome a team’s tendency to use the tools they are familiar with rather than the tools they need.
Perhaps the biggest coaching challenge is moving teams toward mutual learning and away from pure advocacy and negotiation. People often view decision making as a contest. The objective is to win for my product or my facility.
I like to take a mutual learning approach to working with teams. In the 1970’s Chris Argyris and David Schöne, interviewed many people and they observed many groups in decision making situations. They discovered that there is a big disparity between how people say we should act and how we actually act. There seems to be a universal norm, “do what I say, not what I do” when it comes to how we think and act in teams. People say we should think and act according to a Mutual Learning model. They say the goal is to make informed choices based on valid information with internal commitment. They say that the way to do this is to present balanced arguments, remain open to alternatives, and accept constructive criticism.
What Argyris and Schöne observed is quite different. Our goal is to win. We strive to persuade others. We defend our positions. We tend to downplay our weaknesses rather than accept criticism. Rather than constructive inquiry we seem to prefer persuasion and lobbying. Despite our best intentions, we end up with limited understanding, poor decisions, and low commitment simply because we do not learn from each other. Argyris and Schöne called this the Unilateral Control model.
A well-trained, experienced decision coach can help groups move from Unilateral Control to Mutual Learning. It takes reflection, intervention, and skilled facilitation. I personally had the pleasure of working with Chris Argyris and his colleagues in the 1990’s. I have used what I learned from them in my coaching work for the last 20 years. It has never failed me. I try apply the following five guidelines taken from the teachings of Chris Argyris:
State thinking behind my own view.
Inquire into other people’s views
Make dilemmas discusssable (e.g., If we go this direction then you won’t have a role.)
Express and reflect on emotion.
Design ways to test the merits of differing views.
These simple guidelines can go a long way toward sorting out political/social/emotional complexities.
People forget that even a high-level strategy effort needs to be managed like any other complicated project. How many times have you heard project reviews like these? “The project cost too much.” “It took too long,” “The wrong people were involved.” These are project management issues. They have little to do with the technical content of the project. There is an old adage that I use in budget discussions, “No one cares how much a project cost if it is a success. No one cares how little a project cost if it is a failure.” The goal is to get a successful project at the right price. Price includes time and money, and I might add, personal stress.
A decision coach will understand the tradeoffs that need to be made among time, cost, and quality. It is not possible to get a high-quality project, for low cost, in a hurry. Tradeoffs have to be made.
Decision engineering is the path to decision coaching
I believe that most decision coaches will begin their careers as decision engineers. Why engineers? It takes a combination of technical and organizational skills to work with teams. Engineers are comfortable with the technical aspects of complex decisions. It comes naturally. With the right training and experience most engineers can acquire the political/social/emotional skills. There is an important asymmetry in the talents that people bring to decision making. I have never met an engineer that thought business school was difficult. I have never met a non-engineer that thought engineering was easy. Half of the CEO’s in large US corporations started in engineering.
A decision engineer should have a degree in engineering or another technical field like physics. Decision engineers need to have a profound understanding of systems analysis, applied probability, and decision theory. This enables them to work with systems that are complex, dynamic, and uncertain. These disciplines are especially needed to design, build, and manipulate computer-based mathematical models. Structural models are a powerful tool for bringing groups of people together to talk about tough decisions.
A decision engineer is forward looking. Decision making is about the future. Decision engineers are comfortable using future-oriented tools like expert assessments, scenarios, and computer-based structural models.
A decision engineer is process oriented. There are two fundamental processes associated with decision making: the Decision Analysis Process and the Collaborative Design Process. The Decision Analysis process is for problems that are technically complicated but straightforward organizationally. The Decision Analysis process is appropriate when there are only a few stakeholders involved and they are well aligned. The Collaborative Design process is appropriate when the stakes are high and many diverse people are involved.
Engineers are able to frame complex problems, design innovative alternatives, do analysis, and present the results. This knowledge comes from training and experience.
An engineer is guided by norms of logic and behavior. His critical thinking skills enable him to understand the distinction between what is normative and what is descriptive. Engineering is guided by professional norms of good design: efficiency, ease of use, safety, and durability.
A decision engineer knows that a good outcome is not the same as a good decision. Our focus is on helping people make good decisions. The distinction between a good decision and a good outcome is the essence of decision theory. It is easy to recognize a bad outcome. It is hard to determine whether a complex decision is good or bad.
A decision engineer is a Bayesian. If you have to look up the term “Bayesian,” then you are probably not a decision engineer. Bayes’ Rule provides a logical, theoretically sound framework for updating probabilities as new information is acquired. Bayes’ Rule is a central underpinning of normative decision making.
All engineers know how to exercise judgment when data is not available. Decision engineers know how to help other people assign probabilities to uncertain events and overcome cognitive biases. In the terms of Daniel Kahneman, engineers know how to “slow think” when it is appropriate.
There may be other defining characteristics of a decision engineer. These are the important ones based on my experience. I will now share some history and my own career path. This might promote your thinking on how you can become a decision coach.
If you want to become a decision coach then my advice is to first become a decision engineer. Find a place where you can learn systems analysis, computer modeling, and decision analysis. Learn about business. Look for mentors. Get involved in tough projects that require collaboration. Read the writings of the pioneers of modern management: Drucker, Deming, Kahneman, Porter, Christianson, Martin, Howard, and Argyris. Learn how to keep teams focused on decisions. Learn how to present results.
Decision engineering and decision coaching are excellent preparation for taking up executive roles. As Peter Drucker so wisely said, “Decision making is only one of the tasks of an executive. It usually takes but a small fraction of his time. But to make decisions is the specific executive task.”