I meditate upon mankind’s advancement
From flint sparks into million-volted glare
That shows us everything but the future –
And leaves us not much wiser than we were.
WE MAKE OUR DECISIONS. Our decisions make us and our organisations.
In theory, decision-making is simple. A problem emerges. The goal is defined and the possible options for achieving it and solving the problem identified. These options are then analysed and the one that seems most effective is selected. Powerful mathematical tools are available to facilitate the task. Yet if it is so simple, why do businesses keep getting it wrong?
There is no shortage of examples of poor decision-making. Lehman Brothers might have survived if it had raised more capital or merged while it still had the chance. But it left it too late. The Royal Bank of Scotland was almost ruined by the decision to acquire ABN Amro. Toyota’s reputation was severely dented by the furore caused by its reluctance to recall vehicles with potentially lethal faults. Porsche lost its independence as a result of a decision to mount a takeover for VW. The Deepwater Horizon disaster exposed flaws in BP’s decision-making. Many more failures go unreported. Yet the costs, direct and indirect, are borne by shareholders, employees, taxpayers and ultimately society at large. Those costs, moreover, sometimes involve injury or loss of life.
No organisation makes perfect decisions all the time. Decision-making is a lot harder than the ...