DECIDE: How to Manage the Risk in Your Decision Making

By Bryan Whitefield

There are times when fussing over a decision is at best unhelpful. There are times when you should rely on your gut instinct. And then there are strategic decisions that deal with the biggest issues facing your organisation and which are being made within a large cloud of uncertainty. These are the decisions that you must think through, that you

• Language: English
• Publisher: Risk Management Partners
• Release date: Nov 9, 2015
• ISBN: 9780994521873

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DECIDE

How to Manage the Risk in your Decision Making

Bryan Whitefield

Table of Contents

Acknowledgements

Preface

Introduction

Part I

For a strategic leader, uncertainty is your friend

Chapter 1

Houston, we have a problem

Our tendency to impulsiveness

The uncertainty paradox

The three key elements of decision making

Chapter 2

Your decisions define you

Have you thought about the value of a decision?

How good are you at decision making?

A massive opportunity

Chapter 3

Management, we have a problem

It’s like Ground Hog Day

Caught in the rat race

Solutions abound

Chapter 4

The solution is right there within us

The hidden risk

A common trap

Strategic leadership

Part II

It starts with motivation

Chapter 5

Motivation determines mindset

What motivates you leads you

What motivates you can also defeat you – McAuley

What motivates you can also defeat you – NASA

Chapter 6

Mindset creates blockers

Do you understand what drives your motivation?

Enough blocks to build a building

Part III

Clarify your options

Chapter 7

Clarity does not come easily

Hard-smart work

Options

Real options

Outcomes

Chapter 8

Clarification Traps

‘She’ll be right’ attitudes

Very rare, very big, very nasty events

Analysis phobias

Perceive first, ask questions later

Technology and disruptive innovation

Part IV

Implementation. Are you willing, ready and able?

Chapter 9

The implementation deception

Understanding capability

Relentless execution

Choose to be agile

Preparation is key

Will you know?

Beware milestones

Chapter 10

You create your destiny

The power of purpose

Creative leaders

Talented teams

Focused people

Tracking change

Part V

Decision time

Chapter 11

Smarter decisions

The MCI decision model

Unpack your motivation

Clarify your options

Design your implementation

How ready are you?

Chapter 12

Smarter strategies

Dial-up strategic potential

Developing smarter strategies

Agile decision making

Chapter 13

Smarter organisations

Quick tip sheet for smarter decisions and smarter strategies

About the author

Published by Bryan Whitefield Enterprises

PO Box 7367 Warringah Mall

Brookvale NSW 2100 Australia

www.bryanwhitefield.com

Copyright © 2015 Bryan Whitefield

Bryan Whitefield asserts the moral right to be identified as the author of this work.

First Published November 2015

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher.

ISBN 978-0-646-94767-9

Cover design and illustrations by David Williams. [e-mail]

Edited by Caroline Falls, Alexander Falls Productions, Sydney, Australia. [e-mail]

Typesetting by Peter Guo, letterspaced typesetting. www.letterspaced.com.au

Printed by IngramSpark. www.ingramspark.com

Acknowledgements

I have always said I can provide advice to anyone who has kids the same age as mine or younger. Any older and it is a complete mystery. So along with my wonderful partner and soul mate, Jacquie (née Horler) we have had to learn along the way. And so it is to Jacquie and my three magnificent kids, Doug, Ben and Emily that I owe most gratitude for what I have learnt about decision making. Families are full of that thing we call life and living a full life means lots of challenges, lots of uncertainty. What they have taught me most is that making decisions from the heart means no regrets.

As you may expect, the family I grew up in taught me plenty about decision making. While we did not always agree, we have always laughed and we have stuck together. Thanks Mum (Gwyneth), Dad (Vince who passed a few years ago), my sister Leslie and my brother Brett. I owe so much to all of you, no words can do it justice.

Then there is my extended family on the Australian and the Canadian side of the Pacific. They are all wonderful people. They have taught me many things about life, relationships and of course decision making.

To all my friends – I am blessed with too many to thank individually, so thank you all for everything you have taught me and for being there for me and my family. Aussie mateship is quite tangible. All of my mates (and you know who you are) have a love of life. We give life a crack. Because of your friendship I was exposed to much more of the world, much more quickly than I would have otherwise. What comes with that is learning, sometimes the hard way, the benefits of thinking things through. Thank you to the Thought Leaders’ community. If it were not for this community this book almost certainly would not exist.

It was a chance meeting in 2010 that led me to glance at an email that drew me to sign up for my first Thought Leaders course.

Matt Church, founder of Thought Leaders Global, taught me that I was not running a business, I was running a practice, just like a doctor or a lawyer. It changed how I viewed what I was doing and who I was doing it for. I began to thrive on further challenging myself to think differently, to think up new ways of approaching old problems, to find new ways of communicating a challenge or a solution, to simply think, to talk to people about what I had been thinking about and to help them deliver a solution to a new or an old problem. This book is a testament to the difference Matt has made to my and Jacquie’s life. Thanks Matt.

Now I find myself in Thought Leaders Business School with Matt as spiritual leader, Pete Cook the implementer as CEO, an excellent group of mentors and a wonderful group of Thought Leader colleagues. It is a close-knit, diverse and above all inspiring community.

While I have met and been inspired by more than 100 Thought Leaders during the last two years, I can’t name them all here. There are a special few though that I have great pleasure in thanking.

Scott Stein, one of authors of the original Thought Leaders book and long-term partner of Thought Leaders Global, has been my mentor these past two years. He has been instrumental in getting my headspace to the point where I love every part of my role as a Thought Leader. Thanks Scott, I owe you plenty.

To Dr Richard Hodge, thanks for believing in me and what I had to offer. Matt Lumsdaine thanks for being the first guinea pig for my decision model and thanks for making the decision you did. Dr Andrew Pratley thanks for collaborating with me. It has been fun, I have learnt much and I look forward to our future successes. To my editor, Caroline Falls, thanks for what you were able to do with my work. It was great to click with you and have your experience guide me. To David Williams, my illustrator, thanks for your friendship and your wealth of talent.

My final thanks goes to my team. Paula Rival has been a wonderful addition to our team. Your energy and enthusiasm has been fantastic for us.

And to my business manager, Jacquie, my wife and the mother of my children. Yes, she has taken on the greatest challenge in the business world today. Working with your partner, in particular when that partner is me! Thank you for putting up with me, for picking me up when I was down and for inspiring me. I love working with you and I love you.

Bryan Whitefield

Preface

I am passionate about thinking things through as I have found it the single best way to get the most out of life with little or no regret. As a young adult I was good at thinking things through when it came to my social life. My enthusiastic, impatient friends would often jump early at an opportunity offered to attend a party or meet friends in a bar on a Saturday night. Not me. I would make sure I was aware of the options, I would consider who was going to be there, what kind of atmosphere it would be, what it might cost and then choose the option I felt would ensure we had the most fun-packed evening. Many times I was first harangued for my dithering and later lauded for my insight. I have been confident for many years that it was wise to continue to explore and learn more about decision making. However, it was not until I read a book originally published in the 1940s called Administrative Behaviour by Herbert A. Simon that I became so convinced that improving decision-making skills and processes was the answer to overcoming so many challenges and for grasping so many opportunities. In his book, Simon explains that once the purpose of an organisation is established, all that remains is for management to influence decision making to ensure the most appropriate actions are taken by those within the organisation to fulfil the organisation’s purpose. Simon goes on to explain that a perfect decision is one in which all possible consequences are foreseen. But, there is no such luxury in the real world. Not all consequences are foreseeable. With that uncertainty I felt there was a need for other methods to help us manage uncertainty and make great decisions.

I started my career as a chemical engineer after graduating from the University of Sydney. I chose chem-eng after a tour of the engineering department at an open day because it fascinated me the most. What fascinated me? Its complexity. The fact that I had little or no clue as to what was happening inside the lab-sized distillation column, made of glass so I could see the bubbling, the splashing and the fluids being drawn off by exit pipes at different heights to the column. I simply had to find out more.

Over my career as a chemical engineer I learnt that the chemical industry is complex. Consequently, the industry had devised ways of managing that complexity. They had ways of representing entire plants on paper using piping and instrument diagrams and they had chemistry for describing in simple terms what was happening inside a reactor. Despite the efforts of the industry, people still made mistakes and those mistakes were sometimes catastrophic. Many hundreds, and sometimes thousands, were killed in accidents. And this risk continues to this day.

The industry turned to risk management to manage the uncertainties and the complexities. It, along with other high- risk industries, was one of the leaders in developing methods for making decisions where there was a high degree of uncertainty. I learnt these skills and from the mid-1990s started to bring them to the even more complex world of business. Why is the business world more complex? Because of people. In the chemical industry, many of the decisions are bound by the laws of physics and chemistry. As I developed my business facilitation skills, I had more and more opportunity to help executives make some of the most important decisions for their organisations and of their careers. All the time I was learning about the art of decision making.

I read, I researched and I thought. Decision making is tough and the risks are well documented by the likes of Kahneman, Tversky, Thaler, Plous, Gigerenzer and more. But, to me something was missing from the literature and from the real world of decision making. In time, the missing piece of the puzzle became clear to me. I developed a simple model to manage the risk in decision making.

In this book I articulate for you the risk posed when you are making decisions and, most importantly, why that risk exists. I provide you with a simple model you can use any time of any day to help you manage the risk in your decision making. I provide you with additional tools to dig deeper when the stakes are higher, and I provide you with a methodology for improving the decision making of your entire organisation.

All you need to do is decide. Decide you want to be different; decide to make a difference and to manage the risk in your decision making and of those around you.

Bryan Whitefield

Introduction

I have spent my career identifying for my clients the problems with their current approach to their business and helping them work out what they should do about it. The problem, nine times out of 10, is that the decision had already been made and I was being asked to help them make their goals as achievable as possible. Over hundreds of workshops with executive teams, I have watched poor decisions confirmed as part of the key strategy on which the organisation depends. The strategy ends up with band-aids plastered all over it, or worse still, completely unravels, taking management back to the starting line.

What leads to the poor decisions? Well, do any of these personalities ring a bell for you?

First of all we have the tough, gruff leader who thinks almost everyone he or she meets is at best inferior, and more likely an idiot. Their opinion is the only one that matters and that is the end of it.

Then we have the nodding CEO. The one who politely nods as if he or she is hearing your advice and then, immediately after you have left the room, makes an edict that suits him or herself. Same result as the tough, gruff leader, just a nicer exterior.

What about the overly trusting leader? The one that places emphasis on respecting other people’s views and who believes that people learn from their mistakes? The problem is that this type of leader tends to overestimate the talents of others and underestimate the need for themselves to do something about it. One type I am very familiar with is the growth CEO. This type will talk about profitable growth but send signals that they want growth for growth’s sake. On one occasion, before I started my practice, I had the pleasure of dining in my CEO’s office with a new client that a unit of the business had just won over from a key competitor. When I got back to my desk and was talking to a colleague, the truth came out that we had undercut the market rate by more than 30 percent. An unsustainable rate. We were a laughing stock.

One of my least favourite types is the showman leader. The egotist who dresses up in the smart suits, drives the fancy car and maintains their position through stakeholder management. They keep their focus on the board: explaining to them how the best decisions were their own and the poorer ideas were the ideas of others. All the time, never venturing into the real land of strategic decision making and strategy development.

And finally there is the protected-species leader. The one who seems to have very little clue about the position the organisation is in and who is lucky enough to have friends in the right places and a team that can cover for them.

If you have been around for any length of time, I am sure you are familiar with these personality types when it comes to leaders on executive teams. However, while I have encountered these types of leaders, the vast, overwhelming majority of leaders I have met – and have the privilege of calling my clients – are good people, and they are smart.

One of the early working titles of this book was Think it Through. It was called that because of my lifelong frustration with seeing people make dumb mistakes because they didn’t stop and think things through. Then, I realised that in fact many good and smart leaders, especially when it comes to strategic decisions and the formulation of smarter strategies, do stop and think things through. However, unfortunately the reality is that often when I came along to test their strategy with them and their team, it did not take long to find holes in their plans. Some very large holes; some smaller that were patchable at an unplanned cost. Obviously, my title needed to include the how- to concept as well.

So why do smart people struggle to develop smarter strategies? The answer is two-fold. The first is that strategic decision making and the formulation of smarter strategies are done within a large cloud of uncertainty. By their strategic nature they are bigger decisions with potentially wider ramifications, positive and negative. For example, how can we know the price of oil with certainty in 12 months’ time? How can we know with certainty what a competitor is planning to launch in the next quarter? How can we know with certainty who will and won’t be working for us in six months’ time? How can we know with certainty the take up of a new product?

The second answer is that they lack a good process for making key strategic decisions. What is the norm for making key strategic decisions? Often, it goes as follows:

Strategic planning off-site

We have likely all been involved in strategic planning sessions and have ideas about what they involve. They usually go something like this:

A day is set aside two months ahead of time and the invitations are sent out to the leadership team.

About one month out an agenda comes out with topics and names beside each one.

Individuals prepare their presentations.

Someone takes care of logistics for the off-site meeting including the very important choice of a restaurant for dinner.

The day arrives and starts with a pep talk. The agenda is confirmed and it is agreed how the outcomes of a session will be captured.

The first presentation is engaging, runs a bit long and leaves you hanging as to what decision needs to be made. What was the question being asked?

The second presentation goes over time as well and so the third presentation is started after a shortened morning tea. The presenter speeds through and hits you with a recommendation you feel you have insufficient background understanding of to make an informed call. The decision is delayed until later in the day.

Team building exercise.

More presentations.

Document actions and responsibilities.

The wrap-up pep talk.

The end result is that you head back to work with all the problems you had before you went to the off-site session, plus now you have a list of new actions to undertake.

Strategy paper

The next step is to develop a strategy paper. A business case is presented. It has background information, a host of graphs and statistics, studies of the competition, and the all-important analysis done using the SWOT matrix – strengths, weaknesses, opportunities and threats. The decision seems pretty clear.