Tuesday, September 22, 2009

How Leaders Make Great Decisions


Several years ago, my company developed a product called Strategy - an interactive CD-ROM that automated medical marketing. I spent two years and a truckload of money creating and marketing this innovative product. It failed miserably. OUCH! (I'm still convinced it would have been a bestseller... if more people bought it! :-)

In previous blogs (http://davejensenonleadership.blogspot.com/2009/03/understanding-leaders-seven-decision.html), I discussed the common decision-making traps leaders fall into. These traps played a major role in my CD-ROM fiasco. As a way of helping you avoid these hazards, a quick recap…

My early profit projections were based on optimistic market penetration, thus subjecting me to the perils of the anchoring trap (#1). The status quo trap reared its ugly head when I refused to kill the project when I realized the project was in deep trouble (#2). Sunk costs almost buried me because my ego encouraged me to throw good money after bad (#3). I fell into the framing trap by comparing my losses to the many Silicon Valley entrepreneurs who were struggling (#4). I also made a number of false assumptions, including the belief that users would spend time entering data and that physicians cared about marketing (#5). Finally, I missed many signals, including hints from colleagues who were not enthusiastic about my product (#6).

Poor decisions flow from poor decision-making processes.

Just like a sand trap in golf, these decision traps are hazards to be avoided. This blog will show you how to use the eXpansive Leadership Method (XLM) to steer clear of these traps and improve your decision making. The XLM is seen below, with the four key questions that can help you make a better decision when confronting relatively simple challenges.

The XLM doesn’t tell you what to do; it shows you how to decide.


When you choose to ask these four key questions, you are actually drawing on the wisdom of the ages. That's because these four questions are offshoots from four branches in the tree of philosophy:

1. Metaphysics -- This branch of philosophy deals with universal truths and ultimate questions -- how it all relates to the big picture. In decision making, the second question we ask ourselves is "What would be an eXtraordinary outcome?" This is a visionary thinking question because it invites contemplation of a broad perspective, strategic implications, and long-term considerations. For example, when you are deciding how to handle an employee who made a mistake, do you take the time put their mistake in the context of their overall, long-term performance?

2. Epistemology -- This is the branch of philosophy that investigates the study of knowledge -- how we know what we know. In decision making, the first question we must ask ourselves is "What are the facts and expectations of those affected?" This is a rational thinking question because it's related to monitoring our environment closely and being in touch with the facts. For example, when confronted by poor performing employees, do you gather all the facts related to their performance prior to a counseling session?

3. Ethics -- This branch of philosophy concerns itself with the moral code and values we use when interacting with others -- how decisions affect others. In decision making, the third question we ask ourselves is "What's the right thing to do, especially for others?" This is an empowering question because it focuses our attention on serving those whom we lead. For example, is your heart's desire to help employees when they make a mistake or do you just want them to follow specific performance standards?

4. Existentialism – The last major branch of our philosophical tree reminds us that human beings have free will and therefore are responsible for their actions. It leads us to the final decision-making question, “What the consequences of our options?" This commanding question compels us to refuse victim thinking and accept responsibility for our choices. For example, where is the first place you look when an employee underperforms for the second time? If you answered, "the mirror," then you're a closet existentialist!

Ask these four key questions to avoid falling into the decision-making traps. One CEO recently e-mailed me the following:

Dear Dave,

Thank you for coaching me to use the XLM as a decision-making tool. This simple and powerful approach clarified our current situation and provided direction in making a decision that resulted in $147,000 to our bottom line. I now use the XLM as I make decisions throughout the day.

The essence of great decision making is effective decision framing. As you go about making your daily decisions, I encourage you to keep the XLM in front of you and ask these four key questions to frame your decisions. Use it at your meetings by asking your team to brainstorm answers to the questions. How surprised will you be when you find yourself making better and more consistent decisions because you are not failing into traps?

Be eXtraordinary,


P.S. The web-based eXpansive Leadership Method (XLM) assessment measures 4 fundamental leadership styles, 16 core competencies, and 8 essential leadership skills. Within minutes of completing your assessment (which takes less than 20 minutes to fill out), you can download your highly personalized profile - a comprehensive, 21 + page report and customized action plan in PDF format. Go to: http://xlmassessment.com/ to learn more.

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