Judgment Calls. Thomas H. Davenport
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their expertise, adopting some form of collective leadership, applying data and analysis to decisions, and supporting it all with new technology. They are focusing on either big, strategic decisions or the daily tactical decisions that are critical to successful execution of strategy. Leaders are still exercising their responsibilities, but they are doing so in more participative and humble ways. There is no gimmickry here—the organizations we describe are all simply doing their homework in various ways, and they are getting better decision results.
Why Look at Good Decisions?
This book has twelve stories of how particular decisions were made and improved through activities designed to build organizational judgment. Decisions are an important lens for these judgment-building activities because they are the objective of them. If you think about it, a vast amount of organizational activity these days is ultimately intended to improve decision making. Many IT projects, for example, have this as at least an implicit goal. If you're putting in an expensive new enterprise system, building a data warehouse, constructing a knowledge management system, or installing business intelligence software, your ultimate purpose is to support better decisions within your organization. Outside of the realm of IT, perhaps your organization is trying to improve decisions via decision role clarification, reengineering a decision-oriented business process, or addressing a particular decision, such as those in a business strategy. If you have undertaken such activities and those better decisions are not actually happening, something is wrong. Perhaps you need to establish a closer connection between those activities and the actual decisions that need to be improved.
But despite occasional problems, decisions can be improved and made well with good organizational judgment. We chose to tell stories of good decisions because we think the world needs some good examples to emulate. It's all too easy to focus on bad decisions (as we have done at the beginning of this chapter), and there is certainly no shortage of them. But we thought that readers might be tired of reading (and hearing and watching) about the bad decisions made by banks in the financial crisis, the poor judgments made by BP and its business partners that led to the oil spill in the Gulf, or the bad calls at NASA that led to the Challenger and Columbia shuttle disasters. Yes, bad decisions happen, and sometimes they can be very instructive. And we all like to read about human frailty and the troubles that ensue from it. But the world doesn't seem to be getting better at decisions, even after these poor examples have been studied in great depth. So we decided to “accentuate the positive.” The organizations we describe in this book are surely not perfect, but they seem to be making headway in the journey to better decisions.
Instead of providing you with a checklist, we are recounting stories—perhaps not the most rigorous form of evidence, but often the most memorable type. We subscribe to the power of narrative for learning and modeling. We also believe that stories incorporate necessary context and human fabric. And does the world really need another management framework?
That said, there is an implicit framework that emerges from these stories, or at least some common themes that we think define the new paradigm for organizational judgment. They are:
Decision making as a participative problem-solving process. Organizational judgment at its core depends on a disciplined (if not always highly structured) process. In its various steps, the process will include, at the outset, framing the problem to be solved; pursuing the problem through iterative steps that progressively refine the questions that must be answered; engaging diversity of opinion; using fact-based analysis to weigh benefits and risks, and generate and test hypotheses; and pursuing all appropriate options based on continuous deliberation and learning until the best answer emerges. Equally important as the process per se is the need for it to be (albeit in varying degrees in different situations) participative. When organizations with good judgment make important decisions, they routinely engage a broader group than just a few top executives, if not “the crowd”; they seek multiple points of view, including contrarian ones; they work especially to include people with the best knowledge and experience, regardless of status or hierarchy; they embrace the perspective of the “front line” or key stakeholders (including partners, suppliers, and customers) who must implement and live with the decisions made.
The opportunities of new technology and analytics. As more companies recognize the power and value of technology-enabled analysis and analytics for defining their strategy, marketing, or making other key decisions, a new standard is emerging about the integration of data analysis into the “front office” of every business. No longer the rarified provenance of “the geeks downstairs,” technology is becoming integral to decision making, and the overall judgment exercised by the organization, whatever the industry or sector.
The power of culture. Organizations that practice great judgment inevitably have many of the key attributes and values mentioned embedded in their operating culture (respect for the problem-solving process; inclusiveness; leaders as facilitators of decisions, not “monarchs,” etc.). Some organizations come by the new kind of values and behaviors more naturally than others; in some cases, as the need for better decision making and new patterns begins to emerge, cultural change evolves hand in hand with more “democratic” and analytical approaches.
Leaders doing the right thing and establishing the right context. The role of the leader in creating organizational judgment is often first about reframing decisions as indeed not their own exclusively. But great leaders also work to ensure that the processes and mind-sets of more distributed, problem-solving approaches key to judgment are in place and part of the norms of doing business in their enterprise. In many cases they can be seen instituting cultural change to migrate their organizations toward overall better judgment.
We see these themes at work in different ways in different dimensions in the stories we have collected, and each chapter will exhibit some of the variations in them. Of course, as an evolving paradigm, organizational judgment can be found in various, often incomplete forms; it would be foolish to expect any single organization to have all of these ideas complete, perfect, and implemented at a 100-percent level. Our stories show the outlines that are emerging—and you and your own organization can fill in the details as you consider how decision making in your own work might benefit from the ideas of this new approach.
Why You Should Read This Book
If you think that you have a “golden gut,” that you always make excellent decisions on your own, that you are the only person whose opinions matter within your organization, and that social technologies are purely a waste of time, you probably won't be comfortable with this book—and you should drop it immediately. If you have only read this far, we are confident you can get your money back.
But if you're still reading, that means you believe in the possibility that other people in your organization just might have expertise or opinions that could help in your decisions, and that evidence and data analysis might be helpful in decisions too. Maybe you'd simply like to get a better understanding of the iterative and deliberative decision processes that successful organizations employ. If you are a senior manager within your organization, with responsibility for making the organization better, you have really come to the right place. You naturally would like to help your firm or agency or school make better decisions over time. We hope to convince you that undertaking activities to improve your organization's overall and collective judgment is the best way to bring that about.
If you are an individual contributor or educator or consultant, of course you make decisions too—and you can probably benefit from hearing about better ways to make them. You may not have a large organization that you are trying to get into shape, but everybody is a member of a social network (not Facebook, but the social relationships themselves) from whose wisdom you can benefit, and in the age of the Internet, anybody can gather and analyze some data to help with a difficult problem. We believe that knowing about the organizational context of judgment will help more junior or even free-floating individuals improve their ability to make decisions.
No matter what your employment situation, we think you'll enjoy reading these stories about how organizations are making increasingly good decisions with the new and old tools at their disposal. So we invite you to read