Bringing your decision making into the 21st century
Despite the strong rise in profitability in American and European companies over the past 30 years, there is a general lack of decisive leadership. In order to remain competitive, today’s leaders need to continuously review their decision making and to maintain speed and agility. New players from emerging markets pose a threat to more established companies, as they often have greater agility and aggressiveness. Making sound decisions at the necessary pace is a skill set that clearly needs to be developed, yet there are few tools for managers and leaders in this regard. Here is some advice on where to start:
Overcome (strategic) decision inertia
Many leaders today feel the pressure to demonstrate short-term financial performance, yet believe that a long-term approach for business decisions will increase performance. Long-term (strategic) decisions are very (critically) important, but not urgent, and therefore the time and effort taken in addressing these decisions is often not proportional to the value they bring to a business. In order to avoid this pitfall, review where you spend your time and determine the fit between time spent and your strategic priorities. Just like you create a budget sheet; make a decision sheet to ensure you spend your time efficiently.
Create a suitable decision making culture
A company’s culture is often a key driver of its success. The decision-making culture needs to match the ecosystem in which the business operates. For example, a consensus-seeking decision making culture may be too slow for certain environments. To meet the prerequisites, different departments within a larger company may need different approaches. R & D is likely to thrive when people feel confident to think differently, when no idea is too simple to explore, when there is a great deal of flexibility and so on. Production and IT require more structure. As we develop more and more diverse workforces, culture becomes even more important to address, as it is not only the ecosystem, but also the individual cultures of employees that affect how decisions are made. A western mentality may not work as well in a hierarchical environment, unless the company manages to supersede local preferences. Google, for instance, has succeeded in this. The best cultural approach to adopt depends on many variables, but a general recommendation is this: if the aim is to explore new possibilities and make more broad-minded decisions, then you must hire people with diverse backgrounds and make sure everyone is heard—and not inhibited by the fear of failure. You need to create an “ok to make a mistake” atmosphere, because if you don’t dare to make mistakes, you rule out the possibility of progressing beyond “what we’ve always done” (a necessity in a rapidly changing world).
Establish clear decision processes and roles to maintain effectiveness
Understanding the what, who, how, and when of critical decisions and actions will enable you and your team to pace the work appropriately with the right people (and only the right people!) involved. To stay on top, it is more important than ever to maintain speed and agility. Too many initiatives get bogged down as too many people are involved in the decision making and at the same time no one takes the utmost responsibility for making sure it gets done. Moreover, it’s important to understand that a decision process doesn’t end once the decision has been made; it is cyclic and should always involve a review at the end. Only then is it possible to optimize and learn from mistakes.
Evaluate your options against a set of criteria
We have a natural tendency to seek information that supports what we believe and disregard information that doesn’t. This is called confirmation bias, and today it is one of the greatest challenges we face when it comes to making good decisions. A common approach when faced with a decision is to first find an alternative one believes in and then gather information that supports it. Most of the time, the environment rewards a myopic focus. However, this narrows not only your mind, but also your possibilities. Instead, you need to take a step back to initially consider what criteria you find important for your choice, and then gather information about what you really need (and not just information you can get your hands on, as the amount of available information is enormous.) Thereafter, make a choice by weighing your options against these pre-determined set of criteria. This will help you consider/evaluate your options more objectively and make your decision making more effective.
And, last but not least, remember that feelings are always faster than logic
Using intuition in combination with the courage to decide can be a great asset if you aim to make fast decisions. However, understanding your gut feeling can be a tricky task and using it for important decisions comes with a warning. You need to be aware of the fact that your feelings are always, always, always faster than your logic, and your intuitive choice of a certain cause of action can be based on hidden parameters; for example, a feeling of fear, stress, threat, or preference for a character trait, smell or color. The old saying: “Don’t make permanent decisions based on temporary emotions” is sound advice. When you need to be fast, using your gut may be the only option, but add a step or two. Make sure to explicitly answer why you believe it is the right decision and why it’s not. This is a way to recognise your emotions, give you a more objective view of the situation and help you spot your subjective or irrational tendencies. Also, if possible, seek input from people with different mindsets to add their perspectives and broaden your view.
In the end, many times it takes courage to make important decisions. Depending on the outcome, we can be called either brave or foolish. Yet, as Michael Jordan has said “Never let the fear of failure keep you from playing the game”.
Mona Riabacke, PhD and Ari Riabacke, PhD, are the authors of Freestyle Decision Making
5 minutes with... Janthana Kaenprakhamroy, CEO, Tapoly
Founder and CEO of award-winning insurtech firm Tapoly, Janthana Kaenprakhamroy heads up Europe’s first on-demand insurance platform for the gig economy, winning industry awards, innovating in the digital insurance space, and leading with inclusivity.
Here, Business Chief talks to Janthana about her leadership style and skills.
What do you do, in a nutshell?
I’m founder and CEO of Tapoly, a digital MGA providing a full stack of commercial lines insurance specifically for SMEs and freelancers, as well as a SaaS solution to connect insurers with their distribution partners. We build bespoke, end-to-end platforms encompassing the whole customer journey, but can also integrate our APIs within existing systems. We were proud to win Insurance Provider of the Year at the British Small Business Awards 2018 and receive silver in the Insurtech category at the Efma & Accenture Innovation in Insurance Awards 2019.
How would you describe your leadership style?
I try to be as inclusive a leader as possible. I’m committed to creating space for everyone to shine. Many of the roles at Tapoly are performed by women and I speak at industry events to encourage more people to get involved in insurance/insurtech. Similarly, I always try to maintain a growth mindset. I think it’s important to retain values to support learning and development, like reliability, working hard and punctuality.
What’s the best leadership advice you’ve received?
Build your network and seek advice. As a leader, you need smart people around you to help you grow your business. It’s not about personally being the best, but being able to find resources and get help where needed.
How do you see leadership changing in a COVID world?
I think the pandemic has proven the importance of inclusive leadership so that everyone feels supported and valued. It’s also shown the importance of being flexible as a leader. We’ve had to remain adaptable to continue delivering high levels of customer service. This flexibility has also been important when supporting employees as everyone has had individual pressures to deal with during this time. Leaders should continue to embed this flexibility within their organisations moving forward.
They say ‘from every crisis comes opportunity’, what opportunities do you see?
The past year has been challenging, but it has also proven the importance of digital transformation in insurance. When working from home was required, it was much harder for insurers to adjust who had not embedded technology within their operating processes because they did not have data stored in the cloud and it caused communication delays with concerned customers at a time when this communication should have been a priority, which ultimately impacts the level of customer satisfaction. This demonstrates the importance of what we are trying to achieve at Tapoly in driving digitalisation in insurance and making communication between insurers and distribution partners seamless.
What advice would you give to your younger self just starting out in the industry?
Start sooner, don’t be afraid to take (calculated) risks and make sure you raise enough money to get you through the initial seed stage.