Monday, 27 April 2015

The Secret to Making Better Decisions - Part 2

Despite the importance of decision-making, and despite all the research into decision-measurement that has taken place over the past three decades, studies continue to show that the majority of business decisions are simply wrong. 

Why aren't business executives getting better at making them? 

Before trying to answer this question, it’s worth ask a slightly simpler one: How do we go about making decisions? As I mentioned in Part 1, low-stakes decisions like whether to have the turkey or the chicken sandwich are made quickly and without much thought. We use heuristics to do this. A heuristic is simply a rule of thumb or mental shortcut that allows us to make judgments quickly and efficiently without having to stop and deliberate. High-stakes business decisions, on the other hand, are made much more thoroughly, rationally and deliberately.  Or are they?

Neuroscientists now accept the idea that emotions play a significant role in decision-making. But because neuroscientists tend to make things complicated and because decision-making is such a complex, multifaceted process, I decided to search for a simple definition. I found one in Chip and Dan Heath’s new book, Decisive: How to Make Better Choices in Life and Work.

This is how the Heaths define the decision process:

1. We encounter a choice
2. We analyze our options
3. We make a choice
4. We live with the consequences

Sounds simple enough, doesn't it? But the devil is in the details. The Heaths tells us that four ‘villains’ appear every time we make a decision, and they are intent on sabotaging us.

1. We fail to look at all our options;
2. We don’t gather enough objective information;
3. We get side-tracked by hidden emotion;
4. We are overconfident.

We begin by framing the choice we are about to make in an incomplete and subjective way. Then we cloud it with emotion that we cannot see or feel. And finally we conclude our decision-making process by rationalizing it. Why? So we can live with our choice. Not a very rational way to decide, is it? Thankfully, business leaders don’t fall into this trap. Do they?

Yes. They do. And they do it more often than not.

A famous example is William Smithburg, the CEO of Quaker Oats. Smithburg purchased the parent company of Gatorade for $220 million simply because he liked the taste. That decision, impulsive as it was, worked out well for Quaker Oats. But then Smithburg tried his luck a few years later. He bought Snapple for $1.8 billion, and this time the acquisition turned out to be a disaster. The two companies’ cultures and distribution systems and customers were totally different, and they simply couldn’t be integrated. The acquisition nearly sank the company, and Smithburg resigned.

Later, he recalled that during the decision-making process there was no one on the “no” side to balance things out. Really? It’s staggering to think this was allowed to happen. But remember, thanks to the Gatorade acquisition, Quaker Oats’ CEO was riding a hot hand. He might even have been considered an acquisitions ‘genius’ who could do no wrong. As a result, he was allowed to spend nearly 2 billion corporate dollars on, as it turns out, little more than a whim. Smithburg wasn't even making a simple yes/no decision. It was a yes/yes choice. He didn't even ask if there was another alternative. He didn’t consider the opportunity cost, or even whether they should spend $1.8 billion dollars at all.

What can we do to make better decisions? 

What can we do to avoid these, and other more subtle, kinds of decision errors? One way is to widen our alternatives. Research shows that only 29 per cent of organizations consider more than one option when making high-stakes decisions. The reason? Narrow framing, which biases leaders into thinking that the choice is clear when it is not. Smithburg was guilty of narrow framing his decision.

To make better decisions, leaders need to:

1. Widen their options
2. Reality test their assumptions
3. Attain distance before deciding
4. (And the biggie)… Prepare to be wrong

All four require extra work, but the last one is the most difficult of all. Being wrong can be career threatening, depending on the organizational culture within which the decision process is made. If the culture discourages risk-taking, then being wrong can be fatal. But so is a risk-averse organizational culture. Is the payoff worth the work? When the stakes are high, yes, absolutely.

But given the stakes, why doesn’t business decision-making follow in the footsteps of manufacturing processes like TQM (total quality management) and Six Sigma where defect rates are less than 1 in 250,000? Why are decisions made so carefully and scientifically in manufacturing plants but, as Dan Heath points out, “at the top of organizations, decisions—even those in which millions or billions of dollars are at stake—are often made based on politics or personality or a good PowerPoint presentation?"

In Part 3 we’ll try and pinpoint the answer. 

Monday, 23 March 2015

The secret to making better decisions

Everyone wants to make good decisions. So why don't we make more of them more of the time?

The reason, of course, is that we’re human. But that’s not a very helpful answer, is it? If we want to be better decision-makers, we need to go a little deeper and try to discover the why behind the what. What’s the root cause behind so many of our poor decisions?

Tuesday, 23 December 2014

A Ten-year-old Offers A Lesson In Persuasion

When I studied screenwriting a decade ago, one of the most important concepts I learned was specificity. When writing a story, push hard for the telling detail, said my teacher, the incomparable Nika Rylski. Don't say it is a late model sedan. Say it is a midnight blue Lexus with a broken right headlight. Don't tell us it's a Sunday. Let us feel the Sunday morning drizzle.

Tuesday, 11 November 2014

True Leaders Aren't Afraid to Get Naked

The art of being vulnerable

Leadership isn't just about being open to employees’ thoughts and insights and ideas. It’s about giving your employees permission to be open as well. But if leaders don't open up and show their vulnerability first, it's highly unlikely employees will take the risk. As a result, leaders won't get what they really need from their employees: actionable feedback.

Tuesday, 7 October 2014

Forgetting to ask Why

Why do we ask WHY so often when we are growing up, yet ask it so little as we grow older? Perhaps we are no longer curious. Or perhaps we think we know all the answers. Or perhaps we’ll feel stupid. But we risk missing out on a key life lesson if we fall into that trap. 

Wednesday, 24 September 2014

Are CEOs Using Outdated Leadership Ideas?

[This post appeared yesterday on the APQC blog.]

Majority of respondents to an APQC study 

say today’s leadership style is outdated

CEOs are the racehorses of the business world. They move fast, they’re accustomed to finishing first, and they often wear blinders to avoid distractions and stay focused. And that may be a problem because today’s CEOs face a wider and deeper set of challenges than ever before.

Thursday, 21 August 2014

How to grow your professional services firm - Part 3

Not too long ago, buyers would do their pre-purchase research the old fashioned way – word of mouth and brochures and directories. Not anymore. The internet has completely changed how buyers go about purchasing professional services, and your firm can benefit big time.

Friday, 25 July 2014

How to grow your professional services firm - Part 2

(And why thought leadership is like barbecue sauce)

In Part 1 of this post, I suggested that maybe it was time for marketers to get back to basics. CEOs certainly feel that way, as a survey by the Fournaise Marketing Group revealed: 

Saturday, 28 June 2014

How to grow your professional services firm - Part 1

What do financial advisers, accountants and lawyers have in common? 

They all want to grow their business, but have trouble differentiating themselves from the competition. 


What can they do to change this picture?

Monday, 26 May 2014

Why is everyone starving for content?

Most of today's customers begin their buying process by researching online -- seeking out content in order to educate themselves. Yet much of the content they find is overly promotional or poorly thought out, even as the need for higher quality content continues to grow.

Thursday, 15 May 2014

Thursday, 27 March 2014

Abraham Lincoln: "I don't need no ghostwriter"

Courtesy, Library of Congress

Abraham Lincoln is not known as a great writer. He is known as one of America’s greatest presidents. Yet he penned one of the most memorable pieces of writing in history: the Gettysburg Address. He loved writing and understood its power to provoke and inspire and create change.

Friday, 10 January 2014

People don't want creativity, they want results

As the frigid start to 2014 begins to recede from our memories, it's worth remembering that risk is a four letter word for many people. Especially those in large corporations.

Wednesday, 13 November 2013

Want to self-publish? This Forbes article is an eye-opener

Considering Self-Publishing? Don't Bother

(Unless You Follow Guy Kawasaki's Advice)

....If you’re writing a book simply as a means to an end – to get rich, or to get the word out about your expertise, or to attract more consulting or coaching business – forget it.  Stop what you’re doing right now.  If you’re thinking just about what you can get out of it, you’re probably writing a “crappy” book (Guy’s word), and your “crap” will be forever immortalized in black and white.  Something you definitely don’t want.
Guy advises, “Write a book because you have something important to say. If you have a life story that inspires, or information that you believe everyone in a particular niche NEEDS to know, then do it.”  But don’t just rush to get something out because you think it will enhance your career, profile, business, or bank account.  You just won’t succeed with those inner motives....
Read the full article at:

Monday, 28 October 2013

An Action Plan for Women Entrepreneurs (Part 2)

If you’re a woman entrepreneur, your time is now. 

In Part 1 of this two-part post, I talked to Andrea Guendelman and Fran Maier about the challenges facing women entrepreneurs. Female tech entrepreneurs, in particular, are few and far between, and they get funded far less often than men. Part of the reason is that angel investors and venture capitalists are predominantly male (85 per cent and 95 per cent, respectively) so they tend to relate better to male than female entrepreneurs. There is clear evidence that a subtle gender bias is at work in the VC industry.

Wednesday, 23 October 2013

Where are all the women entrepreneurs?

My thanks go out to Andrea Guendelman and Fran Maier for taking the time to share their thoughts on an important subject: women entrepreneurs and startups. Here is the first of two articles I wrote as a result:

Building a business is never easy, but do women entrepreneurs have an extra hurdle to overcome?

"Only 8 per cent of venture backed companies are women-owned. Only 11 per cent of venture capital partners are female. Only 15 per cent of angel investors are female."

Monday, 21 October 2013

Sell without selling

I wrote the following on my website and also my LinkedIn page and felt it was important enough to reiterate it here.

Story = Value
The old ways of advertising and selling are disappearing fast. Today, selling is all about telling the customer's story, not the seller's. Relevant, useful, findable content has replaced glitter and gloss because the only thing more relevant to the customer than money is WIIFM -- What's in it for me? 

Saturday, 5 October 2013

How to write a compelling business plan (Part 2)

"It's the narrative, stupid"

"Despite Steve Job's aversion to selling by PowerPoint, pitch decks have become the preferred option, and for early stage startups, narrative is more important than hard data. Identifying a secular trend is the key. Maybe it's the Zuckerberg effect."

In Silicon Valley, for example, most venture capitalists (and entrepreneurs) have foregone the bulky Business Plan in favour of a short PowerPoint (pitch deck) plus an Executive Summary, plus a pro forma, that lets them understand the entrepreneur's business proposition, market size, goals, direction and management team in just a few moments (VCs are very busy people). Despite Steve Job's aversion to selling by PowerPoint, pitch decks have become the preferred option, and for early stage startups, narrative is more important than hard data. Identifying a secular trend is the key. Maybe it's the Zuckerberg effect.

Sunday, 29 September 2013

How to write a compelling business plan (Part 1)

Ever wondered if your business plans are as compelling and persuasive as they could be? For many top executives and entrepreneurs, a business plan is the most important document they will ever write, because the future of a company or product is at stake and once in a lifetime monetary gain often rides on the outcome. Yet business plans are seldom written as persuasively as they could be.

Saturday, 10 August 2013

Why managers need to become storytellers (Part 2)

When interviewed by the Harvard Business Review a while ago, the interviewer asked media mogul Peter Guber a very pertinent question:

Why does a regional manager at a branch plant need to understand and practice storytelling for business? 

Why managers need to become storytellers (Part 1)

The very short video (below) touches on the most compelling reason why businesses of all sizes should concentrate their efforts on to writing stories that are relevant to their customers and prospects.
The reason?

All buyers -- yes, that includes business buyers -- make their purchasing decisions based on emotion, not reason. 

Sunday, 4 August 2013

Always leave out the boring parts

Elmore Leonard is one of the most gifted writers of dialogue of this or any generation. He has 10 pieces of advice for writers, which can be seen in the graphic above. I especially love #10. If you can solve that one, you will be happy, wealthy and wise.

Elmore Leonard's advice to writers

Wednesday, 31 July 2013

Want to win more business? Articulate your value proposition.

It's amazing how easy it is for us to miss the obvious, simply because we can't see the forest for the trees. We sometimes forget why we're in business. Our knee jerk reaction is to say that we're in business to make money. If you think that's the answer..

You would be dead wrong.

Sunday, 28 July 2013