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Why the Heck Don't Companies Make Better Decisions?

Erik Larson Oct 20, 2015 5:22:19 PM

We make decisions to get what we want. In business, managers and executives make most important decisions. In other words, decisions made by managers and executives are the key to a company getting what it wants.

What do companies want? The best way to find out is to look at the areas that managers prioritize when making decisions. Here are the ten most important business decision priorities from our research, listed in groups of similar importance:

  • Growth and Profit
  • Customer Satisfaction and Employee Morale
  • Personal Success
  • Costs, Business Risk and Competitiveness
  • Personal Risk and Impact on the World

Managers have broadly similar priorities, with one notable exception - women are twice as likely as men to prioritize Competitiveness in their decision making at work.

The art and science of decision making is going through a renaissance as a mix of behavioral economists, psychologists and neuroscientists separate fact from fiction and define the limits and strengths of our decision-making skills. One great result of that effort is a set of decision science best practices that consistently and measurably improve decision-making performance. Most of these practices are common sense, such as always considering multiple alternatives or getting outside perspectives. And they can have a huge effect – for instance, just considering two alternatives increases the likelihood of making a very good decision by 6X, and cuts the likelihood of a failed decision almost in half.

Yet despite their pragmatic nature and huge impact on decision making, our research shows that only 2% of managers regularly apply proven best practices when making business decisions, and almost 90% of managers rarely apply them. This despite the fact that managers who regularly apply decision best practices can expect to earn 15% higher compensation, and see their performance improve by 20%.

Now let’s complete the circle. Decision best practices can improve manager performance by huge amounts. Managers make decisions to get companies what they want. So, by using decision best practices, companies can see huge performance improvements in Growth, Profit, Customer Satisfaction, Employee Morale, Manager Success, Competitiveness, Business Risk and Costs.

Why isn’t this happening!?! There are two main reasons. Over 80% of managers say they don’t have enough time and/or it would be too hard to do. About 45% say they mostly just decide based on their gut intuition and/or they don’t believe the best practices would really have much impact on their performance or compensation. In other words, managers either think the best practices require too much effort, or that they won’t make a difference anyway.

The key is to make it faster and easier for managers to apply these best practices, and to measure the results to show how big an impact they actually have. That’s our mission. Cloverpop is a decision app that automatically applies the best practices, and creates a measure of decision velocity that shows how effectively manager decisions are getting companies what they want. But even if you don’t use Cloverpop, you should at least always make sure to consider more alternatives and involve more people. Just doing those two things every time will put your decision performance above 95% of your peers. Get on it!

Want to improve your decision-making performance? Cloverpop is a decision app for business - easy-to-use, collaborative and based on decision science best practices. Imagine asking the right questions, making the right decisions and getting the right people bought in, every time. Sign up for the preview today.