Remote management is a challenge for procurement leaders during pandemic lockdowns – remote decision making, harder still. Following on from last month’s article on remote management, Jonathan Dutton FCIPS offers some tips on corporate decision making in a procurement context for remote SUPPLY CLUSTERS members…
Given the day-job of procurement managers is based around making corporate decisions on which vendors to employ or whom to let contracts to, you’d be forgiven for imaging that they might be experts, or at least students, of good decision making? But it is not a topic that is studied or even readily understood within the procurement industry.
Yet even a cursory look at the subject of Decision-Making can offer some proven guidelines that are worth remembering when set to make a significant corporate decision. Especially when working remotely, as the chances of a good decision can be minimised without the ready communication channels available to us when working in the same office with colleagues and stakeholders.
Decision making by people
Some people like making decisions – they are confident, decisive and resolute. Even dogmatic. They relish the challenge and welcome being tested. But most people don’t really like making decisions – they can be hesitant, reluctant and fearful in making them. They worry about the downside and, even, fear the glare of accountability. Given the chance they hold off on decisions until absolutely necessary. Even procrastinate, prevaricate or vacillate. Indeed, our dictionary has many words that describe the trait. The psychology of decision-making is a studied topic by academics – google it.
Some people, though, are good at decision making – they weigh with clarity, exercise good judgement and time decisions well. They feel the mood or ‘read the room’ and balance options against objectives well. Others, not so. They distort comparisons with bias or preference, they over-simplify complex judgments and delay decisions towards irrelevance. Some can even be ‘tone deaf’ to the feelings around or only listen to their own instinct, however askew or however biased and self-interested.
Yet, ironically, most people instinctively would rate themselves as good decision-makers. Perhaps more based on their recollections of SIMPLE decisions they have experienced, that led to good outcomes. Not always based upon the questions, audit-trails or examinations following more COMPLEX decisions of the past.
Corporate decision making
In corporate life, the trend is away from individuals making decisions alone and towards group decision making. Maybe because of the examples above? Sometimes, this trend towards group orientated decisions is more consensus focussed decision making. However, in a procurement context, usually a decision-making unit (DMU) is at work – like a tender committee, project group or management team.
Fundamentally, the DMU is working to remove bias, build objectivity and improve the chances of success in corporate decision making. Almost turning the art of good decision making into more of a science – with less intuition and more judgment. Introducing clear objectives, decision process, weighted criteria and balanced scorecards. Bringing more numerical certainty to previously subjective values. Less chance of a costly mistake maybe? But less room for vision and leadership perhaps?
The truth is that corporate decision making, certainly in a procurement context, is getting much more difficult. The difference between simple decisions and more complex decisions is growing. Mostly because of two pincer forces:
- The wider range of objectives built into any single decisions on the supply side – in a world growing in complexity and volatility, yet still embracing ever more outsourcing
- The increasing breadth and depth of decision criteria – as we attempt to wring ever more value from more ‘compliant’ to policy purchase decisions that we want to bring us greater benefit – better, faster, cheaper, greener, safer
Source: Prof D Samson Univ of Melbourne
The DECIDE model
Adopting a set decision process can bring more rigor to bear on your decision making and help think things through more. And this is usually a good idea in any corporate context – especially procurement, and especially in public procurement where greater transparency and strong probity standards are required.
One option might be a simple framework approach like the relatively recent Kristina Group ‘DECIDE’ update in 2008 of the old 1980’s ‘GOFER’ process for straight forward but important decision making – Goals, Options, Facts, Effects, Review.
Similarly, the catchy ‘DECIDE’ model suggest six steps to a good decision basis:
- Define the problem
- Establish or Enumerate all the criteria or constraints
- Consider or Collect all the alternatives
- Identify the best alternative
- Develop and implement a plan of action
- Evaluate and monitor the solution and examine feedback when necessary
Often, many key corporate decisions are inextricably linked to ‘problems’. In corporate life today, few ambitious people seem to like awake in bed at night dreaming of capturing a great opportunity for the company and being rewarded for it. Many, however, lie awake at night dreaming of solving THE PROBLEM. That ‘problem’ – the one which is high-profile, consuming the business, has no easy answers and is ultimately a much-admired problem. That is where the corporate glory lies – “I solved THE PROBLEM” and will clearly get the glory for doing what no other could. Meanwhile, opportunities go by like buses.
The link between problem-solving (and risk-analysis for that matter) and decision-making lends itself well to decision process – like using more sophisticated DECISION TREES for example.
Using the sheer logic of decision trees can help the corporate DMU. Wikipedia defines a decision tree is a decision support tool that uses a tree-like model of decisions and their possible consequences, including chance event outcomes, resource costs, and perceived value. It is one way to help think through decisions and their consequences.
Each branch of the decision tree represents a possible decision, outcome, or reaction. The furthest branches on the tree represent the end results of a certain decision pathway. Decision trees are used in a variety of situations but lend themselves well to business scenarios such as determining a course of action for a complex finance or business decision and, especially, purchase decisions.
They aim to bring the rigour of good process to important or complex decisions – especially when added to tabulations of pros and cons or weighted scores of different options, like in procurement spreadsheets. Yet decision-tress can be quite reliant on conditioning control statements and on known likelihoods and ramifications.
Although, decision trees can aid better risk analysis when considering your chosen option – ‘WHAT IF’ thinking with consequences laid out clearly. Procurement teams have been doing much of this during the pandemic – rebalancing risk and cost advantages of inbound supply chains originating overseas, for instance.
A decision tree example to aid a decision on whether a legal case should proceed to court or settle
Within business life, however, ‘management decisions’ can be the hardest of all all. The phrase implies a team decision, but democracy in corporates is rare so these “management decisions” are usually more individual. Done well they are inspired leadership, done clumsily they can be branded a “Captains Call”.
The loneliness of command ultimately crystallises into single decisions that please a few yet inevitably disappoint many others. This is because management decisions are often subjective. Their strongest decision criteria a vision of the future or a strategy that others cannot see. Decisions that are inevitably complex if not balanced or even nuanced. They usually require fine judgement and courage and are rarely obvious calls. The phrase “that was a ballsy decision” often implies a genuine compliment in retrospect.
In fact, important management decisions are often about embracing leadership and building the courage to have your vision tested. In corporate life, rarely does a manager face the luxury of a choice between GOOD options and BAD ones. Management is not about being sat on a pedestal deciding between good options and bad ones – any idiot can do that; even politicians. No, much more realistic is the scenario that if we were starting out on such a decision journey, you wouldn’t want to be starting from here. Indeed, what you truly most often face as a modern business manager is a decision between a range of bad options and no good ones. Usually, sat on a pedestal deciding between a BAD option and a WORSE one.
Defending such decisions, certainly to your team, can be very difficult (especially if they are decisions passed down from above). And, certainly, if they are based more on instincts over data. It is all too easy for team members to criticise a bad option chosen – and very easy to avoid suggesting which option should have been taken; unless selecting an option that was never there to take (and staff can be really good at choosing those ‘options’ for sure).
Actually, courageous decisions like these move beyond the definition of being simple management decisions and quickly become leadership decisions. The differentiation can be clear when studying the subject:
Yet leadership is at the very heart of all successful businesses – by definition. Entrepreneurs know this and relish the challenge of decisions. They thirst to be tested. Want to be proved right.
“Whenever you see a successful business, someone once made a courageous decision.”
As managers grow they often yearn for leadership positions – sometimes through the channel of entrepreneurship applied internally to their organisations – intrapreneurship.
Remote decision making
In the real world of Covid lockdowns and restrictions, with teams working from home (WFH), remote managers face additional challenges in making decisions – especially timely ones.
Most often, managers do not have all the information they need to make a solid decision. Asking for more information, more data, more evidence before deciding is always an easy option. Except there is rarely time. Decision’s press. Always. And there is a plottable relationship between the knowledge you have at hand to decide, the time available, and the likely consequences – THE CONSEQUENCES MODEL:
So, what can managers practically do to manage down the risks inherent within significant decisions and make better quality decisions when managing remotely? Five things perhaps:
- Use team meetings proactively
Weekly team meetings are a great management tool offering a host of benefits. Especially for the remote manager on ZOOM. But they can also help manage your process to making BETTER decisions. Identifying a likely future decision and ‘tracking’ the process towards it during team (or DMU) meetings can help. It also brings more minds to a question and helps ‘cover your bases’ as you progress towards a final decision. It needn’t take long and can become a standing item on your agenda each week. It can also help in building up your decision balance-sheet of PROS and CONS over time, allowing more reflection and consideration of points as likely decisions soak in with the team better.
This approach works well with regular stakeholder meetings on procurement decisions. Involving them throughout the process, delegating tasks or option-evaluation to them can help them stay involved, take ownership and buy-in more readily to any final decision. Using AGILE PROCUREMENT approaches can facilitate better, faster, cheaper routes to important project decisions. Other tips for managing remote meetings were covered in the previous article last month.
- Define at the outset the right question to frame your decision
One key to better decision making is to take the RIGHT decision – that is, to better define the question that you are deciding upon. For instance, should you buy a new car, and if so which one? Or should you really consider the best transportation mode first – like just taking the train each morning instead? Decisions with emotional attachment are particularly prone to people making decisions to satisfy the wrong question – and basing decisions around WANTS not NEEDS.
Using questions well, demands asking exactly the right question (or problem) to be solved. Get to the heart of the matter. Consider longer term implications. Take time to CRAFT the right question to be addressed – start with a standard prefix to test your accuracy in crafting the right question needing a decision like, “The real question here is ….”
- Time your decision right
Sometimes a looming decision need not be taken yet. Not just yet, anyway. This offers the chance to mull, to collect more information and more data on the pros & cons of any decision or, usually, on the alternatives or different approaches? To sound out options with others. Timing your decision to the right moment can also maximise its impact. Yet good timing sometimes needs ‘strategic patience’ – which some find difficult.
“The secret of my success was only that in the lead up to our victory I did the business that needed doing, on the very day it needed doing”The Duke of Wellington after the successful Waterloo campaign
Taking time to work out your decision timeframes (often working backwards from the desired implementation date or result-date) is an essential part of good corporate decision making. But avoid the temptation to choose hard deadlines based on arbitrary dates. Work out when the business will benefit most? Target that date instead; yet leave room for flexibility where you can … it is a complex world and much can vary in even a short-time.
- Define the success criteria of your decision accurately
Having set upon the right question, set about the right answer. What does success look like? How do you know when you have arrived there? This is particularly important managing teams – you must paint a picture of what success looks like and get them to buy-in. Describe your vision. This is what LEADERS do.
But not everyone can easily share you vision. Not all can ‘see’ it. This demands you not only define success well but also the stages to be achieve on the way to that vision. Using accurate and timely measures keeps the team decision on track and lays down a process for them to follow towards victory. Use the SMART approach maybe:
“No matter how beautiful the strategy, you should occasionally measure the results”Churchill
- Avoid the TOP 6 Decision-Traps
Perhaps the best way to make better decisions – is not to make bad ones. And bad decisions often share similar characteristics. Often, these SIX “decision traps” for the unwary ….
- The fudge – avoid decision-less decisions, the cop-out. This can include delaying decisions long past when a decision is needed. In a procurement context this might be making no-decision (wasting bidders time), staying with the incumbent (because it’s easy) or just delaying any decision to next time (extension by default).
Try setting a deadline for decision and a clear rationale WHY and WHEN? And outlining the consequences to balance the vision of the benefit of the project. Also, scope the DO NOTHING option … what are the consequences of doing nothing?
- Group think – Consensus decision-making has a strong place in many DMUs. Yet too much consensus can lead to group think – far too much agreement. This risks no dissenting views or even alternate views, which is rarely healthy. How do you know that you are right? Sometimes, six buyers in a room are not always the best six people to decide on a course.
Try choosing a broader DMU. Include people with wider roles that represent different perspectives – invite a range of stakeholders (always) or even forge a RASCI model for your DMU perhaps.
- Framing errors – Answering the wrong question is a common framing problem in decision making [see (2) above]. It leads to taking the wrong decision and is often described as frame blindness. Low frame control is also a trap, that is only defining the problem driving your imminent decision from a single point of view – not leaving any room for others’ viewpoints or objections, or even for a later course.
Try a workshop to forge the RIGHT question to decide upon (see above). Set clear and agreed evaluation criteria at the outset and use them to test the rigour of your decision before finalising it. Scope likely or possible short/medium/long term effects of your decision – and other’s reactions to it that may vary your planned outcomes.
Or adopt Edward DeBono’s SIX HATS approach to decision making, where six people play out six roles to offer six differing viewpoints to prosecute or pressure-test a decision before finalising it.
- Dogma – over-confidence, plunging-in or a dogmatic approach can quickly become self-defeating. The attitude of I’m right-You’re wrong is plain wrong – you have to win your argument, even when you are the boss – ask Trump. Whilst on the topic, shooting-from-the-hip rarely pays in an increasingly complex corporate environment.
Truthfully, keeping track of all the information to be incorporated and all the various options on any meaningful decision is often too difficult to keep-in-your-head and comprehend cleanly and clearly. Confusion is inevitable and a confused or muddled decision more likely. And moving from confusion to clarity is a test of a good decision.
Try not to commit to a course too quickly or too early. Do not condition your team too heavily or too early. Do not declare bias or any pre-decision. Leave room for doubt. And follow a process with a more systematic procedure towards a final choice that brings rigour to your decision-making and helps avoid them unravelling downstream.
- Bias – avoiding bias is vital in good decision making. But this is a balance, to some degree, as a leader’s decision often comes from their own conviction and their own vision. Collecting evidence that reinforces your own pre-disposed view can entrench bias. So can anchoring your decision to convenient facts, or just ‘unweighting’ decision criteria to calculate a convenient answer for your own viewpoint.
Always declare any clear bias – let others in the team compensate for your bias. Or, with a clear or apparent conflict of interest recluse yourself or step out of the DMU or just abstain your ‘vote’ from any final decision. Show how you have incorporated others views.
Managing bias or unconscious bias is more difficult and demands a more mature approach. Ask your boss, mentor or coach for advice. Look for a dissenting view and study it, examine its evidence to compare with your own. Use empathy to try and put yourself in other’s shoes – work to see things from their point of view.
6. Foggy decisions – DMUs can sometimes meander in their path towards a decision. Heading down the branches of your decision tree and perhaps losing sight of the key issues or the key questions to be decided upon. Focussing far into the HOW rather than the WHAT or the WHY even. And, along the way, losing track of how we got to where we got.
Maybe a loud voice bullying the DMU to their own way, or an articulate voice leading the DMU astray through sophistry. But, in the end, losing track of why we decided what we did? In the end, too often we may latterly hear the query “How the hell did they get to that decision” – and it is not a compliment.
In part, this is why stakeholders want more transparency on corporate decisions. Decisions need to be able to stand up to review, to scrutiny, to audit, to account. The provenance of significant decisions should be trackable.
Try keeping minutes of meetings, records of key decision points. Include the right people in your DMU or your RASCI group. Draft balance sheets of pros & cons, or write up your cost-benefit analysis, develop a written business case with clear objectives and rate hard/soft benefits individually. Scope out what your success criteria are and define numerically what the measurements of success will be.
CEOs are reputed to rate decision-making capability and good judgment as the most important management skill for their management team members – yet, for the most part, they remain amateurs at maximising their chances of making good decisions. It is not a topic which is studied (or often practiced) in a particularly measured way.
Given the importance of the role decision making has in a procurement context, you would be forgiven for thinking that procurement practitioners would often be the in-house experts on the art and science of decision making. Yet, they too do not study the topic or train to get better at decision making as a skill.
Working remotely heightens the risk of poor decision making as communication is limited and hasty assumptions take over speedy thinking to meet urgent deadlines.
Yet at the very least, we can study decision-traps – or the ease of making BAD decisions – so we can avoid them and improve our chances of making better corporate decisions. And there are surely many examples and case studies to help us learn. These include one quite prevalent in Australian business culture – the Conspiracy of Optimism – but that’s another story, for next time …..
Jonathan Dutton FCIPS has a non-executive role at SUPPLY CLUSTERS and writes a monthly column for the website. Jonathan is the CEO of PASA who run a wide range of procurement events and training programmes each year and cover all aspects of procurement thoroughly including AGILE PROCUREMENT He has also worked extensively in the past as a senior procurement consultant and trainer including his own renowned training programme ‘THE STRATEGIC PROCUREMENT LEADERSHIP PROGRAMME’