How Many Good Decision Makers Have You Fired Lately?
By Jitendra Jain (JJ)
Tuesday, 10th March 2009
The art and science of decision making - The quality of our decisions, the role of intuition, the results we achieve and the rewards we enjoy (or perhaps penalties we endure). 

The ability to make good decisions is key to the survival and success of any good manager, director or CEO in today's fast-paced, cut-throat business environment. Most of us make business decisions in the expectation of achieving great results…and our performance is measured by these results.

But what if this approach is wrong? What if the results managers achieve are NOT the best yardstick of competence and decision-making ability? More often than not, bad managers are rewarded for good results that are a matter of pure luck…and great managers who've made the right decisions end up on the street when project results are less than satisfactory. What role do experience and intuition play in the decision making process? Is it all a matter of gut feel…or is decision making a purely methodical science?

To discover the answers to these and many more questions, I turned to Professor Zeger Degraeve, who is the ‘Sheikh Mohammed bin Rashid Al Maktoum Professor of Innovation, Professor of Decision Sciences' at London Business School. Zeger is one of the brightest minds in the field of decision making, operations research and managing project portfolios.

In our interview, we talked about fundamental issues in today's business environment…the decisions we face, the results we're held accountable for…and perhaps a clearer way to approach decision making than just relying on gut feel.

[JJ] We face many decisions on a day to day basis, ranging from personal to business…and from the critical life-changing type to the more mundane. Shouldn't decisions be judged on the basis of the results they achieve?

[ZD] The result is irrelevant … as a measure of decision quality. People, including managers and business leaders typically equate the quality of a decision with the quality of the result.  When people observe a good result they conclude that they made a good decision.  Likewise, when a bad result is observed, people conclude that a bad decision was made.  This is untrue.  Decisions and results are two different things.  Time elapses between a decision and the realisation of its result.  Decisions are made at a specific moment in time. 

Afterwards, people implement these decisions and the result is observed in the future.  The future is uncertain, there are no facts about the future, and nobody has a crystal ball.  In the future, events can happen that managers and organisations cannot control.  Also, events can happen that managers could not foresee.  Such events can cause good decisions to have a bad result and vice versa. 

Therefore, the quality of the result is not an indicator of decision quality and the result is irrelevant as a measure of decision (and execution) quality.

Further questions:
  • What is then a measure of decision quality?
  • What about Experience? Doesn't this play a big role in decision making?
  • How valuable, in your opinion, is Intuition in today's increasingly complex and rapidly evolving business landscape?
  • What are the downsides of using results as such a measure?
  • If we are not accountable for the result, what then are we accountable for?
  • But the result is not irrelevant … for our organisations, … and for our CEOs.
  • What are your suggestions to business leaders in implementing such an approach, especially with regards to compensation structures?
Read the entire interview here:

About the Interviewee: Zeger Degraeve is ‘Sheikh Mohammed bin Rashid Al Maktoum Professor of Innovation, Professor of Decision Sciences' at London Business School. Zeger is a leading expert in decision-making, operations research and managing project portfolios.

An award-winning teacher, he has contributed to executive development programmes in Europe, Africa, Asia, the Middle East and North America for leading businesses including: HSBC, Cadbury Schweppes, Novartis, Rio Tinto, E.on, Carlsberg, Zain/Celtel, Orascom, Dubai Holdings and IBM.

About the Interviewer: Jitendra Jain (JJ) is the founder of various online initiatives like www.hotelemarketer.com, www.thetalentjungle.com and www.younghotelier.com (among others) that dream, connect, educate and share all that is glorious about hospitality, technology and most importantly…the people that define our times.
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