Strategy

How to Make Smarter Decisions

As a leader, you’re regularly making decisions that affect your organization. Good decisions drive profits and engagement. Poor decisions, on the other hand, cause disengagement and erode profits. Granted, we all make mistakes. But our goal is to minimize missteps and make the best decisions possible.

And while intelligence, education, and experience are important factors in making smart decisions, there is another factor that plays a significant role in the quality of those decisions.

That factor relates to stress.

First, let me explain why and how stress affects our decision-making, and then explore what to do about it.

The brain is made up of three parts – the reptilian brain, the amygdala, and the neocortex. (Yes…. I know I’m oversimplifying things.) The reptilian brain controls our autonomic functions – things like breathing, heartbeat, and digestion. The amygdala is the emotional center of the brain. It’s where emotions are processed and where the “fight-or-flight” response resides. And the neocortex is where logical thinking and creativity take place.

When we’re under stress, the amygdala starts to take over. And if the stress increases, our fight-or-flight response kicks in. This hard-wired response developed when we lived in an age when we were often faced with real life-or-death situations. It was important to make an instant decision. Fight to save yourself or flee to save yourself. We didn’t have the luxury of thinking things through. Hesitation could prove fatal.

Therefore, to cause us to make an instant decision during high stress, the body cuts out the neocortex. It essentially keeps us from thinking.

We’ve all seen examples of this dynamic in action. We’ve seen someone who – under pressure or stress – can barely form a sentence, let alone make a smart decision.

That’s why being under stress hampers our decision-making abilities.

As for what to do about this, the obvious answer is clear. Avoid or reduce stress. But as you know, that’s often easier said than done. Things like eating better, getting restful sleep and exercising will all help alleviate stress. But we’re still going to experience stress. There always seem to be stress-causing issues in our life.

There is, however, an interesting strategy for minimizing the number of stressful situations you need to deal with as a leader.

Over my years as an executive coach, as I’ve helped my clients become more effective leaders, I’ve asked them to draw out the following diagram:

After they’ve created this matrix, I’ll ask, “Ideally, in which quadrant do you want to spend most of your time?”

The majority of my clients tell me that ideally, they should be spending their day on important and urgent matters.

And then I’ll ask them, “What do you call matters that are important and urgent?”

The answer, of course, is that we call urgent, important matters “fires”. I’ll point out to my clients that they just said that in their ideal world, they’d like to spend the majority of their time putting out fires! (Which of course, produces lots of stress.)

If you’re spending your days putting out fires and you’re under constant stress, you can’t think clearly and you’re unable to make the best decisions you’re capable of making.

How do you get off this “hamster wheel” of putting out fires?

Obviously, you need to first put out the fires. After all, they’re important and urgent. The key is what happens next. Once an urgent matter is addressed, it is essential to carve out some time to step back and reflect on the answer to the question, “How can I prevent this from happening again?”

In other words, the key to clear thinking and smart decision-making is to address the important before it becomes urgent. Only by giving thought to this can you – as a leader – get off the hamster wheel of putting out fires.

In order to facilitate clarity of thought, I recommend getting out of your work environment. Get away from the computer and get away from the office. Take a pad of paper and go somewhere. For example, go to a coffee shop or a park or even your backyard. You’ll be surprised at the clarity of thought you’ll get. (It’s something I do every day.)

And as you begin to address important matters before they become urgent, your days will begin to quiet down. And as your days begin to quiet down, your discretionary time increases.

And as your discretionary time increases, you’ll have more time to think about other important decisions, develop better strategies, and clarify your vision for your team and your organization.

Executive Effectiveness: Stop Setting Goals

Over the years, I’ve seen this scenario over and over. An executive decides they want a real boost in growth and profits, so they set a big goal for their organization. Or, if they’re really ambitious, they develop a “BHAG” (a Big, Hairy, Audacious Goal).

Then they rally the troops, announce their big goal with lots of fanfare and encourage their team by proclaiming they are confident it can be achieved.

The pronouncement is then followed by a cascade of meetings at all levels, during which it’s explained how the goal can be accomplished, thereby ensuring buy-in throughout the organization. Strategies and tactics are developed in each department so that there is a clear blueprint for success in place. And the initiative begins…

The problem is that the goal is rarely reached. Despite all the hoopla and slogans, despite all the detailed plans and projections, and despite all the accountability, results fall short. Why do these initiatives almost always miss their target? Why are these goals not met? The answer is simple.

A “goal” has no emotional component to it.

If you understand people and how they make buying decision, you also understand that people buy emotionally. This holds true whether we want someone to buy a widget or buy an idea. We are emotional creatures and are prompted to action by emotion more so than logic. Yes, we rationalize our decisions logically, but the decision is made emotionally.

Although an initiative may have a well-developed plan, trying to get people enthused about a big goal is like asking people to get excited about doubling sales. No one cares. (Except the owners/shareholders and the person who came up with the goal). It’s unrealistic to expect an enthusiastic, committed response to a cold, arbitrary goal.

In order for something really significant to be accomplished, people need to work diligently towards its attainment. They need to maintain their commitment to it in the face of obstacles and setbacks. The only way to achieve that state is for everyone to “buy-in” to the initiative. And as I noted, people buy emotionally.

Therefore, if an executive truly wants a team to get behind an initiative and really strive to achieve it, the initiative must have an emotional component. There needs to be a compelling “why”. An effective initiative has to embrace a meaningful reason for the pursuit of it. Only then will the efforts be persistent enough to reach the objective. And, if the initiative is well thought out and relevant, the tangible “goal” will almost always be attained as a consequence of the quest.

An example of an initiative with an emotional component might be something like: “We want to be known in our industry as the premier provider of custom solutions. We want to set ourselves apart from our competitors by developing creative solutions for the difficult problems faced by our customers.”

This is an initiative people can get behind, rally around, and take pride in achieving. Also, because the initiative is a way of being rather than the attainment of an arbitrary number, the nature of the strategies and tactics developed will be very different from those created simply to drive sales in the next quarter. Additionally, because it will create a fundamental shift in the way the company does business, the results will be longer lasting.

If you want to be an exceptional executive, get away from setting goals and start developing meaningful initiatives.

All Leaders Have Blind Spots

In truth, we all have patterns, habits, and beliefs that limit us. The challenge is that we generally can’t see how those thought-patterns and beliefs hold us back.

Blind spots can severely impact a leader’s strategic vision, their course of action, and their rate of success. Blind spots can impact decision-making and creativity, and they act to limit the strategic initiatives we are willing to consider. They even affect how we relate to others – hampering our leadership effectiveness, our political adeptness, and our executive presence.

It doesn’t matter how experienced we are, what our background is, our age, level of education, or intelligence. We’re all subject to blind spots. Leaders, like everyone else, acquire blind spots from life, but as leaders, they suffer additional blind spots caused by their need to operate within the corporate environment.

Blind spots show up in our beliefs, our thoughts, and our actions. When it comes to our thoughts, the same thinking that got us where we are can’t take us further. If we keep thinking in the same way, we’ll keep coming up with the same kinds of solutions. Our thinking becomes stagnant without outside stimulation. The only way to expand one’s thinking is to get fresh, outside perspective.

When we get attached to the process of how we imagine success will be attained we become blind to other possibilities. And when that happens, we’re like a fly incessantly beating its wings against a pane of glass trying to reach its goal. It doesn’t matter how hard we try if we’re pursuing success in an ineffective manner. When we’re not willing to consider other courses of action, we limit our success. How does one distinguish between dogged determination and blindness? It usually requires input from an outside, unbiased source.

Additional blind spots within the corporate world arise from two sources. The first source is corporate culture – corporate culture in a general sense as well as the specific “culture” of an organization. We hold beliefs about how organizations should function, how they should be structured, and which behaviors are valued. Every organization has its own special culture – either by design or by default. And while a corporate culture can be an asset, it often acts to create blind spots with executives. The second source of blind spots arising from the corporate world stems from the need of leaders to achieve productivity through others. As executives, we run the risk of our thoughts and beliefs being influenced by the thoughts and beliefs of the people under our guidance.

Breaking free of limiting thoughts and beliefs is essential for achieving the results we want, however, there are some inherent challenges in releasing blind spots. Many blind spots are so deeply ingrained within our make-up, we’re no longer aware they control us. Without outside perspective, these beliefs appear to be truths. It’s important to keep in mind that generally these limiting beliefs are YOUR truths rather than THE truth.

It is critical that leaders identify and release their self-limiting blind spots. To that end, it requires outside perspective and input from someone who can point out what they can’t see for themselves.

Please give us a call and let us help you and/or your leaders move past their blind spots, and achieve the success they want and the organization needs.

3 Mistakes to Resist in Strategy Development

I’ve seen this scenario over and over again. Companies looking to increase profits develop a strategy to bring them closer to where they want to be. Except that the so-called strategy they develop isn’t really a strategy at all. It’s just a goal. Or sometimes it’s simply a platitude – a nice-sounding, but meaningless statement.

Regardless of whether they develop a goal or a platitude, the results are always the same. The so-called “strategy” is never realized. No amount of encouragement, accountability or table pounding will lead to achieving the desired results. Only a true strategy stands a chance of achieving significant results.

If you really want to develop a strategy that achieves great results, it is essential to avoid these three mistakes.

Mistake #1: Developing a Platitude
Let’s dispense with platitudes right up front. Platitudes are nice sounding phrases that accomplish nothing. A typical platitude might read, “We strive to be the recognized leader in our field and meet our customer’s expectations of excellence.” It gives no direction, isn’t actionable, and addresses no particular issue. There’s no way to execute on it and it can’t really be measured. A platitude is not a strategy.

Mistake #2: Developing a Goal
A goal is just a metric to measure progress in the execution of a strategy. It has no emotional or inspirational component. It’s simply a means of determining progress. A strategic-sounding goal might be, “Our strategy is to double revenues over the next three years.” No matter how detailed the plan is to achieve that goal and regardless of the fanfare with which it is rolled out, this non-strategy is simply a goal to double sales – nothing more. Not only that, but the desire to double revenues is completely arbitrary; a figure pulled out of the air. The only people who will be enthused about this non-strategy are the ones who set the goal. And while it may result in an initial burst of activity and enthusiasm, they soon fade, resulting in business as usual. A goal is not a strategy.

Mistake #3: Developing a Tactic
Tactics are the means by which a strategic initiative can be achieved. Tactics – like goals – have no emotion or energy behind them. They are simply the mechanics of how things will get done. A typical strategic-sounding tactic might be, “Our strategy is to increase the sales force by 20% over the course of this year.” It’s simply a statement of the mechanics to achieve something. The problem is that that “something” is undefined and therefore this metric is viewed as arbitrary as well. Just as in the case of the pursuit of a goal, executing a tactic in the absence of a strategic objective make sense for a while, until the newness wears off and then enthusiasm wanes. There simply isn’t a compelling reason to achieve it. A tactic is not a strategy.

Develop a True Strategy
A good strategy, in contrast to platitudes, goals or tactics, addresses an issue or problem, and provides a direction for the company to move. It also provides the reason for the initiative, creating a desire to achieve it. By way of example, if the core problem is a product line which is not differentiated from the competition, the strategy might be, “Our strategy is to become known as the innovator in our industry by developing customized products and services.” This is an initiative that people can get behind (buy-in) and strive to achieve. The strategy causes the company and its people to become better than they presently are. Additionally, it incorporates a compelling “why” and embodies something people can take pride in achieving. By developing a true strategy, excellent results can be achieved and the desired financial goals realized.