A Methodical Strategy to Develop Executives’ Decision Making Acumen
At all levels of a business, there is a constant need to make critical decisions in a timely manner. This is especially crucial at the strategic level, where top leaders are expected to demonstrate a high capacity for systematic and coordinated decision-making. However, this is not straightforward, and there is no clear path to follow either.
There is a wealth of research and thought leadership on developing strategy and implementing it — but nothing on how to develop into a leader with excellent judgment abilities. Chief Executive Officers are frequently required to create their own on-the-job training programs for executives in order to hone their strategic thinking and judgmental abilities.
Executives must make trade-offs while making decisions, weighing the various available possibilities. Selecting the most viable option from a limited number of alternatives is difficult for executives, as they want to keep all of their options open.
Decision Making Acumen is a matter of life and death for leaders. It is vital for CEOs, for example, to do an exhaustive assessment of the advantages and disadvantages of entering a particular market before presenting the case to the board. They must determine which regions to enter and how to do so.
The capacity to make sound choices encourages people to analyze the larger picture and think long term rather than focusing exclusively on short-term gains. Executives who possess Decision Making Acumen are able to say no to undesirable choices for their firms.
To develop CEOs’ judgment and decision making abilities, a systematic strategy is required. A methodical strategy to developing an executive’s Decision Making Acumen should contain the following components:
- Grasp on Reality
- Strategic Choice Cascade
Understanding these 2 components enables CEOs to create priorities, express their reasoning clearly, stand solid in their decisions, and urge for others to follow.
Now, let us discuss how having a firm grasp on reality is crucial for leaders developing Decision Making Acumen.
Grasp on Reality
Executives are frequently predisposed to view data in a way that validates their preconceived ideas. This cognitive bias causes them to misinterpret their situations. The approach’s first component emphasizes the importance of removing biases and preconceived ideas from the decision-making process. Executives with Decision Making Acumen make decisions based on a comprehensive examination of the situation, putting their own biases aside, and embracing reality.
Distraction by preconceived notions and a refusal to accept reality result in failures. For example, on the idea that expanding into economies such as Brazil would be simple due to innovation and brand equity in other markets, Proctor and Gamble spent heavily in the distribution of their oral care product in that country. The corporation was unaware that Colgate had had invested twice as much in distribution as P&G and had established a large distribution network in Brazil, resulting in enormous brand loyalty for its products. This erroneous assumption cost P&G millions of dollars in market share and compelled the company’s leadership to modify their growth plans.
Interested in learning more about the other element of the systematic approach to Decision Making? You can download an editable PowerPoint on Executive Decision Making Acumen here on the Flevy documents marketplace.
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