Making better decisions in a crisis … don’t be rushed into the wrong decisions by emotions, stress, or group think
April 10, 2020
Decision-making in a crisis can be tough.
Situations change at bewildering speed, there is more complexity, more uncertainty, more urgency and more pressure.
How do we react under pressure and what can we do to improve our judgements and decisions?
- How do you see the future? Future Recoded … Reimagine markets. Reimagine work. Reimagine business. Reimagine success.
- What are the impacts of Covid-19? What business leaders should do now, to support people and society, and secure their business future.
- Why innovate in a downturn? Whilst everyone else is losing their heads, the companies of tomorrow are being created right now
- The latest edition of my “Fast Leader” magazine Happy with Zoom, Finding more purpose, Babylon Health, Fujifilm’s anti-viral drugs
Leading in a world of Covid-19
As the Covid-19 pandemic spread across the world, the response of different leaders will remain a case study for years to come. Whilst some were fast to act, like South Korea, others dithered and lived in denial, like in the UK. Stock markets too were slow to respond, with dramatical falls in late February, 6-8 weeks after the first signs of what was emerging.
As the reality, the magnitude of the crisis dawned on leaders, they swung into action. Whilst some had an immediate concern for people, like in New Zealand, others were more concerned about the economy, like in Germany. Whilst come decisions changed, others just looked for scapegoats.
Whilst these leaders, whose skill is typically more political than leadership, they were clearly unprepared to adjust from their normal behaviours in good times, to those required now.
Making better decisions
There is no magic to making decisions. Leaders typically create a strategic framework for their organisation – purpose and strategy, objectives and metrics – within which decisions are about making the right choices.
The are 4 important moments in any devision
- Define the problem – Identify the problem, although this is not obvious, why may require deeper analysis – asking why. Then establish the decision making criteria, which would normally be aligned to the strategic framework.
- Explore the options – Options are based on creative solutions, balanced against the risks involved – which decision will solve the problem, or achieve the goal best?
- Make the decision – Having evaluated the options, and the implications, and the criteria for making the decision – then its time to be decisive.
- Review the impact – Whilst decisions are clear, they can sometimes be wrong. This is not a failure, more important is learning about what’s wrong, and making the decision better.
A useful models, similar to the above, often used for decision making is DECIDE, an acronym for six decision-making steps:
- Define the problem
- Establish the criteria
- Consider all alternatives
- Identify best alternative
- Develop and implement
- Evaluate and monitor
There is much more depth into what makes good decisions, which is covered elsewhere. At a high level, decision-making can be an individual or collective activity, it can be more rational or irrational, usually meaning more analytical or intuitive, using knowledge that is explicit or tacit.
It also depends on authority, and therefore how much influence over actions one has, how idealistic or “perfect” you want the decision to be compared to a “good enough” practical solution, the culture in which you work which may differ significantly in the use of authority and consensus, and your own thinking and behavioural styles.
“A good plan, violently executed now, is better than a perfect plan next week.” General George Patton
Jeff Bezos discussed how Amazon takes decisions, in his recent annual letter to shareholders, and in particular how it is willing to take big risks with the knowledge that 90% of them will fail. He distinguishes two kinds of decision-making that affect how he thinks about risks.
- Absolute decisions are not reversible, and you have to be very careful making them.
- Agile decisions are reversible, like walking through a door — if you don’t like the decision, you can always go back.
The problem, he says, comes from confusing the two, and that as organisations get larger, there is a tendency to favour absolute decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.
Making better decisions in a crisis
Approaches to problem solving and decision making that work well in normal circumstances might not work well in a crisis. e The “Cynefin” Framework developed by Kurtz and Snowden. This is a sensemaking framework with five domains:
- Obvious or Simple (the known) — We’ve seen this a million times and as such can categorize and respond according to established best practices. The relationship between cause and effect is well known.
- Complicated (the knowable) — Although we don’t immediately know what is happening, we can analyze the situation and come to a conclusion of what must be done. We can enlist experts to analyze, set up constraints and a process addressing resolution.
- Complex (the unknowable) — We’re not able to determine what will cause a particular result. The best course of action is to conduct experiments and check if any or all take us in the correct direction. A lot of time when human opinion and decision is involved we could be working in this area; simply because humans are complex beings.
- Chaotic (the incoherent) — The situation is very unstable. We don’t have time to experiment or probe since the situation is dire and we need to act. An IT issue that must be taken care of immediately with no delay may be categorized as such. If we have no time to figure out a system deadlock issue, we may opt to get ourselves out of this chaotic state by rebooting the server.
- Disorder (not determined) — Anything whose domain has not been determined falls into this domain.
Leaders who don’t recognise that a complex domain requires a more experimental mode of management may become impatient when they don’t seem to be achieving the results they were aiming for. They may also find it difficult to tolerate failure, which is an essential aspect of experimental understanding. If they try to overcontrol the organization, they will preempt the opportunity for informative patterns to emerge. Leaders who try to impose order in a complex context will fail, but those who set the stage, step back a bit, allow patterns to emerge, and determine which ones are desirable will succeed.
Pyschologists suggest that, in the face of a crisis, our mental state tends to move from one of relatively restful contemplation towards increased anxiety, worry and anger. The fatigue that inevitably comes with a period of prolonged crisis only heightens the level of emotion.
Why does this matter? Because a change in our emotional state is likely to affect the way we make judgements and reduce the effectiveness of decisions.
Many will call for faster decisions, because humans are programmed to respond faster to threats than opportunities, but also urgency may be able to save lives or reputations, however others believe that it is better to make slower decisions in a crisis.
Important issues to consider include:
- Stress reduces thinking power. Worrying uses up valuable mental resources resulting in less thinking capacity to solve a crisis. Just as our computers slow down when we have lots of applications open at the same time, our processing power is also reduced when we are distracted by the anxiety caused by potential hits to personal reputation, share price or product sales.
- Crisis encourages narrow thinking. On some occasions, concentrating on priority information can provide a necessary and helpful focus. Too often, however, it can lead to myopic thinking which may miss the bigger picture. This bigger picture is often crucial to managing the crisis effectively.
- Time pressure can lead to bias. Even when professionals do try and consider the bigger picture, there is a tendency just to confirmation bias and groupthink – select the facts and information that support or confirm initial interpretations and conclusions.
- Emotions drive quick decisions. Crisis decision-making is stressful and uncomfortable. One means to overcome the emotion is to drive towards quick decisions. The first reasonable option is selected, with little or no thought given to the optimum approach. This approach manages the negative emotion at the cost of taking effective decisions.
There are some useful ways to avoid these traits, and improve crisis decision-making:
- Don’t hide away. Fight the tendency to hunker down and maintain your worldview, and connections. Social support reduces stress, keeps issues in context and improves the thinking process. While tempting, the hunker down approach often leads to narrow thinking.
- Set clear goals at the outset of the crisis. It’s important to be realistic about what can be achieved and not be overly ambitious. The process of setting goals also helps the crisis team stick to objectives and prioritise the right issues.
- See crises as an opportunity to learn from adversity. This more positive ‘frame’ of a crisis can reduce anxiety and stress, build resilience and lead to significant improvements in the future. Run a full debrief once the crisis has been averted.
- Put things in perspective. Think carefully about whether you need to apply a sticking plaster or carry out a full-blown crisis operation. There is a difference between a relatively isolated crisis and an incident that’s reflective of a much bigger problem.
- Accept that some things are outside of your control. There will be some aspects of a crisis that cannot be changed, regardless of what you’d like to happen. Move on to other things that you can exert some influence over.
- Prepare for it. Easy to say afterwards, but by identifying and practicing reactions to different scenarios, we can help to remove some of the negative emotions naturally associated with live crises.
By recognising the effects of emotion we can introduce measures to address the likely flaws in our decision-making process. By understanding the psychology of crisis, we can improve our approach to communications and protect, and sometimes even enhance, company reputation
- New Scientist: Making better decisions
- Jeff Bezos on reversible and irreversible decisions
- HBR article: Slow down to make better decisions in a crisis
- Forbes, Comparing business to military models of decision making
- The Art and Science of Decision Making Daniel Kahneman
- Decision making under uncertainty
- How do smart people make decisions? Gerd Gigerenze
- The OODA Loop: A Competitive Decision-Making Tool