Surrounded by flashing lights and pumping music, the CEO stood on stage and announced “we’re innovative – we are the future”! Memories of Steve Jobs! But when we looked at examples of projects that genuinely pushed the boundaries of the strategy, they’d all been stopped or reshaped to feel more comfortable. Decision-making processes had smoothed out as much risk as possible.
Let’s be honest, how many leaders would say “we’re not innovative”? But actions speak louder than words. And actions during a crisis speak extra loud – a crisis has a great way of showing a company’s true colours.
“Stress Destroys Your Ability To Make Smart Choices” – Tyler Tervooren
Crisis situations are fascinating. Putting a company under stress can reveal its true values.
- How are decisions made in a crisis?
- Who’s involved in those decisions?
- What factors matter when making rapid judgement-based decisions?
Established companies and leaders are usually well-oiled when making operational decisions. They may even have measures to ensure decisions aren’t all about the financials. But how effective are those measures in a crisis? Or do the previous intentions of taking a broader view in decision-making get trumped by financials?
Values-based decision making
“When your values are clear, making decisions becomes easier.” —Roy E. Disney
What are your organisation’s values? More importantly – to what extent are they embedded into culture and processes?
There is an increasing focus on the importance of ‘purpose’ – values are strongly linked to that. But this purpose can’t just be superficial. To be authentic it needs to be more than words – an integral part of how the organisation operates and decisions are made. How you choose to spend money and allocate resources or leadership time reflect what you truly value – are these aligned with what you say is important? Or not? Actions speak louder than words.
Leadership is a crucial piece of the puzzle – are your leaders aligned with your organisational values and genuinely applying them whenever they make decisions? What decisions were made over the last six months – what do they say about your true values? For example – if protecting the environment is something you talk about, can you give examples of decisions that were right from an environmental perspective but not necessarily the obvious decision from a financial perspective?
This is a great article on green-washing. There are many parallels with other big cultural changes such as embedding digital behaviours or transforming an organisation to be more innovative. If you want to transform then that change must be championed from the top. There is evidence that environmental sustainability only genuinely happens when it’s core to the CEO’s values – i.e. they have to feel it in their bones, not just talk about it. That’s true any time you want to transform an organisation – otherwise it’s just lip-service and the organisation reverts to type when things get tough. As Chris Beswick says – “Can you shift the strategy without having a leadership mindset which is also aligned towards innovation? Well, you can try, but it probably won’t get you very far.”
When embedding purpose, I was told “you can’t have conscious business with unconscious finance”. The same applies to innovation – at the moment, the finance voice in the room is stronger than ever. And so the biases and priorities of your Chief Financial Officer or Finance Director are having a larger-than-ever impact on the organisation’s decision making. What are these? Are they aligned with what you say are your organisational values?
Crisis situations create panic and result in rapid knee-jerk reactions. There’s a lot written about the importance of giving yourself time to make decisions – shifting from system 1 (instinctive, emotional) to system 2 (more logical) thinking, the two thought modes described by Daniel Kahnemann.
We crave certainty and control, two things which aren’t present in a crisis. Operational processes are about control and don’t respond well to ambiguity – we see this often enough in the innovation space where there’s a desire to shut down options and remove risk and ambiguity.
This article discusses how urgency to take control can result in premature decisions before a good set of options has been created. Taking action can be comforting but the result is often a sub-optimal decision which creates more problems in the long run. For example, Sports Direct and Wetherspoons made dubious decisions in the early stages of UK lockdown and both subsequently made very public U-turns – these rapid decisions could mean long term brand damage.
Taking time to collaborate and gather different perspectives will create a better set of options. This is what pilots do in emergency situations on aircraft – if they have time to collaborate in those situations then we definitely have time within the much slower context of business! Crisis situations need strong leadership but not leaders who think they have all the answers.
Research into how pilots collaborate showed “in all critical situations, even the most experienced pilot may overlook something, act too hastily, or lose focus. Collaboration, thus, is vital to safety.” This same article talks about the importance of asking open questions and inquiry, taking a coaching style of leadership.
Also be mindful of time though – you need to strike a balance between rapid knee-jerk decisions and slow good decisions. How can you make rapid good-enough decisions? Having a clear framework for decision-making will help.
How can a company improve?
If you want values to be integral to your organisation’s culture then they need to be embedded in core business processes, including decision-making. But just changing your processes won’t cut it. People are the ones making those decisions – and they bring with them a load of baggage based on their life experience. Those biases impact how they show up in the room during the decision-making process – so this is about people change too.
Step 1 – define your north star
Have a clear organisational “north star” and set of values.
Step 2 – design your decision-making processes
Design decision-making processes so that your north star and values genuinely drive decision-making. For example, by incorporating non-financial metrics and ensuring these hold an equal weight to financial metrics.
Step 3 – be prepared to change
This is the most important step. Leaders must be humble and accept they may need to change. Just because someone is good at making operational decisions doesn’t mean they have the right behaviours and experience to make values-based decisions.
Coaching can play a role here. And it can help to bring someone external into decision-making meetings. At the beginning, the decision-making group should agree:
- They are willing to feel uncomfortable
- They will need to behave differently.
From this platform, the external person holds up a mirror when the team revert to type when making decisions – for example, by putting more weight on financial metrics or on short-term versus long-term returns