Focus 3 
“All of life is but a mass of small choices — practical, emotional, and intellectual — systematically organized for our greatness or grief. We must never forget that it’s not only our big dreams that shape reality. The small choices also bear us irresistibly toward our destiny.”
– William James
Every day we think and make decisions. And the quality of our thinking and decision-making has a direct and powerful impact on our effectiveness at work. One can make the case that the performance of any company is the result of the collective decisions and actions of its people. Consistently successful companies have people who are consistently effective in their thinking and decision-making.
Despite the importance of decision-making, about half of all business decisions end in failure. This is the finding of a multi-decade study of real-life organizational decisions conducted by Dr. Paul Nutt, a business professor at Ohio State University.
Dr. Nutt studied more than 400 actual decisions made by top managers in private, public and nonprofit organizations across the United States, Canada, and Europe. For more than 20 years, Nutt collected decisions, selected by the top executives of the organizations he studied, and systematically analyzed them. His research includes a wide variety of decisions, from purchasing equipment to renovating space to deciding which products or services to sell.
“Vast sums of money are spent to make decisions that realize no ultimate value for the organization,” said Nutt, “and managers make the same mistakes over and over again as they formulate their decisions.” The common theme in failed decisions is that most seem preventable, according to Nutt. “Failure cannot be blamed on events we can’t control such as fickle customers and bear markets,” he said. “Failure is the result of blunders that lead unsuspecting decision makers to fall repeatedly into thinking traps that ensnare them.”
We can only imagine the findings if Dr. Nutt had studied 20 years of political decisions!
By far the greatest value from this study is the tracing of flawed decisions back to credible root causes. Excuses such as surprise events and customer behavior are wisely set aside to allow probing for the real causes. The findings may surprise you. Dr. Nutt determined that decision failures commonly develop from three primary sources:
Rushing to judgment.
Premature commitment to a decision can lock managers into a flawed decision, even after evidence of the flaw begins to surface.
Failing to use resources wisely.
Resources are focused on defending a flawed decision rather than on developing a sound decision. This problem is often accompanied by premature commitment to a course of action.
Using failure-prone practices.
Two-thirds of failed decisions relied upon commonly-used tactics that turn out to have a poor track record.
“Most of the good decision-making tactics are commonly known, but uncommonly practiced,” Nutt says. “The problem is that the best tactics take time to implement and many managers are looking for quick fixes. However, poor decision making costs more time in the long run.”
Consider Dr. Nutt’s findings in light of a recent survey that asked 818 professionals and managers about their confidence in the quality of their business decisions over the past three years. 91 percent said their confidence had increased or stayed the same.
So, over 50 percent of business decisions fail, and yet 91 percent of businesspeople are as confident as ever in their ability to make those decisions. Decision confidence is up. Decision success is down.
It’s time to close that gap.
Think about it …
