The pandemic has magnified one of the most prominent difficulties leaders face during volatile times. Despite insufficient information, executives must make deeply consequential decisions, often on the spot.
By this means, business leaders have had to decide whether to impose mask and vaccination mandates, open their business fully onsite or allow work from home perhaps in a hybrid form. Additionally, they have to prepare their business for a likely onslaught of unforeseen circumstances while seeking new opportunities during extremely challenging times.
Naturally, we feel vulnerable, when facing such situations, but how do we convincingly communicate our conclusions in light of such overbearing complexity? According to studies, it is our confidence level that has a counter-intuitive impact.
Confidence versus Clarity
In the 1950s, Herbert Simon introduced the concept of ‘bounded rationality’ to describe a human decision-making process in which we attempt to ‘satisfice’, rather than optimize. In other words, as a default we do not seek the best possible decision, nor do we attempt to gain more clarity about complex data. Instead, we pursue a decision that simply strikes us as good enough.
From Noble-Prize-winning research, we have come to know that we arrive at that “good enough” state of mind by comparing the current situation to an ideal that we hold -- to devise solutions that strike us as closer to our ideal (Tversky & Kahneman). Our decision-making is far from linear, objective, or 100% rational. However, to convince others we tend to announce our conclusions with utmost confidence. This behavior, in turn, reconfirms our own bias, which might limit our access to more clarity with the next decision.
The uncomfortable truth is: From a cognitive perspective, we are not optimally equipped with a decision-making mode that can find suitable responses in the face of ambiguity. As complexity increases, our brain tricks us into confusing confidence with clarity. It lures us into a false sense of security.
Camouflaging lack of clarity with confidence has been rewarded in our organizations for decades. The most convincing and charismatic leader is typically promoted and their advice followed. However, recent research shows the tables are beginning to turn, at least in the reaction of the most immediate audience.
In several social experiments, Ito & Bligh, 2016, found that people lost trust in leaders who masked their lack of clarity with confidence. Conversely, leaders that embraced their vulnerability, admitted mistakes and acknowledged circumstances that placed them in a sub-optimal position to make a decision, were consistently perceived as more competent.
In short, leaders who exude false confidence and fail to achieve necessary buy-in and trust in their decision-making may leave it doubtful whether their business endeavors will achieve success. Business leaders and their organizations are therefore well advised to establish and reward decision-making that seeks clarity over false confidence.
How Can Agile Decision-Making Help?
The notion of agile decision-making was birthed in response to VUCA (Vulnerability, Uncertainty, Complexity, Ambiguity). It is deeply ingrained in the understanding that we are vulnerable and therefore rely on others to reduce our biases.
Agile decision-making is collaborative decision-making. A network of decision-makers reduces our blind spots and increases our chance for much-needed thought diversity and buy-in.
The following techniques are central to agile decision-making. They reduce the risk of falling prey to our own cognitive biases which result in ignoring our own mistakes and leading in a one-dimensional way.
- Collaborate on decision-making: One person alone can never get a grip on the abundance of information we are facing in the complexity of our times. Therefore, as a leader, you must learn to make decisions together. Reduce your blind spots. Seek advice. Discuss the ins and outs of everything. Get feedback on your own thoughts and give feedback to arrive at a decision, together.
- Avoid thought hierarchies - change perspectives – allow multiple views: During discussions, it is important to change perspectives. Create an environment in which there is no hierarchy of thought. Every voice matters and a conversation in which you haven’t changed your point of view, was simply not a very rich conversation.
- Acknowledge your own vulnerability: Yes, this is hard. However, this is also a way to reduce stress and build trust in yourself and with others. Understand that you are vulnerable. Admit that you are flawed and make mistakes. Allow others to do the same.
- Learn from the future as much as from the past: In complex situations, it is as important to learn from the future as it emerges (Scharmer, 2009) as it is to learn from the past. Try to envision with your team what might happen tomorrow and which solutions you can produce for the issues the future will hold.
- Observe your own ideals: Observe what is important to you, what your ideal state is and how you think you will get the closest to meet that ideal. Once you know that, you know your own bias. From there, switch course: Are there other options? What would they mean?
- Make the best decision given the circumstances: agile decision-making is fast, yet competent decision-making. Don’t maneuver yourself into inactivity, paralysis, or overthinking an issue. Instead, highlight that this is the best decision you can make given the information you have and your ability to read it.
- Communicate your standards to your team and organization: Communicate with the decision-makers in the rest of the organization and to your team. Let them know early on that this is what you are doing to arrive at a more solid basis for collaboration, decision-making, and success.
Applying these methods doesn’t mean that you will never make mistakes again or always get buy-in for your ideas. Contrarily, it means that you are willing to lean into your own shortcomings and inability to make 100% sound decisions when facing complex situations. On the upside, you’ll gain new standing in your team and organization. Over time, you will get much closer to both, balanced confidence and situational clarity.
Erika Jacobi, Ph.D. is the managing director of LC GLOBAL Consulting Inc. Erika specializes in agile organization design at scale. She is a C-Suite adviser and Top Executive Coach for organizational change, growth, and innovation matters. Her design and organization development principles are geared to translate enterprise agility into organizational reality. Read Erika Jacobi, Ph.D.'s full executive profile here.