On Leadership and Decision making:

Wisdom from T V Mohandas Pai:

On Leadership and Decision making:

·         Every little decision has big consequences and many more end in failures than those that hit the mark.

·         The fear of erring or being accused of wrong decision makes most leaders and organizations base their decisions on precedent. Doing the right thing requires complete awareness and honesty.

·         Self awareness allows a leader to make the best decisions for the organization and not just for oneself. It also makes the leader more open to contrarian inputs and gives the decisions the flavor of consensus. Subordinates lend to tell the leader what one wants to hear and that leads to poor decisions that hurt the organization.

·         An open culture which encourages different views is essential to make the right decisions

·         Leaders like to establish homogeneity in the organization through conformity.

·         In uncertain conditions with too many variables the decision makers would do better by erring on the side of experimentation instead of experience. 

·         Committees and long meetings are the biggest enemies of fast and effective decisions-making. While consultations and consensus are vital for the quality of decisions too often meetings tend to degenerate into durbars for the bosses.

·         To bring speed and quality to decision making, it is necessary to flatten the hierarchy and even push the decision making authority to those who perform the task and roles.

·         Technology allows instant consultation and collaboration and allows automation of routine and repetitive decision. Data can be analyzed by algorithms and trained to adapt to any changes in business events and adjust decisions accordingly.

·         Machines validate and predict business events but humans must make the strategic judgments and bear the final responsibility. 

·         The central role of decisions is to upgrade the present to a better future.

·         Decisions involve a paradox of preventing risks and taking risk at the same time.

·         Decisions separate the leader from the herd.

Source: Indian Management, August 2018

Different types of Thinking

Human brain consists of two different ways of thinking – 

System 1 and System 2.

System 1 is fast, automatic, based on impressions, is quick to make associations between events, cannot be switched off and requires little effort or energy to operate. It operates in normal times. System 1 simplifies or assumes ‘what you see is all there is‘(WYSIATI). It is open to cognitive bias – systemic tendencies to deviate from rational calculations.

The biases are:

1) Confirmation Bias: Pick up information that fits into their existing experiences and pay less attention to the contrary information available.

2) Sunk Cost Bias: Administrators often expend effort, time and resources in an Endeavour. Even after all evidences shows that the program is giving astray and results are unlikely to be achieved, they will continue with the earlier course of action.

3. Anchor and insufficient adjustment bias: Administrators take the initial position and rest their decision on this stand and fail to move away from the first point of view.

System 2 is slow, deliberate and requires effort to make it operate; it is lazy and tires easily and prefers to accept what System 1 tells. 

“The view of the man at the bottom of the hierarchy who writes the first note on a file is all important in most instances.” Paul Appleby

Administrators get into adverse situation mainly due to their reliance on System 1. System 1 operated on Heuristics – automatic assumptions based on experiences without having thought through them carefully. System 2 requires effort evaluating those heuristics; thinking slow requires effort. Administrators are prone to think fast or take the path of least resistance.

“Intelligence is not only the ability to reason; it is also the ability to find relevant material in memory and to deploy attention when needed.”

Think “reactively” to accomplish routine tasks. When dealing with complicated task containing value conflicts, engage in “reflective” thinking.

Source: Sameer Sharma, “Using behavior economics will help officers take better decisions.” Economic times, 9 January, 2018