Corporate decision-making and forecasting is difficult enough, but it is exponentially more challenging in a volatile, uncertain, complex, and ambiguous (VUCA) environment. To develop better individual and organizational decision-making to make accurate and efficient decisions, especially in a VUCA environment, we need the right people, the right data, and the right process to come together.
Of these three factors, the greatest hindrance to success is people. People bring their judgments, their biases (both conscious and unconscious), and their experience to every decision. Even their lack of experience will affect the decision-making process, summarized so well by the famous idiom: “They don't know what they don't know.”
Given our fast-paced world, how well are we applying a sound process with the right data and the right people under the intense urgency of decision-making? When somebody says, “We need to know by Thursday,” is it really needed for Thursday, or is it just that person's opinion? How much misplaced urgency is affecting our decisions?
In times of uncertainty, people can overanalyze. They reduce risk-taking. Oftentimes, this goes back to interpersonal style. Some people are more risk averse and tend to over-think and second guess themselves. Others make decisions too quickly. But all can have a negative effect on decision-making as it relates to forecasting.
This isn’t surprising given the amount of stress that can occur in a VUCA environment—at any level. Decision-making under stress isn’t usually talked about, but awareness of our reactions under stressful circumstances is important. Those reactions can have a major impact on a decision.
So to be human is to be judgmental…positive or negative. We have biases and unconscious bias topic certainly has become prominent in recent years. Biases can affect how we even frame and or reframe a problem/decision and in the phrasing of the decision.
For those who have been through Six Sigma/root cause analysis training, we know that the way the problem/decision is phrased is an issue that directly leads to an inappropriate solution. In times of VUCA, do we go straight to the solution or truly understand the problem and issues with openness?
Our attention can also be biased toward our memory of what has worked in the past, especially in times of stress and risk. We, or perhaps the people we choose to collaborate with, may have a “confirmation bias”—we seek others knowingly or unconsciously that will agree with us.
Part of our training programs is about helping people to seek disconfirming and challenging thinking in order to make the best decisions. The people part of our equation will determine which and how much data will be used, as well as what process will be utilized.
After people, the next significant influencer to the VUCA decision is the type of data being used. Analytics, or big data, is such an important factor these days, and many organizations have this in abundance. The question is: are they leveraging it, turning it into useful information, and utilizing it correctly for key decisions?
And how does this translate to the business world? What data are we using, and is the data pure data and fact-based, rather than a tainted byproduct of people's biases and judgments?
Big data is a phrase that gets thrown around a lot. In HR/learning and development departments, there is a lot of data. It may be still be manual and dashboard-oriented, or organized in a meaningful way from an HRIS. Regardless, a recent view says only 20 to 40 percent of firms get this data right.
With the advent of newer systems, it's becoming easier. But to the many organizations with older legacy systems or Learning Management Systems data that is not available or being leveraged correctly, it becomes harder to work with meaningful information. This is why there is a fast increase in data analytics training demand.
Forecasting within HR/learning and development can take on a number of different aspects including:
- Talent/succession planning;
- Staffing requirements;
- Course curriculums;
- How people learn, the value of shorter learning and the way they need it, when they need it.
How often is a particular program offered? When is it offered? Who is it offered to? In a New York Association for Talent Development meeting on September 4, Elliott Masie stated: “I see a CLO coming from marketing or data analytics.”
One may ask, “Why a CLO with a marketing or data analytics background?” Marketing also uses data for decision-making, plus the marketing positions promote a very customer-focused mindset.
During the process part of decision-making, consensus can be deadly. In a consensus, people may support an idea though it isn’t their first choice. To produce the best decision, process and people must collide in the form of open, challenging, and rigorous discussion.
RACI stands for the individuals who are:
- R – Responsible: Whoever did the work or produced the recommendation
- A – Accountable: Whoever will be approving the decision/work
- C – Consulted: Whoever needs to contribute…before
- I – Informed: Whoever needs to know about the decision or action…after
But in decision-making, RACI is not always clear. Problems may arise when those we think to only “inform” afterward, actually want to be consulted during the process. The misappropriation of people within simple RACI decision rights causes a lack of collaboration and even distrust, hurting relationships…besides diminishing chances for finding the best decision.
Reactions under stress usually consist of either avoiding the decisions, saying yes to just get to closure, becoming aggravated or mad, or rapid enforcement of the decision-making recommendation. In these situations, it is even more important to use RACI to effectively and efficiently consult, collaborate, and check with the right people.
We must also mind the duration of our decisions. Recent studies show jobs change within 12 months and, in a major way, every 2.5 years. Amidst growing competitive intelligence, evolving responsibilities, changing roles, etc., how do we make the best decisions?
In the VUCA environment where there is intense pressure, a lack of complete data and information, and urgency to move forward, the right process and the right collaboration often isn't clear. But following the process of people, data, and process will lead to better decision-making. Additionally, it is recommended to immerse people in decision-making simulations first, to allow them to perfect their skills in a safe and constructive environment.