Reference no: EM133767958

Question

Have you ever wondered what the link is between a decision and the result of a decision? It might be surprising, but the link is actually significantly weak, very weak. It has to do with the time in between. We make decisions now, we implement our decisions later, in the future, and we see results even later in the future. There are no facts about the future. The future is uncertain. In between the decision and it's execution there can be all sorts of things can happen outside of control of managers and organizations that can turn good decisions into bad results, bad outcomes.

The key consequence of the insight that a decision is different from a result is about evaluation. It's about how do you work with people? People can have good results, but they can have made a bad decision. Are those good people? People can have made a good decision and have a bad result, are you going to blame the decision maker then? Quite on the contrary, does the decision maker should be rewarded for having made the good decision. Unfortunately, the person had a bad result. It links to creating a culture of tolerating failure, accepting failure.

The key consequence of understanding the difference between a decision and the results is essentially about innovation. It's about experimentation, which is ultimately value creation. It is better to make many, many, many decisions and fail many, many, many times, small amounts, than to fail once big time. By making many, many, many decisions and naturally failing many, many, many times you will win also quite a few times. This is understanding the difference between a decision and it's result creates a culture of innovation, of experimentation, of exploration.

So for innovation and value creation to occur, companies and leaders should value and judge their decisions, the decision quality rather than the results.

When we make decisions in an uncertain environment, there are no guarantees that our decision will yield the best outcome (i.e., there is always some chance that a bad outcome may occur). In fact, a bad decision could yield a good outcome! Respond to the following three questions in this week's discussion board:

1. How do you relate the points made by Professor Degraeve and the use of decision trees as a decision making tool?

2. In practice, do you feel that organizations focus more on outcomes or decisions?

3. Suggest at least one idea as to how an organization can make a cultural shift to focusing on the process associated with decision making as opposed to the outcomes.