A Mental Model for Leadership Decisions

Happy Friday,

The day we started ECO:LOGIC, our older, wiser partner, Fred, said, “Okay Dave, your job is to make decisions, and make 51% of them right.”

At one end of the decision-making spectrum is engineering. Engineers are taught to gather and analyze enough information to make decisions with, say, a 95% + degree of certainty. That’s good. You'll drive across that bridge. But once promoted to leadership, one enters the fog of ambiguity, and the more leadership responsibility you get, the more ambiguity you'll face. Good to know.

Leaders are frequently forced to make decisions with too little information, too little time, and with unwelcome consequences no matter what they decide. And it may be actions taken a year or more later that finally determine whether it was a good decision. That's also different.

This inherent ambiguity makes it tempting to kick tough decisions down the road. Humans fear being wrong far more than they need to be right, and no leader likes to be second-guessed. But inaction is, in fact, a decision not to act, and it carries its own cascading costs, both tangible and opportunity. So all leaders need to get comfortable with discomfort and embrace probabilistic judgment over certainty.

A preloaded mental model for decision-making provides some reassuring structure to the process.

There isn’t just one perfect model, but the theme should be to always 'do what’s right.’ Anything less, any inconsistency or compromise, will prove counterproductive over time. If you run an organization, you can/should prescribe the model you want leaders to use so their decisions align consistently with the organization's values.

Here’s the mental model I’ve always used for business decisions. Six considerations, weighted most to least. It's served me well, so I recommend it:

·      What’s ultimately the right thing to do? You know…

·      What best serves society and the public?

·      Which decision aligns best with the organization’s values? (Not necessarily its purpose, because the end doesn't justify the means)

·      Which decision serves the most loyal, hardest-working people in this organization?

·      Which decision serves the greater good of all employees?

·      Which decision minimizes long-term regret?

You’ve now defined 'the high moral ground'; claim it by framing your decision in transparent, principle-driven terms that clearly and concisely communicate why you made this decision. Even if people don't like it, they’ll understand and respect the reasons behind it. Not always right away, but over time.

Punchline: A mental model for decision-making defines who you are and what you stand for as a leader. At the end of your career, it's the mental model behind your decisions that you'll be most proud of. More so even than the decisions themselves.

That’s it. Have a great weekend,

Dave

Feedback and blowback are always welcome: dave@goodnewsfriday.com

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