Coaching Tip: The Leadership Blog

Decision Making Safeguards

When no red flags exist, the decision-making process can be fast and simple.

When we spot red flags, we can design appropriate, effective safeguards that are less likely to demotivate everyone involved in the decision process:

 

1.    Experience, Data and Analysis: In business, there are many ways data can be collected and experience broadened.  Discussion with key customers can provide valuable feedback.  Consultants can be hired to offer objectivity and outside perspectives.

2.    Group Debate and Challenge: The process of debate can help expose assumptions and beliefs.  It’s vital to choose the right participants, as the group must identify appropriate challenges that meet organizational goals.

3.    Governance: It may be necessary to set up a separate governance team if one doesn’t exist apart from the decision-making team.  The new team should be designed as a vital backstop to stand in the way of any flawed judgments that make it past the decision team.

4.    Monitoring: The monitoring process tracks the progress of the decision.  Awareness of monitoring encourages decisions makers to think carefully before making their recommendations.  If decision makers know the outcome will be recorded and publicized, they will be motivated to think—and rethink—their positions.

Source:  Sydney Finkelstein: Think Again: Why Good Leaders Make Bad Decisions and How to Keep it From Happening to You

The Brain Science of Decision Making

 The brain uses two processes that enable us to cope with complexities:

·         Pattern recognition

·         Emotional tagging

Both help us make excellent decisions most of the time.  But in certain conditions, these processes can mislead us, resulting in poor judgments and bad decisions.

Old School Decision Processes

Complex decisions always involve personal interpretations and judgment.

That’s what makes them difficult to get right. You need debate and consensus—but even with both, two important questions arise:

1.    How do you know when you or those debating your premise are coming from a biased position?

2.    How do you know when your consensus is nothing more than group think?

Old School Decision Making

Traditional decision-making processes are supposed to follow several logical steps:

1.    Lay out the problem.

2.    Define the objectives.

3.    Generate options.

4.    Evaluate each option against the objectives and other relevant criteria.

5.    Choose the option with the best outcome.

6.    Monitor progress and change course, if necessary.

Many people work under the illusion that if these steps are followed, little can go wrong

But these steps do not take into account what goes on in people’s brains when they weigh options and make judgments.

Source:  Sydney Finkelstein: Think Again: Why Good Leaders Make Bad Decisions and How to Keep it From Happening to You

Leadership Mistakes

Each day, intelligent leaders make mistakes, with devastating consequences.

Our daily decisions are generally small and innocuous. Others are incredibly important, affecting people’s lives and well-being.

Authors Sydney Finkelstein, Jo Whitehead and Andrew Campbell have studied how smart leaders make catastrophic decisions. In Think Again: Why Good Leaders Make Bad Decisions and How to Keep It From Happening to You (Harvard Business School Press, 2008), these experts show how the brain’s thinking processes can distort judgment.

Flaws of Decision Making

In studies of more than 83 flawed business and political decisions, the authors identify two major factors at play:

1.    An individual or a group has made an error of judgment.

2.    A decision process fails to correct the error.

Normally, when an influential person makes an error of judgment, the decision process will bring the error to light. Other people with different views will challenge the flawed thinking. The facts will be exposed and erroneous views corrected.

  Sydney Finkelstein: Think Again: Why Good Leaders Make Bad Decisions and How to Keep it From Happening to You

Mindset, Attitude and Personality

Neurobiology governs behavior.  Decisions impact neurobiology.

 

 

A new study derived from a global survey of business leaders, reveals a leader's perceived and predicted behavioral patterns correlate with the mindset, attitude and personality components of the brain.

 

The study looks at behavior from a neurological perspective, mapping individual behavior from three views that correspond to three domains namely:   Mindset,  Attitude and Personality.   The three different views or dimensions provide a “viewer” with both a clearer and more complete representation than a single personality perspective. 

 

The MINDSET (M) domain indicates:  the way a human BRAIN categorizes data and   how individuals perceive the external environment.

The framework of this domain consists of three categories (or slices) labeled:  Success, Growth & Happiness.  

 

Based on the structure of the brain, the three categorizations correlate with the LEFT hemisphere, the Corpus Callosum (CC) and the RIGHT hemisphere. 

·         LEFT brain: functional & operational faculties necessary for application & success

·         BRIDGE (CC): inter-hemispheric connections necessary for understanding & growth

·         RIGHT brain:  relational & ideational faculties necessary for engagement & happiness

The ATTITUDE (A) domain indicates:  how a human BRAIN differentiates the three motivational attitudes and  “in pursuit of pleasure” or “aimed at a purpose” or “avoiding pain”.

The framework of this domain consists of three attitudes (or panels) labeled : Pursuance, Fruitfulness & Avoidance. 

Based on the structure of the brain, the three attitudes correlate with the FOREBRAIN (frontal lobes), the MIDDLE panel (parietal lobes) & the HINDBRAIN (occipital lobes).

·         FRONT brain: exciter & stimulation functions trigger pleasure seeking & risk PURSUANCE

·         MIDDLE brain: aspiration & purpose functions trigger goal setting responses & FRUITFULNESS

·         BACK brain: inhibitor & restraint functions trigger pain avoidance & risk AVOIDANCE

The PERSONALITY (P) domain indicates:  the way a human BRAIN processes data and information internally and how individuals think, feel and evaluate 'events' and 'things'. 

The framework of this domain consists of three processing regions (or layers) labeled:  Reason, Volition & Emotion.

Based on the structure of the brain, the three regions correlate with the UPPER (rational) cortical region, the CORE (volitional) thalamus region and the LOWER (emotional) limbic region and (instinctive) brain stem:

·         UPPER brain: cerebral and cortical functions that manifest as RATIONAL BELIEFS

·         NEXUS (core): VOLITIONAL functions that transform VALUES into discriminations & decisions

·         LOWER brain: visceral and limbic functions that manifest as EMOTION feelings & gut instincts

For more information, including methodology, findings and conclusions, please visit: www.stratega.co.uk and/or www.talengene.com

Risky Local Banks

Commercial real estate loans could generate losses of $100 billion by the end of next year at more than 900 small and midsize U.S. banks if the economy's woes deepen, according to an analysis by The Wall Street Journal.

Such loans, which fund the construction of shopping malls, office buildings, apartment complexes and hotels, could account for nearly half the losses at the banks analyzed by the Journal, consuming capital that is an essential cushion against bad loans.

Total losses at those banks could surpass $200 billion over that period, according to the Journal's analysis, which utilized the same worst-case scenario the federal government used in its recent stress tests of 19 large banks.  The potential losses could exceed revenue over that period at nearly all the banks analyzed by the Journal.

The potential losses on commercial real estate are by far the largest problem facing the midsize and small banks, easily exceeding losses on home loans, which could total about $49 billion, according to the Journal's analysis.  Nearly one-third of the banks could see their capital slip to risky levels because of commercial real estate losses, the Journal found.

How safe is your bank?

Source: The Wall Street Journal, May 19, 2009

Plan and Budget before you become an Entrepreneur

There are few more gratifying accomplishments than making it on your own.  But here's what you should keep in mind as you figure out what to charge for your work and how to budget for your future.

Perhaps, the greatest advantage of hanging out your own shingle or making that consulting or coaching business full time is the independence that comes with being your own boss.  But the higher expenses and other costs come along with your newfound liberty.

The way we think is conditioned by our life experiences.  If we've spent our life in a classroom, we tend to think as a student or teacher.  If we've spent our work life as an employee, we tend to think as an employee.

Many new entrepreneurs talk-the-talk of the entrepreneur -- but their thinking is still grounded in their life as an employee.  This can be deadly to their goals and aspirations.

Why Unconventional Wisdom Wins

David can beat Goliath by substituting effort for ability--and substituting effort for ability turns out to be a winning formula for underdogs in all walks of life.

Underdog insurgents operate in real time.

Consider the way T. E. Lawrence (or, as he is better known, Lawrence of Arabia) lead the revolt against the Ottoman Army occupying Arabia near the end of the First World War.  The British were helping the Arabs in their uprising, and the initial focus was Medina, the city at the end of a long railroad that the Turks had built, running south from Damascus and down through the Hejaz desert.  The Turks had amassed a large force in Medina, and the British leadership wanted Lawrence to gather the Arabs and destroy the Turkish garrison there, before the Turks could threaten the entire region.

Lawrence attacked the Turks where they were weak--the railroad--and not where they were strong, Medina.  Lawrence hit the Turks, in that stretch of railroad in the spring of 1917, nearly every day, because he knew that the more he accelerated the pace of combat the more the war became a battle of endurance--and endurance battles favor the insurgent.  Just as it did David against Goliath many years before.

"And it happened as the Philistine arose and was drawing near David that David hastened and ran out from the lines toward the Philistine," the Bible says.  "And he reached his hand into the pouch and took from there a stone and slung it and struck the Philistine in his forehead."  The second sentence--the slingshot part--is what made David famous.  But the first sentence matters just as much. 

CEO Transition

With an understanding that the death of Henry Ford was the best thing to happen for the Ford Motor Company, I recently asked a Metro Detroit CEO, who had stated his plan to "die in office," if his company had a realistic succession plan.  His response was unconvincing.

Of course, this is not an easy time to nurture a new generation of corporate leaders.  Yet, the need for top talent is growing.  A record 1,484 U.S.-based chief executives left their jobs in 2008, according to outplacement firm Challenger, Gray & Christmas.  Many more could step down this year as losses mount.

What's striking about many emerging CEO candidates is that they were identified as promising early on and given opportunities to prove themselves.  Their careers highlight the critical importance of an oft-ignored management priority: succession. 

Workplace Leadership Skills

Leadership has reached its pinnacle point in modern-day society and now serves to separate and divide those who can take charge and those who can merely follow orders. 

Both sectors have integral parts in any workplace, although there will always be a high demand for leaders, as well as a healthy bonus in any type of environment.  With the economy the way it is today, it is important to establish yourself as a leader, and therefore as a vital force for the company you work for. 

Establishing yourself as a leader requires you to take charge of projects without coming across as overbearing.  A leader does not dictate to his subordinates, but merely guides and assists, helping out when needed.  Leaders additionally are in charge of setting an example for the group, so you need to make sure that you ascertain yourself early on as a positive role model.  You furthermore need to recognize the difference between a leader and a manager; a manager is in charge of tasks, not people, which is why the skills involved in becoming a leader are more complex and challenging. 

Whether you are leading a group of five or fifty, the same basic skills are required in order to become a phenomenal leader, which are almost the same skills you need to run a company.  You need to be able to understand everyone in your staff, offer guidance, counseling, and be able to effectively problem-solve within any situation. 

Additionally, you need to be able to mold yourself into any situation; there is not going to be the exact same incident every day, rather, you need to be able to combat any sort of problem that comes your way.  Once you have reached this level of leadership, it should become apparent to your superiors that you are up to the task, and are a valuable asset to the company. 

This guest leadership tip posting was contributed by Heidi Taylor, who writes about the best online schools.  She welcomes your feedback at: [email protected]