Optimising processes for decision-making in business
Working from home has been a godsend for many. No more stressful commutes, no more overpriced croissants washed down with burnt coffee on the train, having the opportunity to wear pyjamas all day. However, life goes on and business must continue. With the future uncertain for myriad industries, effective decision-making is more important than ever.
James Berry, director of the UCL MBA, recently examined how businesses can embrace uncertainty and prepare for new market realities, which involves maximising the value of the talents at hand and leveraging multiple sources of information. To achieve this, leaders must make decisions about what the future holds and how best to serve this new market reality. However, decision-makers don’t need to be lone heroes — this is where teams come in handy.
My latest research examines how businesses can optimise decision-making processes to maximize the power of collective intelligence. HR leaders must ensure processes in place, whether for large or small decisions, are as efficient as possible, yet also take advantage of all the opinions of all individuals involved.
Businesses can simplify decision-making by imagining three broad processes: idea generation, idea evaluation and idea selection. Whatever task you face, the main question is simple: to communicate or not to communicate? In other words, are you better off having people working in silos or working together?
One of the most common methods deployed during the idea generation process is brainstorming. While this is a great way of coming up with creative strategies, there comes a point when you must stop generating ideas and simply decide which one is best. This is where communication gets tricky — while you do want people talking, you must ensure valuable ideas are not being lost by people talking over each other.
You don't want to choose the first acceptable option; you want to choose the best option. That puts people in a bind, as even if you've found a solution you like, you must keep looking. It may feel unnatural to keep looking after you've found a satisfactory solution. However, this is where process design can help teams to optimise.
When the process includes this step as a default component, groups always generate a whole new set of ideas even when they think they’re out of steam.
HR managers and business leaders should seek to harness the diversity of ideas that employees bring to the table. This is the whole point of having meetings, and the real power of collective intelligence.
Everybody has a unique way of solving a problem. However, letting people talk to each other can actually erase diversity if conversation is not carefully managed. Why? On the one hand, if people don’t talk to each other, they can’t learn from each other. At the same time, the more people talk to each other, the more similar ideas become. Process design helps to balance the trade-off between social learning and social herding.
The trick is realising that the whole is greater than the sum of its parts – pairing people who have ideas around online events with others thinking about real-world marketing, might lead to ideas that neither person would have come up with on their own. In other words, people together can generate ideas that might never come to light when people stay within their silos.
This method isn’t without risk, and there must be a balance between social learning and independent exploration. One classic solution is called brainwriting — a general process that sees ideas written down by the individual who thought of them. They are then passed on to the next person who uses them as a trigger for new unique ideas, while leaving mental space for independent thinking.
Evaluating more efficiently
In idea evaluation, things must be managed differently. Take this fairly common evaluation task – deciding to build a piece of software for an uncertain cost or buy it on the open market for a fixed cost. Another so-called ‘build or buy’ problem is a market entry decision when businesses want to enter a new area in which the firm isn't involved.
There are two ways of making these yes/no type decisions. You can vote whether to build or buy. Or you could ask each person for their estimate on how much it costs to build – this ‘wisdom of crowds’ approach is becoming quite popular.
The herding flipside, and the reason that it matters how you organise the conversation, is that some people are more talkative than others.
For me, the solution is digital technology. Messaging platforms like Zoom and WhatsApp offer teams the ability to communicate remotely, and features including the ability to create different groups or set-up break out rooms lend well to fostering a culture of independent thinking and generating diverse ideas. My research uses digital platforms as our laboratory setting, so that our designs can be applied directly to digital communication. We’re using this method to identify ways that teams can manage the risks of herding while enabling social learning – and finding that this can be as easy as carefully structured chat rooms or break-out groups.
My final piece of advice is to bring in an expert. Too often we see businesses hiring mediators or arbitrators only when they’ve hit a roadblock. Facilitators can help you design a process to make a great decision before you have a problem.
Ultimately every business and even every decision is different, therefore HR managers and leaders must collaborate to evaluate where and when decision-making processes could be better. While the COVID-19 vaccines offer light at the end of the tunnel, businesses must continue to have the agility to react to changing markets, especially in light of the uncertainty of Brexit, and this is where optimised decision-making processes can help.
Joshua Becker is assistant professor at UCL School of Management