Even before Covid-19 we were living in a period of high uncertainty and volatility. Every sector of our economy was, arguably, being disrupted by technological change and/or by cross-border competition. Political uncertainty was already evident in the US, not to mention Brexit closer to home.
Successful executive teams around the world were operating in markets disrupted by changing consumer behaviours and with changes speeded up by technological advances. The data their decisions were based on was often incomplete and ambiguous. Like it or not, those decisions could often be wrong in retrospect. They would also need to be reviewed and revised, as circumstances changed and more information came to hand.
Consequently, top executives today, whether they realise it or not, already understand VUCA (Volatile, Uncertain, Complex and Ambiguous) environments. They are thus more likely to cope in the post Covid-19 world because they are comfortable with previous decisions being proven wrong, or at least needing to be rethought and corrected quickly.
However, not all boards are yet comfortable with pivoting strategies and/or have the nimble approval process needed to cope with the pace of current change.
As experts from UGM Consulting put it to me a few weeks ago: “These days, getting stuck in analysis paralysis, as the data piles up, just isn’t an option. You need to think carefully about exactly what data you’ll require to tackle a problem and think more strategically about how to apply this often limited data to your decision-making.”
So, what do you do if your board of directors is struggling to cope with making decisions when the data changes daily?
Start by making sure that everyone in your decision-making team is on the same page and appreciates first and foremost that we are not going back to the way of life we had before.
To do this effectively, we advise using an information map. This encourages a problem-solving mindset and requires the issue is examined from multiple angles. Dr Margaret Byrne and Dr Grant Robertson from UGM Consulting believe that this approach exposes any hidden assumptions and highlights the most critical questions.
With this better view of the issue in its larger and “new” context, your executive team should design any action plans using rapid experiments with clear metrics—accepting that frequent adjustments are now the new normal.
Your chair and non-executives directors may not like it, but fast and “roughly right” decision-making has now replaced precise but slow. VUCA environments wait for no one, according to Dr Grant Robertson.
However, to ensure the board is comfortable with the new “roughly right” approach to decision-making, Robertson advises you prioritise and define your most critical strategic objective.
Of the various objectives you would like to meet, which one or two will have the biggest impact on the situation? Of all your stakeholders, which one would be the riskiest to let down? Which objective do they care most about? Check your team’s answers with an outsider (someone not as close to the action) who might be able to provide a rapid assumptions check.
You’ll have to select one option and let go of other possibilities—this is perhaps the hardest part. However we all need to come to terms with the fact that the perfect option is probably not available today.
Continuous decision stream
Dr Margaret Byrne once said to me: “Decision-making in the midst of volatility is an exercise in coping with an unknowable and unpredictable future. The purpose of your decision is not to identify perfection but to move you towards the next decision, as part of a continuous decision stream”.
The risk of insolvency for many businesses today, following Covid-19, makes taking decisions particularly difficult. Without cashflow certainty many businesses are looking more like start-ups—a very different mindset for most boards and executive teams.
This means that you are likely to have to make some tough calls. As a leader, it can be beneficial to work through a series of core questions to support your judgment on these.
UGM Consulting term it the “grey area” of problem-solving, which requires you to think more deeply, objectively and imaginatively about the impact of your decisions. For example, what are the consequences of your options? What are your core obligations? What will work in the world, as it is? What can you live with?
Write down your decision and your reasons for it. Writing forces clearer thinking and supports personal commitment. It will also enable you to evaluate your decision as new data comes in, which may be as soon as the next day. You should also accept that even your best decision might, in this VUCA world, turn out to be wrong.
But, what can boards do to support their executive teams?
First and foremost, as a board member you must ensure that your executive team do not over-simplify the situation, seeing options as either A or B. Top business schools around the world, alongside my favourite advisers, know that successful decision-making often requires that you transcend simplicity to find new ways of solving a problem.
Boards should additionally require that the risks of not acting are considered. They must also support senior executives to avoid the “sunk cost fallacy” of simply defending previous decisions.
In summary, strong boards know that they pay their executive team to make a steady stream of good decisions to guide the business in the appropriate direction, in line with the agreed company purpose, whilst accepting that currently no-one can have a 100% success rate.
So, my advice to all boards is to listen to Robertson and Byrne and rely on two things: your best understanding of the situation at a particular point, and your principles. You’ll have to decide what matters most and take the next small decision step.
Fiona Hathorn is CEO of Women on Boards UK. WOB UK is currently running a series of webinars on leading through the Covid-19 crisis.