As we grapple with the chaos of the past two years, it’s become clear that strategic decision-making is an important skill for leaders in all industries. The ability to analyze situations, data, and personal experiences to reach a solution keeps leaders prepared for even the most unexpected events — like a global pandemic.
At a recent Applied Physician Leadership Academy at the Dana Farber Cancer Institute, Kathy Pearson, Ph.D., shared her perspective on strategic decision-making with those in attendance. We enjoyed her presentation so much that we asked her to share more of her insights with us on our blog. Below, read Kathy’s suggestions on enhancing strategic decision-making, why it’s important for the future, and how to develop your strategic decision-making skills.
What is strategic decision-making?
“Strategic decision-making means that when leadership is choosing strategies and solutions, they are considering the wider consequences and results the decision will have on the organization. These decisions are not routine or transactional in nature, but rather tend to be unique and complex with many variables. When making these types of complex decisions, executives need to employ a mix of analytical tools, judgment, intuition, and critical thinking. Why these three components?
First, as a decision scientist and statistician, I always recommend using data and analytics when available. In strategic decisions, however, leaders do not always have access to all of the necessary data — in fact, most often, some data simply does not exist. Case in point: there was no historical data to analyze for strategic decisions made in the midst of a global pandemic!
So, decision-makers must also rely on their own experiences and intuition. Of course, executives never want to rely only on intuition alone because we, as humans, have cognitive biases. Understanding how to mitigate the effects of these biases is the foundation of critical thinking. Therefore, all three components are essential: analytics, judgment and intuition, and critical thinking.”
Why is strategic decision-making an important skill for today’s business environment?
“Most business leaders would agree that the environment in the last few years has had an inordinate amount of uncertainty and volatility. Leaders who had a deep understanding of the importance of judgment, critical thinking, and adaptability performed much better during the global pandemic, at least anecdotally. I’m quite sure there are many dissertations being written now to provide empirical data on the leadership skills that were most highly correlated with strong organizational performance over the last two years. My hypothesis is that we will confirm what I have seen anecdotally — those leaders who were not paralyzed by the uncertainty and volatility, but rather encouraged their employees to adapt quickly, were more effective.”
How can someone looking to enhance their strategic decision-making ability improve?
“First, I advise that a leader needs to become much more comfortable with and accepting of an uncertain future. The most effective leaders with whom I have worked have no issues admitting “I don’t know the answer.” Rather, they spend time planning strategies on how to manage the uncertainty. Becoming more comfortable with uncertainty allows leaders to remain level-headed throughout the strategic decision-making process, leading to better outcomes.
Second, I recommend studying decision biases (the fields of behavioral economics and cognitive psychology) and developing methods for mitigating the effects of these biases. This helps leaders to approach problems and their solutions objectively.
Finally, many lessons were learned during the last two years in the context of making effective strategic decisions. I have been encouraging all executives with whom I have met in the last few months to allocate space and time to reflect on their own decision-making behaviors as well as those of their colleagues during the pandemic. Clearly, strategic decisions made in the last two years were made in an uncertain, chaotic, ambiguous environment.”
Strategic decision-making allows leaders to find solutions while considering the overall impact on the rest of the organization. In order to be an effective leader, you need to understand how to make decisions that are strategically aligned with your organization.
Contact us and grow your strategic decision-making skills through executive coaching with TLD Group. Our coaches work one-on-one with you to help grow and develop your strategic decision-making skills to be a more effective leader.