Decision Making Frameworks

Why leaders should rely on them

Making tough decisions is a crucial aspect of effective leadership, yet it is often fraught with the fear of making errors that could lead to embarrassment or harm to others. The dilemma is well captured by a rule of thumb from former Secretary of State Colin Powell, which posits that leaders should make decisions with between forty and seventy percent of the necessary information (40/70 Rule). Deciding with less than forty percent can lead to hasty, misinformed choices. Having less than the necessary data implies a risky reliance on conjecture and guesswork. Conversely, waiting to gather more than seventy percent might mean missing the opportunity entirely as delays can allow competitors to take the lead.

Powell's rule underscores the importance of balancing information with timely action, a concept that surprises many leaders who tend to seek more comprehensive data before making decisions. This insight leads to the acknowledgment of intuition as a critical component of leadership. Intuition enables leaders to make competent decisions amidst uncertainty, setting apart exceptional leaders from the mediocre. In practice, those who seek absolute certainty in decision-making often find themselves in subordinate roles rather than in positions of leadership. This type of rule highlights the need for leaders to embrace some type of framework for making decisions so that in the heat of the moment you don’t overreact and decide too early or hesitate too long and miss an opportunity. 

I personally use lots of frameworks for decisions. When I evaluate an organization I often use a SWOT analysis and when I’m evaluating service providers I often use the quality function deployment (QFD) framework. In fact we used an HOQ that is part of the QFD framework when we selected a cloud provider at a previous company. I like frameworks because they give me a systematic approach to analyzing situations and making decisions. I’d like to cover six frameworks that I use:

1. Starting with probably the most intuitive model, the Rational Decision-Making Model is a systematic and structured approach to problem solving that aims to achieve the most optimal outcome by following a clear sequence of steps. These steps typically include defining the problem, identifying decision criteria, weighing those criteria, generating alternative solutions, evaluating the alternatives against the criteria, and selecting the best option. This method is particularly valued in environments that require thorough analysis and where the stakes are high. One of the strengths of this technique is that it promotes thoroughness in decision-making and helps avoid impulsive decisions by relying on factual data and logical analysis. However, the model assumes that decision-makers have access to all necessary information and can accurately predict outcomes, which is often not the case. Additionally, it can be very time-consuming and may not sufficiently accommodate human emotions or irrationalities.

2. Developed by Edward de Bono, the Six Thinking Hats technique facilitates decision-making by forcing thinkers to shift perspectives. This method uses six colored "hats," each representing a different style of thinking: White (factual), Red (emotional), Black (critical), Yellow (optimistic), Green (creative), and Blue (organizing). Participants cycle through these hats to explore different aspects of a decision, ensuring a more rounded view of the situation. This technique encourages diversity of thought and helps uncover hidden insights by separating logic from emotion and creativity from information. The effectiveness heavily depends on the discipline of participants to strictly adhere to the role of each hat, which can be challenging to maintain, especially without trained facilitation.

3. Some things are complicated and others complex. According to Dave Snowden’s Cynefin framework, there are five contexts or "domains" that decision makers have to deal with that includes: simple, complicated, complex, chaotic, and disorder. While this model was designed to help manage intellectual capital it can be applied to a number of other pursuits including engineering teams. It helps leaders understand the type of environment they are dealing with so they can respond appropriately. By distinguishing between different types of systems, it aids in applying suitable management and decision-making styles, particularly in complex and adaptive environments. It does, however, require a deep understanding of each domain and sophisticated judgment to classify situations accurately, which may not be straightforward.

4. Another simple and straightforward framework, favored by many consultants, is a SWOT Analysis. This is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves listing these four components to visualize a strategy from different perspectives to form a competitive strategy. This technique is very easy to conduct and provides a quick overview of internal and external factors affecting a decision. In my experience, its simplicity can lead to oversights and it does not provide a direct route to decision-making, often requiring further analysis.

5. The House of Quality that I mentioned earlier is a key component of the Quality Function Deployment (QFD) framework. It serves as a structured method for translating customer requirements into appropriate company capabilities. These customer requirements can be either your customers’ requirement or your own requirements as a customer to a service provider you are considering. This matrix-based tool helps organizations ensure that their development or production processes align closely with customer desires, effectively bridging the gap between consumer expectations and the final product. The process begins by identifying customer needs and then systematically relating these needs to different ways of meeting them, ranking each for importance. It quantifies relationships between customer desires and a company's ability to meet those needs, often incorporating competitive benchmarking as a comparative measure. The House of Quality's rigorous approach to defining and prioritizing requirements ensures that strategic decisions are clearly aligned with market demands, thus minimizing the risk of product misalignment and enhancing the likelihood of customer satisfaction. However, its complexity and the time required to complete it can be considerable, demanding a significant investment in detailed data gathering and cross-functional collaboration.

6. The last of our frameworks is the PrOACT model that breaks decision-making into distinct elements: Problem, Objectives, Alternatives, Consequences, and Trade-offs. This structured approach helps clarify decisions by focusing separately on each component, promoting a more deliberate consideration of the options and their implications. This framework facilitates detailed analysis and comparison of different decision paths, helpful in complex scenarios involving multiple stakeholders. It can be resource-intensive, requiring extensive data collection and analysis. Predicting consequences accurately also poses a significant challenge.

In the realm of leadership, the ability to make timely and effective decisions cannot be overstated, and this is where decision-making frameworks prove invaluable. These structured methodologies equip leaders with the tools necessary to navigate complex situations with a balance of speed and precision. From the 40/70 rule popularized by Colin Powell, which emphasizes the need for a balanced approach to information gathering, to the systematic procedures outlined in the Rational Decision-Making Model and the House of Quality, each framework serves to minimize the risk of errors while maximizing the chances for a successful outcome.

Ultimately, the choice of a decision-making framework depends on the specific circumstances and the nature of the decisions at hand. Whether it's relying on intuitive judgment as advocated by the 40/70 rule or engaging in a comprehensive analysis with the House of Quality, the goal remains the same: to make decisions that are not only timely but also well-informed and aligned with organizational goals. Leaders are thus advised to familiarize themselves with these frameworks, understanding their strengths and limitations, to enhance their decision-making capabilities in a way that propels their organizations forward. What are your favorite decision frameworks?