Making better decisions

Posted by Kelvin on Dec 21st, 2009 | no comments home title

Learn about the author. Kelvin is the Founder of MontaRosa. He has spent the last 20 years in executive search, most recently managing the global private equity practice at another leading executive search firm. Read more from this author

I read a fascinating article by Tom Davenport in the November issue of Harvard Business Review. It was titled simply, “Making Better Decisions.” Davenport has most recently been known for his work in analytics: the ability of firms to use data to achieve competitive advantage. This has led Davenport to focus on decision making because analytics only become a powerful tool if the information collected and analyzed is put to work in ways that enable organizations to find new opportunities, minimize risk, and outthink their competitors.

Davenport’s main thrust was that companies do not often scrutinize their decision making processes and that the lack of attention can lead to sub-optimal decisions. This echoes earlier work by management guru Adrian Slywotsky of Oliver Wyman, who advocated business process audits. His point was that organizations regularly reexamine their strategies and structure, bring out new products, and enter new markets but don’t put the same emphasis on the underlying processes. In short, the business changes but too often the processes that support the business don’t change and that hampers an organization’s pursuit of the growth and profitability envisioned in the strategic changes.

I thought of these ideas in relation to the ways that organizations choose their chief executives and board members. My team and I have been doing this for a long time and we often see that firms revert to the comfortable and familiar when embarking on a search. Much like Captain Renault in Casablanca, the call goes out to “round up the usual suspects.” They call the same consultants, they put the same board members on the search team, they look to the same pool of candidates, and they use the same criteria to evaluate them. Too rarely do they question the assumptions or challenge the orthodoxies they use as they go about making a choice.

Davenport lays out a four-step process for this analysis: (1) List and prioritize the decisions that must be made; (2) assess the factors that go into each, such as who plays what role, how often the decision must be made, and what information is available to support it; (3) design the roles, processes, systems, and behaviors your organization needs; and (4) institutionalize decision tools and assistance.

At MontaRosa we have an ongoing investment in developing performance metrics that can help firms choose people most likely to succeed in their particular situation. This includes not only actual measurable performance, but also more esoteric performance metrics, including social media perceptions. We also get the chance – particularly with emerging roles such as Chief Sustainability Officer where there are questions about search criteria – to help walk clients through the evaluation and decision-making process. However, even then there seems to be a certain amount of the process firmly set in stone.

This is not to suggest that the wheel must be reinvented with each search but rather that the search, evaluation, and decision-making processes should all be intentional, not accidental, and that the foundations be examined regularly.

I think that the first step is to conduct an after-action review following each c-level and board search. This time should be used to capture what has been learned, what has gone well, and what should be changed for next time. It should include all of the people involved in the process – including the candidate who is now onboard. If it is possible to get feedback from some of those not chosen, include that as well.

Second, appoint a “Team B” to critique your process during a search. These would be bright and candid people, some internal and some external, who would be charged with trying to poke holes in the way you currently identify and select candidates. Much like a devil’s advocate, their task would be to forcefully advance an opposing view without necessarily adopting that view personally (making this distinction removes the fear of possible of retribution). “Team A” likely has a significant investment in the status quo; “Team B” can leave that baggage behind.

Finally, challenge your consultants to articulate their thinking and push your thinking about the criteria that will be used to define the role and identify the prospects. The more that is unpacked and put on the table, the better. I believe you’ll find it to be a fruitful discussion.

The lesson that I take from Davenport’s article is that decision making around senior talent is another hidden pocket of potential competitive advantage. What’s missing is the courage and foresight to think and act differently.

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