Wednesday, 25 November 2009

When things go wrong: Towards better decision making - measuring success

What to use to measure success - quality of decision making or results?

The implications for businesses are profound.  If it is the quality of decision making , rather than results, that are the measure of success, then those who take decisions in the right way should be rewarded, even if they make mistakes.  They should also be given more decisions to make in the future, not fewer.

This doesn't mean automatically promoting people who get bad results.  it means:
  • encouraging better decison making and making it clear that it will be rewarded
  • setting boundaries to limit the impact that mistakes can have; acknowledging and actively managing the risk of mistakes
  • avoiding or limiting exposure to fatal downsides (doctors and airline pilots, for example, need systems to help them avoid errors)
  • when rewarding people, considering the way decisions have been taken as well as the results of decisions
  • questioning the business benefit of punishing those who get bad results
  • weighing the negative impact of mistakes against the learning and development they can bring.

It is important to remember that none of this means ignoring poor results or mistakes.  Financial loss or commercial reverses are bad for business.  But failing to learn can be worse.  The focus of management has to be the future, and what can be learned from the present and past to help shape the future.  By focussing on learning and better decision making, the business is doing everything it can to do to avoid bad result in the future, rather than simply reflecting what has happened in the past.

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