Decision-making in a complex world

We are living in an environment where there are hardly any simple solutions or decisions – neither in our private lives, nor in organizations or in social policy. Everything seems to be complex nowadays. Whether it’s supporting our children in choosing a career path, or making decisions as a qualified professional or as a manager on the strategic direction of a company, or dealing with the farmers’ protests and the associated agricultural and climate policy.

I certainly don’t need to explain in detail the uncertainties surrounding the different situations, because they are obvious:

For someone at the age of 20, the countless graduate courses universities offer, the opportunities for dual studies, the possibilities to stay abroad for a certain time combined with volunteer programs, but also the change or elimination of many professions due to artificial intelligence – all this seems to be completely unmanageable.

The global markets, which are exposed to multiple crises, are only predictable to a limited extent, even for experts. Under these conditions, how are business leaders supposed to make decisions in such a way that the company can continue to operate successfully?

What is the right agricultural policy for Europe if climate protection should be considered? Imports from outside the EU bring cheaper products into the European internal market and at the same time European products are more expensive to produce due to regulations. Consumers do not seem to be prepared to pay more for products from Europe. However, a withdrawal of climate and species protection at European level is certainly not the solution either.

In fact, when it comes to decisions in complex contexts, there is no single right decision that is to the benefit of everyone involved. In organizations in particular, we often delude ourselves by thinking that we only need to prepare a decision carefully enough in order to make the perfect choice that has no risks and also benefits everyone involved.

One example: a company decides to develop a new product and to take another one off the market as soon as the new product is marketable. Then, there may be employees who are no longer needed, while others have to take part in retraining measures and are then deployed for the new product. However, an employee with very specific knowledge may be lost to the company as a result of the above decision, even though their expertise would have been equally important for the new product. Also, more employees may be attached to the old product than they indicated at the time when the decision was made. Furthermore, the product might not be accepted by the market, in which case the capacities and skills in production might no longer be available to revert to the old product.

The example may sound a somewhat contrived, but what I want to say is this:

  • There is no decision without disadvantages, costs and downsides.
  • Figures, data and facts that are used to make decisions always refer to the past. However, every decision has an impact on the future, and this future remains uncertain. 
  • Decision-makers can only influence the success of their decisions to a limited extent, as the future also depends on the behavior of employees, the markets and global conditions. 
  • Decisions in complex contexts are always subject to risks, no matter how much preparation has gone into them.

As far as the last of the aspects is concerned, I am not suggesting that decisions should not be well prepared. Far from it! Thorough research and analysis of figures, data and facts expand the solution space, which means that there are more options for decision-makers and therefore more scope for action. But research cannot eliminate uncertainty as regards future development. Organizational consultant Klaus Eidenschink says: “If you can calculate it, it’s not a decision.” This means that if the figures, data and facts show me a clear path, then I no longer have to make a decision.

Coupled with the realisation that we have no control over our future, I would like to make the following recommendations to all decision-makers:

  1. Acknowledge that we are not omnipotent and cannot plan the future.
  2. Acknowledge that every decision also has its disadvantages.
  3. Make decisions on a trial basis, whenever possible. In other words, make reversible decisions that you can correct if they turn out to be unsuitable. Most of us are already familiar with this principle from the iterative approach in agile working.
  4. As figures, data and facts do not help to eliminate any future risks, pay more attention to intuition, experience and perceptions. Because honestly, we already do that. How often do we create tables (with figures, data and facts) to help us make decisions and manipulate them until the result is what our intuition recommends?
  5. Even business leaders often make decisions based on their intuition in complex contexts. My recommendation to all decision-makers is to communicate the same to the staff, the team and the organizational unit that is affected. Be honest instead of claiming that the numbers led to this decision. 
  6. Make a decision even under uncertainty, with all the associated disadvantages, because not making a decision is also a decision.

I am very much looking forward to your feedback regarding your experiences of making decisions in uncertain contexts.

This text first appeared in my newsletter 'Innovation on Wednesday'. It is published every three weeks. For subscription click here

Further reading:

Andrea SchmittInnovationstrainerinAm Mittelpfad 24aD 65520 Bad Camberg+49 64 34-905 997+49 175 5196446
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