They say our choices shape our destiny. At home or at work, the future is ours to create. But how do we prepare the next generation of leaders to make decisions that inspire positive change?
The choices we make shape our lives daily – from what shoes we choose to wear to how much we invest in our retirement. For leaders, the stakes are even higher. With increasingly complex challenges and a rapidly changing world, the ability to make quick, informed decisions is essential for guiding organizations through uncertainty and toward success.
A recent McKinsey study highlights decision-making as one of the top challenges faced by CEOs, who must strike a balance between maintaining control and empowering their teams to make decisions independently.
Leaders of today encounter various types of decisions, each with its own set of challenges – we can categorize four types of decisions.
Routine decisions are repetitive, predictable scenarios that we are typically well-prepared for. They’re made without much thought and are often governed by programmed behavior, policies, or what is socially acceptable. Non-routine decisions arise when unforeseen circumstances disrupt the norm, requiring leaders to think on their feet and devise creative decisions. Finding an alternative route during a traffic jam is an example of a simple, non-routine decision.
Adaptive decisions are needed when unforeseen circumstances present a larger threat, such as the global shift to remote work during the COVID-19 pandemic. Organizations are forced to make more complex decisions to adapt and thrive in new environments. Innovative decisions are proactive decisions that capitalize on opportunities, and they often lead to significant positive changes within an organization.
Using decision-making to drive business
Johannes Eng, Partner at Signium Sweden, stresses that developing decision-making skills is fundamental to leadership success. He says, “Being able to tackle new circumstances with discernment and confidence helps to shape the future of leadership itself. We place so much emphasis on developing numerous other leadership qualities and skills, but sometimes forget that everything we do is driven by actual decisions.”
There are several business advantages to developing strong decision-making in tomorrow’s leaders. In times of crisis, effective decision-making skills enable leaders to assess the situation quickly, identify the best course of action, and implement solutions that minimize damage. “Decisive leaders help to re-establish stability and ensure that the organization recovers swiftly,” Eng explains.
What’s more, when leaders make informed, confident decisions, it builds trust in the workforce, strengthens relationships with stakeholders, and promotes customer loyalty. Clear decisions made with integrity inspire belief in an organization’s direction and values. People find it far easier to follow and invest in a company that demonstrates consistency and fairness in its decisions.
Fast, educated decisions streamline processes and reduce uncertainty. This minimizes bottlenecks and empowers employees to execute tasks efficiently, which boosts overall organizational performance and morale.
Finally, transparent decision-making diminishes interpersonal conflict by providing clear expectations, which helps prevent misunderstandings and misalignment among team members. Eng emphasizes, “When leaders make transparent and inclusive decisions, it fosters a sense of equality and cooperation, creating a more harmonious work environment.”
Five steps to develop powerful next-gen decision-makers
“Some people have a natural knack for making smart decisions quickly,” says Eng. “But that’s not to say that these skills can’t be developed and learned.” Organizations can proactively enable better decision-making in future leaders by prioritizing five simple steps.
Step 1: Cultivate data-driven decision-making
Leaders must develop data literacy to interpret analytics and insights effectively. Companies could provide information analysis workshops to show up-and-coming leaders how to contribute to strategic decisions based on data.
Organizations should also invest in data management tools and encourage an environment where choices are informed by information rather than intuition alone.
Step 2: Develop critical thinking skills
“In the past, we were taught not to ask questions and to never deviate from the status quo,” says Eng. “What we’ve learned now is that fostering a culture that values questioning and challenging assumptions helps leaders develop a habit of deep thinking before making decisions.”
To develop this skill in future leaders, organizations should integrate critical thinking into leadership training programs and pair young leaders with mentors who exemplify strong critical thinking.
Step 3: Promote collaborative decision-making
According to the World Economic Forum 2024 report “Building a Resilient Tomorrow”, organizations that empower decentralized decision-making and autonomous teams are better able to adapt to volatile environments.
Senior executives should model collaborative behaviours by actively including others in key decisions. Engaging emerging leaders in cross-functional projects helps them understand various perspectives, leads to better outcomes, and strengthens team cohesion as a whole.
Step 4: Foster emotional intelligence
As humans, we often approach major decisions with our emotions – whether fear, excitement, ambition, or feelings of overwhelm. Leaders who understand and manage their emotions, and those of others, make more thoughtful decisions based on data and facts, rather than knee-jerk reactions based on instincts.
“Empathy plays a crucial role in decision-making,” Eng notes. “Leaders must consider how their decisions impact others and strive to make inclusive choices that benefit the entire organization.”
Step 5: Measure decision-making
It’s important to gauge the effectiveness of decision-making by setting various key performance indicators (KPIs) and metrics. Some of these could include the quality of outcomes, the speed of implementation, and employee engagement levels.
What happens when decision-making becomes a core value?
Netflix provides a compelling example of how decision-making can be embedded as a core value within a company, with leadership driving this value from the top. The Netflix “Culture Deck” emphasizes the idea of freedom and responsibility, allowing employees the autonomy to make data-driven decisions aligned with company goals.
There are several key aspects from Netflix’s Culture Deck that define how their values promote smart, responsive decision-making. Some of these values are:
- Empowerment: High-performing individuals are trusted to make decisions without excessive supervision, which promotes innovation.
- Context over control: Leaders are provided with necessary context rather than micromanagement, enabling informed choices.
- Risk-taking: Netflix creates a culture that embraces calculated risks and inspires leaders to innovate without fear of failure.
- Data utilization: While creativity is valued, Netflix ensures systems are in place for data-driven insights to inform decision-making.
- Zero ambiguity: Netflix’s Culture Deck is explicit on the company’s values, and what matters most to the organization. This helps employees to align their decisions with organizational goals.
Putting the power of choice in the next generation’s hands
In the words of Theodore Roosevelt, “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.”
Eng adds: “By focusing on developing decision-making skills, organizations can create leaders who are not only ready to handle challenges but also prepared to seize opportunities. This is essential for businesses to thrive in the complexities of tomorrow’s world.”
Developing strong decision-making skills in future leaders is essential for preparing today’s businesses to survive and thrive in the complexities of tomorrow. To effectively wield the power of choice, we need courageous leaders who are unafraid to use their decision-making positions to not only adapt to change but innovate for opportunity as well.
