Chapter 5 - Board decision-making

Question 1

The Decision Style Model

Answer 1

• the ‘decisive’ who is fast, action orientated and efficiency minded;
• the ‘flexible’ who is fast, action orientated, yet adaptable;
• the ‘hierarchic’ who is an analytical, methodological, logical and focuses on quality;
• the ‘integrative’ who is analytical, exploratory and creative.
• the ‘systemic’, who is analytical, comprehensive and prioritises solution strategies.

Question 2

The WRAP framework

Answer 2

1. Widen your options - consider alternatives
2. Reality - fighting confirmation bias by collaborating with someone with conflicting opinions
3. Attain some distance before deciding - avoiding short-term emotions - 10/10/10 rule (mins/months/years)
4. Prepare to be wrong - avoid overconfidence about how it will unfold (contingency planning)

Question 3

Professor Badaracco’s five key questions to complex decision-making

Answer 3

1. What are the consequences of all the options?
   Evidence based question to highlight who the winners and losers will be following a decision.
2. What are my core obligations?
   Directors aware of their governance and fiduciary duties, but also their duties in their particular role as either a non-executive or executive member of the board?
3. What will work in the world as it is?
   Practicalities of their options, especially in the VUCA world.
4. Who are we?
   Core values of the organisation along with the culture.
5. What can I live with?
   Personal values and being true to these when making a complex decision.

Question 4

Toolkit for better decision-making (male and female)

Answer 4

1. Increase the options that are considered
2. Increase one’s distance from a decision
3. Moderate your confidence
4. Take time to explore assumptions
5. Recognise and counter the reasons for individual or group indecisiveness
6. Step out of your own shoes
7. Enhance group decisiveness through process

Question 5

6 key types of bias

Answer 5

Groupthink: the ‘overriding desire for consensus and unanimity, leading to poor decision making, in cohesive groups due to suppression of internal dissent and consequent inadequate evaluation’

Confirmation bias: our tendency to interpret and search for information consistent with our prior beliefs, discounting contrary evidence

Anchoring effect: our tendency to too heavily rely on or to overemphasise, one trait or piece of information (often the first piece of information presented to us) – usually the first piece of information (i.e. being told a 3D printer costs £1,000 – then you look online and see one for £300 and think that it is cheap/rubbish).

Hindsight bias: our tendency to see past events as being more predictable than they were before the event occurred and therefore people convince themselves after an event that they had accurately predicted it before it happened.

Loss aversion: our tendency to prefer avoiding losses than to acquiring gains

Sunk cost fallacy: our tendency not to accept our decisions as wrong and therefore to throw good money after bad.

Question 6

De Bono’s Six Thinking Hats methodology

Answer 6

Blue – this hat represents process control. What are we thinking about? What is the goal of our decision making?

White - what are the facts that we need to bring to this decision, or what additional facts do we need?

Red – what are our instinctive gut reactions or emotions that we bring to this decision?

Black – look at a decision’s potentially negative outcomes. Look at it cautiously and defensively. Try to see why it might not work.

Yellow – what are the benefits, what are our best hopes, how can we look on the bright side of this decision?

Green - what if anything was possible? What creative innovations might be possible as a way of breaking through in this decision?