The Two Types of Decisions

Decision making is a fundamental part of leadership and management. While business savvy and intuition can carry one a long way, it helps to be familiar with the potential consequences of said decision before jumping to any conclusions. In an insightful new article from the Farnum Street blog, the two types of decisions are broken down, using some advice from Amazon CEO Jeff Bezos. These are put into perspective, along with some advice on how to make the best of each situation.

Much like diabetes, the type of decision to be made can be broken down into two types: Irreversible (type 1), and Reversible (type 2). Type 1 decisions tend are the higher-stakes decisions that would be too costly to come back from, where as type 2 decisions are easily corrected with little cost and/or time involved. Once issues are viewed on this spectrum of reversibility, it’s possible to know how to approach their solution. For type 1 decisions, the consequences can be much higher, so it’s best to make these decisions slowly. Gather information, weigh risks vs. rewards, and literally calculate potential costs if the results go sideways.

Some folks have a hard time knowing when to stop this process, however, and may miss the opportunity altogether. To know when the data gathering has gone far enough, the author recommends what he calls “Stop, LOP, or Know.” First of all: Stop. if helpful information has stopped coming in, it’s likely there’s no more to gather. Due diligence is great, but once you have a well-rounded view of things, there’s little chance of some earth-shattering piece of information coming in at the last moment. Take what information has come to light, and make the best of it. Secondly, LOP, stands for Loss of Opportunity. If the decision to be made faces a deadline, the opportunity could slip away unless a timely choice is made. And lastly, Know: leadership knows what to do, but may not want to face up to it. Some decisions are awkward and difficult, despite the fact that the answer is clear.

Reversible, or type 2 decisions, on the the other hand, should be made as quickly as possible. This is not a green-light to act recklessly or choose options out of a hat. This is just an acknowledgement that imperfection is acceptable where the stakes are lower. Bezos himself has said having to quickly correct a 70% sure option is better than waiting around for a 90% sure option. For these low-cost gambles, he may just be right. Give the full article a read here for more insights on when and how to incorporate these methods.

Eight Qualities for Successful Leadership

Over the years there have been thousands of articles, scientific studies, and speculation about the commonalities among those who lead. While some identify the classic “Type A” as those ambitious enough to rise in the ranks, others have found that communication skills and the ability to listen are what make leaders truly great. According to Harvard Professor Linda Hill and a new article out of HBR.org, none of the above qualities are what one really needs to be an effective leader.

Hill, an authority on leadership and author of Collective Genius: The Art and Practice of Leading Innovation, claims that what truly makes a leader great is the willingness to enter into uncomfortable situations. Situations in which we have to adapt, learn, and grow in the moment are ultimately what develops confidence and the ability to inspire others.

From these experiences, Hill has identified eight common qualities that stand out more than others.

• The first up in the list is authenticity. Showing up as your true self is essential if you plan on asking others to follow you. As Hill states; “Your competence is not enough; people need to trust your character and connect with you, otherwise they will not be willing to take risks with you.”

• Second, curiosity. One trait that has been studied more often in leadership is the love of learning. Maintaining a state of curiosity, soaking up knowledge and having a willingness to explore uncharted territory ultimately aids in decision making as these individuals tend to have a broader world view.

• Third, analytical prowess. When it comes to tough decisions, it’s about more than strong intuition. Great leaders will always stay informed and up to date on analytics, although they must walk the fine line and remain “data informed” instead of “data driven”.

• Fourth, Adaptability. With the world changing faster than ever, this is a quality that everyone must possess, not just leaders. It is, however, especially important for those at the helm as it allows them to succeed when new challenges arise.

• Fifth in line is creativity. When having to innovate or solve problems, Hill explains that often the best leaders are able to come up with solutions or ideas that are “adjacent possible”, meaning just outside of what is immediately in reach.

• Sixth, comfort with ambiguity. This may be the most challenging as it is outside of the comfort zone of many of us. Maintaining confidence in the face of competing priorities or information may feel like “navigating through the fog”, as Hill states, but is essential to inspire others.

• Seventh, resilience. Weathering the storm and adjusting to changing environments is essential, plain and simple.

• And lastly, empathy. The ability to connect with others and truly understand their point of views is perhaps the most important of all. Developing emotional intelligence will not only make a better leader, but a better person as well.

Give the full article a read here for more information on developing these skills and growing as a leader.

The Ill Effects of Job Insecurity

All companies have ups and downs, it’s part of running a business in a capitalist economy. No one expects things to be good all the time. As such, sometimes companies go through periods in which cutbacks are a reality, and employees must be let go. Sad, but true. In an effort to get more from their employees, some business owners or managers may use job insecurity as a motivating factor to get employees to work harder, work longer hours, or to try and outperform colleagues. But does this threat of the lay-off actually work? A few of the brains over at HBR (Mindy Shoss, Shiyang Su, Ann Schlotzhauer, and Nicole Carusone) have published the results of a 3-month long study of how job insecurity affected employees.

According to a recent Gallup poll 15% of workers do not feel that their jobs are secure, despite unemployment being at record low levels. This new study surveyed over 600 participants and how they felt over a months-long process. One very interesting aspect of the study is that in the short term, these threats or scare tactics seem to work well to motivate workers. People will try to work harder to make themselves an indispensable part of the team, to impeccably follow the rules, and to make higher-ups aware of their achievements even if those achievements added no real value to the company. Over the long-term, however, the burnout becomes very real. Many participants described the heightened anxiety around job security as negatively impacting their job performance. Eventually, most people felt so distracted, tired, or worried that they began failing at their core tasks. Yes, they may have been working longer hours, but productivity, reliability, and creativeness suffered overall.

While some companies freely admit to using this strategy, others may do it unknowingly. Discussions of scarcity, austerity, or potential cutbacks can be overheard or mentioned in passing, and still have a negative impact on employees. Check out the full article here and get access to the full range of studies on the subject. See if your company and your employees are caught in this cycle of negativity.