“A perfect decision demands impossible certainty. Leadership begins when knowledge has done its work, courage takes over, and a decision becomes action.” – MJ Martin
Decisions Are Made Under Uncertainty
Every business decision is ultimately an act of judgment under uncertainty. Whether a Canadian company is selecting a new technology platform, hiring an employee, entering a market, or simply approving a purchase, there is rarely one demonstrably perfect answer. There are instead competing possibilities, imperfect information, risks, assumptions, and consequences.
The Treasury Board of Canada Secretariat defines risk management as finding the best course of action under uncertainty through identifying, assessing, understanding, and communicating risk. Importantly, it does not define good management as eliminating uncertainty. Risk is unavoidable. The objective is to make intelligent decisions despite it. (Canada)
The Illusion of the Perfect Decision
Modern organizations have access to extraordinary quantities of information. Data analytics, artificial intelligence, consultants, market research, financial modelling, and competitive intelligence can illuminate almost any decision. Yet illumination can eventually become glare.
Herbert Simon, awarded the 1978 Nobel Prize in Economic Sciences for his work on organizational decision-making, challenged the assumption that managers consistently optimize decisions. He argued that human rationality is bounded. Managers normally search until they discover an acceptable solution rather than exhaustively identifying some theoretical optimum. (Nobel Prize)
This is enormously important. A manager who insists upon knowing everything before deciding has effectively created an impossible condition for action.
When Knowledge Kills Action
The statement that “knowledge kills action” is intentionally provocative. Knowledge itself does not kill action. Unbounded information gathering does.
Imagine attempting to cross a highway while continuously calculating the speed, acceleration, tire condition, braking distance, and probability distribution of every approaching vehicle. More analysis initially improves the decision. Eventually, however, the analysis prevents you from ever crossing the road.
Choice can produce the same problem. Research by Sheena Iyengar and Mark Lepper found situations where people presented with six alternatives were more likely to act than people presented with 24 or 30 alternatives. (Columbia Business School) The effect is not universal. A later meta-analysis of 50 experiments found substantial variation and no general choice-overload effect across every circumstance. The more accurate conclusion is that excessive choice can impede decisions when complexity, uncertainty, or difficulty comparing alternatives becomes sufficiently high. (DOI)
Decide According to Consequence
Not every decision deserves equal analytical effort. That distinction may be one of management’s most valuable disciplines.
A reversible, inexpensive decision should usually be made quickly. Choose, observe the consequences, and adjust. A difficult-to-reverse decision involving safety, regulatory compliance, substantial capital, reputation, or long-term strategic direction deserves considerably greater analysis.
The mistake is applying the governance of a $10-million acquisition to the purchase of a $1,000 piece of equipment. The Canadian government’s risk-management guidance similarly advocates proportionality, with controls and oversight corresponding to the likelihood and potential impact of risk. (Canada)
Decision Is an Act of Leadership
Indecision feels safe because nothing has yet been committed. In reality, refusing to decide is itself a decision. Opportunities disappear, employees wait, competitors move, costs accumulate, and uncertainty grows.
A strong decision-maker therefore asks not, “Do I know enough to guarantee that I am right?” Such certainty rarely exists. The better question is, “Do I know enough to make a responsible decision, understand the important risks, and change course if new evidence appears?”
Questions to Ponder
Consider your own organization.
- Which decisions genuinely require more information, and which merely require courage?
- Does your management culture punish an intelligent decision that later proves wrong more severely than it punishes months of indecision?
- Most importantly, would your organization make better decisions if every proposal had not only a deadline for analysis, but also a deadline for deciding?
Knowledge should inform action. It should never become an excuse for avoiding it.
About the Author:
Michael Martin is the Vice President of Technology with Metercor Inc., a Smart Meter, IoT, and Smart City systems integrator based in Canada. He has more than 40 years of experience in systems design for applications that use broadband networks, optical fibre, wireless, and digital communications technologies. He is a business and technology consultant. He was a senior executive consultant for 15 years with IBM, where he worked in the GBS Global Center of Competency for Energy and Utilities and the GTS Global Center of Excellence for Energy and Utilities. He is a founding partner and President of MICAN Communications and before that was President of Comlink Systems Limited and Ensat Broadcast Services, Inc., both divisions of Cygnal Technologies Corporation (CYN: TSX).
Martin served on the Board of Directors for TeraGo Inc (TGO: TSX) and on the Board of Directors for Avante Logixx Inc. (XX: TSX.V). He has served as a Member, SCC ISO-IEC JTC 1/SC-41 – Internet of Things and related technologies, ISO – International Organization for Standardization, and as a member of the NIST SP 500-325 Fog Computing Conceptual Model, National Institute of Standards and Technology. He served on the Board of Governors of the University of Ontario Institute of Technology (UOIT) [now Ontario Tech University] and on the Board of Advisers of five different Colleges in Ontario – Centennial College, Humber College, George Brown College, Durham College, Ryerson Polytechnic University [now Toronto Metropolitan University]. For 16 years he served on the Board of the Society of Motion Picture and Television Engineers (SMPTE), Toronto Section.
He holds three master’s degrees – in business (MBA), communication (MA), and education (MEd). As well, he has three undergraduate diplomas and seven major certifications in business, computer programming, internetworking, project management, media, photography, and communication technology. He has completed over 80 next generation MOOC (Massive Open Online Courses) [aka Micro Learning] continuous education programs in a wide variety of topics, including: Economics, Python Programming, Internet of Things, Cloud, Artificial Intelligence and Cognitive systems, Blockchain, Agile, Power BI, Big Data, Design Thinking, Security, Indigenous Canada awareness, and more.
Martin is a volunteer, a photographer, a learner, a technologist, a philosophizer, and a romantic optimist.