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Channel your inner Jeff Bezos and make decisions that permit your organization to be forceful yet flexible, says IMD Professor of Strategy Arnaud Chevallier.
By combining scenario planning and Bayesian thinking – in essence, using probabilistic rather than deterministic methods – Professor Chevallier says senior executives can bolster their decision-making abilities, enabling them to move forward.
“You can’t predict the future but you can plan for it,” says Professor Chevallier. “Define the future scenarios, prepare for them and then adapt!”
Here are the top ten takeaways from Agile decision-making – deciding when you don’t have all the facts that can help senior leaders make better choices in uncertain times:
Think of the futures, not of the future
Identify the full range of possible ways the future might look like six months or even one year from now, from a worst-case scenario to a best-case one.
Determine what’s behind the curtain
Out of the plethora of forces out there, identify the two or three that have the most influence on the future. Then continuously monitor those forces to determine their intensity and in which direction they are pushing the future.
Plan your success
Develop an action plan that will enable you to be successful for different scenarios, so that you’re prepared no matter what the future might look like – whether that’s the best- or worst-case scenario.
Forget about efficiency
Efficiency requires only one plan in order to avoid wasting resources. While this lean operations style is sensible under normal operating circumstances, it’s not appropriate when uncertainty skyrockets.
Focus on effectiveness
Effectiveness is being prepared for whatever might unfold; it requires thinking broadly and having plans of action for each scenario. But as the future, especially in these times, is highly uncertain, you should aim for effectiveness rather than efficiency – at least at the onset.
Decide on your approach
Move away from a Boolean – i.e. black and white – approach to a Bayesian approach where there are shades of grey. Bayesian thinking is rooted in probability – one version of the future becomes more probable even though it remains a grey area.
Prepare a wide launch
Roll out several plans of action initially, but as more data becomes available, stop investing in these unnecessary or irrelevant action plans. By gradually narrowing down your rollout, you re-introduce efficiency in your operations.
Change your mind
As new evidence unfolds, update your thinking. This will require you changing your mind, which is perfectly acceptable and, in fact, the only reasonable way to act, when circumstances change.
Order your doors
Jeff Bezos – love him or hate him – has a great way to classify decisions: some are one-way doors (irreversible) while others are two-way doors (reversible). Order your decisions so that you make the irreversible ones later, when you have acquired a better understanding of what the future will be.
Embrace an uncertain future
Even if a perfect storm like COVID-19 appears, organizations can weather it by making the best out of what’s happening to them. Success exists even in the worst case; maybe that’s simply avoiding bankruptcy, for example, but being hit by a perfect storm doesn’t mean you’ll fail. You have a chance to shine no matter the environment, it’s your job to recognize it and make it happen.
Source: https://www.imd.org/research-knowledge/videos/Agile-decision-making-deciding-when-you-dont-have-all-the-facts/?utm_medium=em&utm_source=DME&utm_campaign=LTT_webinars&utm_term=Event&utm_content=Reminder