4 Drivers Of Bad Executive Decision-Making

Article by 
Cascade Team
  —  Published 
December 8, 2023
December 9, 2023

The cost of misguided business decisions looms large, often bearing career-ending implications. Consequently, there’s an incentive to disperse the decision-making responsibilities. 

It’s no wonder that fewer and fewer leaders want to be the sole problem-solving heroes. In fact, 53% of business leaders now involve at least 11 individuals in their decision-making.

However, is this the optimal way to make tough decisions? 

In this article, we dissect the forces that impede effective decision-making and provide actionable insights to empower business leaders in conquering these challenges.

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drivers of bad executive decision making diagram

#1 Lack Of Business Context 

Business decisions cannot exist in isolation; they must intricately connect with both internal dynamics and external factors. Otherwise, organizations get stuck in a strategic drift, losing their competitive advantage. 

To prevent this, business leaders should constantly monitor industry trends, competitor strategies, evolving customer demands, and stakeholder interests

However, scattered business metrics and operational information across siloed systems make it difficult to access crucial insights and make the right decisions, fast. This approach is time-consuming and error-prone. 

At the same time, 58% of business leaders agree they would benefit from better visibility and understanding of different functions when making important decisions. Lack of contextual understanding leads to misguided and poor decisions resulting in wasted resources, missed opportunities, and lower profitability. 

To address this, decision-makers must have both access to accurate and consolidated data as well as the context to interpret and apply it effectively. 

Understand the bigger picture with the right frameworks 

Successful executives navigate the complexities of the business world by leveraging various decision-making skills and frameworks. While they might not use these frameworks themselves, understanding their applicability, strengths, and weaknesses is crucial. This enables them to provide guidance and support to others when they face issues they cannot resolve independently.

One of the most reputable frameworks is the decision matrix, a systematic method for evaluating and prioritizing different options based on multiple criteria. 

💡You can find a free template here.

For example, when a healthcare institution is deciding between different Patient Management Systems, a decision matrix can weigh factors like:

  • Data security: Ensuring patient information confidentiality.
  • User-friendliness: Ease of use for healthcare professionals.
  • Interoperability: Compatibility with existing medical systems.
  • Scalability: Ability to handle increasing patient loads.
  • Compliance: Adherence to healthcare regulations.

Then there are other approaches like SWOT analysis, decision trees, scenario planning, and cost-benefit analysis. 

📚You can read more about the most useful and efficient decision-making frameworks for business leaders here.

The dynamic interplay of these tools empowers senior leadership and Chief Strategy Officers (CSOs) to make good decisions grounded in evaluations and analysis, steering the organization toward strategic success.

Note: Regardless of the chosen framework, involving those who execute strategies on the ground is crucial. Frontline employees offer valuable insights into operational challenges, customer needs, and the practical feasibility of strategic initiatives. Actively incorporating their wisdom fosters collaboration and ensures that decisions are viable. 

Tie business metrics with initiatives 

Business metrics, spanning financial KPIs to operational indicators, form the quantitative backbone of an organization. However, their true power is unlocked when they are closely tied to strategic objectives.

The essence lies in aligning decision objectives with the most impactful metrics, ensuring initiatives' impact is not just conceptual but quantifiable.

In a strategy execution platform like Cascade, achieving this synergy is streamlined through integrations and the Metrics Library.

By consolidating business systems under one unified roof via integrations, executives gain unparalleled clarity in strategic decision-making. 

The Metrics Library puts all the key metrics at your fingertips, aligning operating and financial goals with strategy. You can easily connect your business data directly to your core initiatives and assign targets in strategic plans against high-level metrics progress.

📽Watch this short video to see how the Metrics Library works in Cascade. 

#2 Information Overload  

According to Harvard Business Review, 40% of leaders report high levels of burden due to the excessive volume of information they receive. This information overload can easily result in decision paralysis, diminished decision quality, heightened stress, and burnout.

Those who report a high burden due to information overload are 7.4 times more likely to experience high decision regret and may miss strategic opportunities. This makes it increasingly important to have the right tools that reduce information overload by presenting relevant, contextual information aligned with strategic priorities.

Focus on key metrics 

In the quest for effective decision-making, the ability to focus on key metrics is crucial. Automated tools, such as dashboards and reporting systems, play a pivotal role in consolidating vast amounts of data into actionable insights. This streamlined process not only saves time but ensures that executives concentrate on what truly matters.

As Kurt Jossie, Integrated Strategy Director at Ogilvy, said at Cascade’s World Strategy Day 2023 (WSD):

“Data helps you make sure you have the highest probability of success. If you have quality data, the right type of data, and know what to ask of the data, you’ll be informed to make better decisions.”

Cascade facilitates this through its Reports & Dashboards. Executives can monitor key metrics and critical business and strategic information in real-time. The platform's visualizations present insights in a digestible manner, empowering decision-makers to grasp complex data effortlessly. 

Customizable dashboards and data presentation features (e.g. charts and tables) empower executives to filter out noise and focus on critical insights for effective decision-making.

example of a report in cascade
Example of a Report in Cascade.

Additionally, Cascade allows for the integration of information from various data sources. 62% of business leaders who participated in our WSD 2023 survey said that their organizations use at least 5 business tools, so ensuring data gets centralized is key to simplifying data-driven decision-making.

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Empower people to make smaller decisions

Empowering team members at middle and lower levels promotes ownership and accountability, allowing quicker responses to daily challenges and reducing bottlenecks associated with centralized decision-making. 

As Dave Burchfield, Director of People’s Strategy at McDonald’s pointed out during the discussion at WSD 2023: 

“Middle managers in global corporations need to have data and access to information so they can provide strong recommendations to the executives and be accountable for decisions. At the same time, they need to have this information to effectively distill priorities and communicate clearly with their respective teams.”

Decentralizing the executive decision-making process reduces the burden on leadership and helps solve information overload as executive directors don’t have to be involved with every decision within their jurisdiction.

Cascade supports this by providing a collaborative environment where teams align decisions with the broader organizational strategy

#3 Inadequate Risk Management 

The relentless demands of day-to-day operations often consume executives' attention, leaving little room for proactive risk assessment. The absence of a robust risk management plan compounds the issue, making organizations reactive to emerging crises and unaware of existing risks. 

Not fully understanding such risks can lead executives to either overestimate or underestimate their organization's capacity for risk, resulting in suboptimal decisions and possible operational disruptions, reputational damage, and financial losses, to name just a few consequences.

Dodge risk bullets with clear processes and frameworks 

Taking risks into account from the very start improves decision-making, especially regarding organizational resilience. Proactive strategic risk management enables senior executives to recognize risks, identify their causes and effects, and take action to mitigate them. Risk management prepares leaders for various scenarios and empowers them to make quick and decisive yet informed decisions.

Embracing frameworks such as the risk matrix or SWOT analysis also helps organizations to systematically identify, assess, and mitigate potential risks

  • The risk matrix provides a visual representation of risks based on their likelihood and impact, guiding executives in prioritizing where to focus their risk management efforts. 
  • Porter's Five Forces analysis offers a comprehensive view of the risk landscape by delving into s competitive rivalries, the bargaining power of suppliers and buyers, and the threat of new entrants and substitutes.
📚If you want to dive deeper into strategic risk management, you can read our guide here.

Build a culture of accountability and transparency

Frameworks alone are insufficient without a conducive organizational culture. Management teams should also focus on fostering an environment where employees are not only encouraged but celebrated for pinpointing potential risks. This open dialogue ensures that critical insights from different corners of the organization are brought to the table.

As Burchfield said at WSD: 

“You have to advocate responsibility, particularly in large organizations. Because it’s easier to be in self-preservation mode rather than have the courage to say ‘Yes I am accountable for this decision and if it’s the wrong decision I will own that’. I think that comfort and rewarding failure is something you need in tandem with any sort of decision-making framework. You can’t have your philosophy about decision-making without the ability to say ‘We’re going to be comfortable with failure, reward failure, and not disincentivize people from being accountable’.“

Assigning clear roles and responsibilities is another cornerstone of risk management. Cascade’s Planner helps here, allowing organizations to assign owners to different aspects of the strategy. This not only clarifies responsibilities but also minimizes the chances of crucial elements slipping through the cracks.

Example of a plan in Cascade
Example of a plan in Cascade.

Set up real-time risk intelligence 

Organizations benefit from systems that deliver instant data on potential threats, accelerating the speed of decision-making. This ensures that decision-makers possess the latest insights, enabling rapid adaptation to emerging risks in the dynamic business environment.

Cascade enhances and simplifies real-time risk intelligence with its Risks feature. It allows users to add risk trackers to objectives, projects, actions, or measures. You can define each risk and how to manage it (add likelihood, impact, timeline, mitigations, etc.). Users can easily spot risks and create a Risk report that includes a Risk Matrix for improved visibility.

Another useful feature is Alignment & Relationships, which helps you track risks, dependencies, and blockers that may lie along your strategic journey.

#4 Absence Of Testing And Learning 

The consequences of not testing assumptions before you make a decision can be profound, impacting the entire organization. Failure to validate ideas and theories can lead to misguided strategies, inefficient resource allocation, and, ultimately, costly mistakes. Yet many senior leaders and decision-makers can be a bit too confident or hurried to test assumptions properly.

Here’s an example provided by Jay Gouliard, Senior VP at Mondelez International, at WSD:

“I was working for an industry-leading organization and we thought we knew our customer’s needs and desires very well. We often successfully innovated before. We were developing a new product for 3 years without a real Minimum Viable Product (MVP), we just briefly tested the concept at the very beginning. After 3 years and 6 million dollars, we launched the product with our key customers, but they were rejecting the innovation. The design didn’t resonate with new potential users. The complexity we thought the consumers wanted wasn’t what they were looking for. An MVP would’ve prevented this failure and resulting losses.”

As we can see from this example, testing doesn't demand absolute certainty, but rather a sufficient level of confidence to inform key decisions with meaningful insights. You also need to define the test's objectives and success criteria, or you risk cognitive biases impacting the interpretation of results. 

Let MVPs guide your decision-making 

Launching an MVP version of a product or initiative to assess its viability is likely the most important approach for informed decision-making.  By gathering real-world feedback organizations can identify potential challenges, understand user responses, and refine strategies before full-scale implementation and large investments.

Despite its utility, 56% of business leaders surveyed at WSD 2023 said their organizations don’t use MVPs as a testing method.

Here’s a practical example of why you definitely should create MVPs as told by Jennifer Riel, Chief Strategy Officer of IDEO, at WSD:

“We had a client from Japan that wanted to launch a product on the US market. We created a skeleton of an online store to test different value propositions and see what would work in the USA. We invested in a few ads on social media sites to see what people were “buying” and quickly got a sample size of real human behavior. The value prop the client wanted to choose initially was the one closest to what they were using in Japan, tested far and away lowest. It didn’t resonate with the US market. An MVP, a few hundred dollars, and a couple of weeks of testing prevented us from doing a silly thing at scale which would result in a disaster.”

During the same panel at WSD, Scott Lichtenhal, Senior Vice President of Product (Analytics Solutions) at Mastercard, provided 3 key things MVPs enable decision-makers to do:

  1. Protect resources, especially mindshare and time.
  2. Find the right problems and learn from the test results.
  3. Help shut down the project if needed and prevent organizations from doing something silly on a large scale.

Considering all of the above, there’s no legitimate reason for organizations not to employ MVP testing. The strength of this approach lies in the ability to adapt based on real-time learnings.

Imagine a scenario: Your MVP testing reveals unexpected user preferences, and you need to pivot swiftly. Cascade's integrated approach ensures that this pivot isn't just a reaction but a strategic move aligned with your overall goals that is visible to all key parties within the platform.

With Cascade's platform, you gain the capability to quickly adjust strategies in real-time based on your MVP's insights.

Use Cascade To Make Better Strategic Decisions 🚀

In the relentless pursuit of effective decision-making, it becomes evident that leadership success hinges on overcoming some key challenges.

Different organizations face different obstacles, such as aligning business metrics with strategic initiatives, fostering a culture of accountability, or managing complex risks.

Cascade steps in as an ally for any decision-making style or type of decision. It offers a strategy execution platform that helps you centralize strategy, make informed decisions quickly, and adjust to changing circumstances before it’s too late.

With its powerful suite of tools, from integrations to progress tracking, Cascade transforms challenges into opportunities and ensures that every decision you make aligns with your strategic goals.

Get a live demo today and enhance your decision-making process.

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