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CEO Strategic Decision Making: How To See Around Corners

CEO Strategic Decision Making: How To See Around Corners

Strategic decisions require hard choices for CEOs. Being able to anticipate and avoid unintended consequences is a must in the information age.
CEO vision

What's the problem?

As a CEO, you have multiple competing priorities, and need to juggle different stakeholders when navigating strategic decisions. How confident are you that your choices will lead to the outcome you want, with no unintended consequences? 

Competing Priorities

You need to grow the share price, reduce costs, keep the board happy, identify growth areas and ensure your firm's green agenda is up to date. How can you juggle these competing priorities?

How do Actions link to Outcomes?

Big decisions have a complex relationship with your competing priorities. How confident are you that your decision will tick as many boxes as possible?

Time is Money

This lack of certainty slows down strategic decision making. How much time do you waste trying to reach consensus? What's the lost opportunity cost?

Which decisions are most challenging?

Big-bet decisions such as mergers and acquisitions clearly define the success and failure of a CEO. But what about the lower-level decisions? Cross-cutting decisions are broad in scope, but impact multiple teams. Delegated decisions are those made by independent teams or individuals. 

Getting the balance between these decision types right streamlines the organisation and allows C-level Execs to focus their attention on the decisions that matter:

Big Bet Decisions

These happen infrequently but have a large impact on the direction of the firm. Only 44% of firms make these decisions quickly and accurately. Is your firm one of them?

Real world examples

Cross-Cutting Decisions

Technology selections, new product launches and pricing decisions fall under this category. Just 34% of firms can make these decisions quickly and accurately, wasting time and money.

Delegated Decisions

These are narrow decisions and can be made by individuals or small teams. Companies that can delegate decisions to the right level are 6.8x more likely to make quick, high-quality decisions.

Seeing around corners

Fortunately, it’s possible to build decision models to help you see around corners and anticipate outcomes before you are overly invested:

Model how your actions lead to outcomes

Determine the outcome before you decide

When modelling decisions we often rush off and answer the first question put in front of us. To succeed we need to determine the full set of outcomes you want – and what they mean for your specific business:

Objective Quantifiable Goal
Grow the share price
Outperform S&P 500 by 7% in 2022
Reduce costs
Cut staff headcount costs by 12% by June 2022
Identify new markets
Develop and deliver 2 new product lines that will contribute 10% in incremental revenues by December 2022
Meet Green Objectives
Ensure we are carbon neutral by the end of 2025

Translate your Objectives into Quantifiable Goals. This allows you to identify whether the actions you need to take are going to help achieve the goal or whether they’ll hurt your chances of hitting the target:

Modelling strategic decisions

Diverse teams help to model complex decisions

Using decision models to reduce uncertainty

When this is done well, you have a clear link between the Actions you might take and the Outcomes you wish to achieve, including:

  • What assumptions have been taken into consideration
  • What data or insight has been used to justify these links
  • Which objectives are achievable or unachievable, and why
  • What to do if your assumptions are wrong, and;
  • Which sequence you need to perform these actions in

Think of this like a Flight Simulator for Executive Decision Making. Before you rush to choose, you can run scenarios and simulations to test drive the decision. Model different circumstances and assumptions to identify weaknesses in your plans.

Engage all stakeholders in your decision making before the decision is made, so you can carry through your changes.

How does this help with Strategic Decision Making?

Dodge unexpected consequences

Before you make a strategic choice you have a clear picture of the outcome it will achieve.

Reduce "Gut Feel"

Gut feel decisions are risky, and difficult to justify after the fact. Identify where your gut is in need of more data and better information.

Anticipate the future

Use your decision model like a time-machine; identifying future outcomes and planning ahead to beat your competition.

What do you do next?

First, clearly define the problem you’re trying to solve. What strategic question(s) do you need to answer?

Next, determine the “rules of the game” – what can we do, and what are we forbidden from trying? Maybe there’s a budget cap, or a legal ruling that limits our choices up-front.

Finally, bring together a diverse team of leaders and doers in your firm to model the strategic levers and link action to outcome. Take a step back to grab more data or test your assumptions along the route – the more thorough the link the more predictive power your decision model has.

Armed with the decision model you can progress to make your strategic decisions with confidence.

Cognopia are experts in building decision models that help you see around corners. If you’d like to find out how these workshops can accelerate decision making in your firm please set up time to chat using the link below.

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