Decision making in uncertain times

McKinsey 24 Mar 2020 12:00

Downloadable Resources

Open interactive popup
  1. Article (PDF-845KB)

Leaders know that making good, fast decisions is challenging under the best of circumstances. But the trickiest are those we call “big bets”—unfamiliar, high-stakes decisions. When you have a crisis of uncertainty such as the COVID-19 pandemic, which arrived at overwhelming speed and enormous scale, organizations face a potentially paralyzing volume of these big-bet decisions.

The typical approach of many companies, big and small, will be far too slow to keep up in such turbulence. Postponing decisions to wait for more information might make sense during business as usual. But when the environment is uncertain—and defined by urgency and imperfect information—waiting to decide is a decision in itself. For instance, delaying the decision to cancel noncritical surgeries can mean not freeing up physician and hospital capacity now and potentially exposing or infecting more people.

To make bold decisions quickly in these uncertain times, leaders can follow these five principles.

This ability to anticipate how things might unfold—and to begin to act accordingly—can help avoid knee-jerk reactions that lead to poor outcomes.

In the coronavirus context, if you are a leader of a grocery-store chain, you are seeing a drastic increase in purchases. You must think about your supply chains, whether to ration items, and how to put safety protocols in place for customers. In addition, there are the questions of whether to modify store hours, whether to limit service to curbside pickup and delivery only, and how to handle staffing. All of these decisions are related, so you must pause and prioritize the most pressing issues first. That also means having the discipline to ignore distractions.

Specifically, leaders can use a so-called fishbowl model in which decision makers and key experts sit around a table—or virtual table—to make a decision (exhibit). At the table are one or two decision makers, multiple experts, and one or two “empty seats” for other relevant stakeholders in the gallery to rotate in as they have points to share. A majority of stakeholders observes the meeting, which builds understanding without having to make an extra communication step afterward.

When following this approach, it is possible to involve a large number of stakeholders and experts without sacrificing speed. Especially when things are unfamiliar and the decisions you are considering are bold, you need many points of view to make sure the decision makers aren’t missing something.

Some small choices that leaders make in the short run could loom very large over the long term as the crisis unfolds. They can be hard to spot, but leaders must look for them.

The response to the Boston Marathon bombings in 2013 is a good example of a critical small choice that made a big difference. The decision was made to disperse severely injured people to eight different hospitals. While some of those hospitals were farther from the bombing site, vascular surgeons were called to those locations to begin operating right away. If victims had been sent only to the closest hospitals, many would have had to wait for surgery and possibly bled to death.

During business as usual, some people who get ahead are of a certain type. They say the right things, don’t ruffle feathers, know how to navigate the system, and manage messages so that people hear what they want to hear. Many of these usual suspects, who typically are tapped to lead special initiatives, are ill suited to lead in a landscape crisis of uncertainty.

You may not be able to find enough leaders in your organization who meet all three criteria but beware if you empower leaders who meet none of them.

Decision making amid uncertainty is not easy. Business leaders cannot afford to wait when events are moving as fast as they are right now. We believe these five principles of decision making can help leaders make smart decisions quickly to guide their organizations through this crisis. Embrace them, and continue to learn as you go.

Continue reading original article...


hockeyCaptain Chesley SullenbergerWayne GretzkyLaGuardia AirportHudson River