Who’d be a business leader these days? Any hopes that 2022 might furnish a chance to regroup after years of pandemic pandemonium have been dashed by the war in Ukraine, spiking costs and spiralling inflation.
Chuck in the great resignation (quickly followed by quiet quitting) the ongoing tensions around hybrid working (a compromise that can end up pleasing neither those who would rather WFH nor those who prefer to be in the office) and the overarching impact of tech-accelerated change.
Oh, and then top it all off with a looming recession and such unstable politics that Number 10 Downing Street is apparently in urgent need of a revolving door. Life at the coalface of UK plc has rarely been more confused and confusing.
"It’s very hard to make good decisions or plan properly at the moment" says Laura Rudoe, founder of organic skincare brand Evolve. "We have been growing very quickly, there is so much uncertainty about the future, and the last few years have not been representative of normal years, so we couldn’t base our planning on them."
As well as all those pressing ‘externalities’ as the economists drily call them, leaders are also bombarded with books, articles and LinkedIn posts exhorting them to be leaner, more agile and faster-moving or risk getting left behind in this era of techno-hypercompetition.
And since even CEOs are not immune to suffering from FOMO, it is hardly surprising if simply taking faster and faster decisions can look like the answer to coping with all the mounting pressures of the permacrisis.
However, while the need for speed may be entirely human and understandable, the more salient question is: how well does it work? For every decision that can be made in a moment, there are others where a considered and judicious approach may save you from calamity.
It’s a leader’s job to know the difference, says Rudoe, whose business is currently in the throes of international expansion and seeking a retail partner for the huge US market. This is a big decision and she is aware that her natural desire to get on with it needs to be tempered with caution.
‘My sales team are all professionals and they are careful – sometimes I get frustrated and I want them to go faster, but they always say “no, we have to do this properly”. Because if you sign a multi-year deal with the wrong retail partner, that’s not good.’
And although fast thinking – like fast food – hits the spot on occasion, we all know that an unrelenting diet of burgers and chips is not a healthy one. Fast thinking may give us the impression that we are getting more done but it comes freighted with psychological risks that can derail your decisions and end up making for slower rather than faster progress.
Mental shortcuts can be dangerous
In a crisis situation - even one that seems to go on forever - our brains are hardwired to fall back on mental shortcuts called heuristics, but these are precisely the knee-jerk responses that we should be trying to avoid, says Niro Sivanathan, professor of organisational behaviour at London Business School. Along with his colleague David Faro, Sivanathan has researched why it is that even well-prepared leaders can make hasty and sub-optimal choices in the face of the unexpected.
"Crises have common ingredients. There is time pressure, there are high stakes, there is lots of emotion. These are all things that make it more likely that we will deviate from making rational decisions and fall back on heuristics. And heuristics are very rarely the right way of making decisions: they will almost always fail you."
You don’t have to go very far these days for examples of hastily made decisions based on flawed assumptions going disastrously awry – just look at October’s Truss/Kwarteng’s ‘fiscal event’ – a so-called ‘mini-budget’ which ended up having maximum impact in all the wrong ways, crashing the pound and causing a dangerous spike in the cost of government borrowing.
Heuristics amount to caveman thinking, because we evolved them tens of thousands of years ago to help us cope with immediate and existential threats such as being attacked by wild animals – a situation in which there is no time to carefully weigh up the options.
They still have their place today for helping us to navigate quotidian risks like crossing the road or boiling a kettle, but they are packed with unconscious biases and have little place in guiding us through territory where the risks are complex, interdependent and longer-term rather than obvious and charging towards us like an angry rhinoceros.
"Heuristics are subject to many biases which are systematic and ubiquitous" adds Sivanathan. "Some of them had evolutionary benefits a long time ago – loss aversion was important [in prehistoric times] because if you made the wrong move you would die. But we carry them over into decisions about investments and whether to move forward with an acquisition or cut our losses."
‘Just F***ing Do It’
But relying on mental shortcuts is only one negative consequence of a desire to act quickly and appear decisive. Decisiveness can all too easily tip over into domineering behaviour, the ‘Just F***ing Do It’ approach, which reduces employees to mere extensions of their bosses brains rather than allowing them to use their own.
Rudoe says that her role as leader is not to tell others what to do, but rather create the environment in which they can make their full contribution, because she does not have all the answers. "If you’ve got a team of people who are trying to help you deliver operationally, you want to empower them to make decisions. Otherwise I am trying to take every little decision myself, and why did I hire this great team of female executives if I don’t empower them?"
And even for those decisions that she does take herself – she still interviews every new hire at Evolve, which now employs around 30 people at its Hertfordshire base – she takes care to chew things over with the team. "My style is quite collegiate, we do talk about things a lot because so many decisions stretch across different parts of the business."
When it comes to minimising the impact of our own unconscious bias on the decisions we make, process is more reliable than training, says Sivanathan. "You can train people to make better decisions, but it doesn’t work to the extent that you might hope. Structural solutions tend to be more impactful."
So a bank lending money to a business, for example, might give one loan officer the job of making the initial loan decision, but should the business owner wish to extend the loan in future, that decision will likely be made by a different bank employee. "Because if you are the person who authorised the first loan, you are more likely to say yes the second time" – even if the business in question can’t really afford it.
A universal panacea?
In a world where the past is an increasingly unreliable guide to the future, there are tools that can help you make better decisions. Using three sales scenarios for the year to come – worst case, middle case, best case - has helped Rudoe and her team make more useful financial forecasts, because matching the cost base to the ‘worst case’ scenario minimises the risk of running out of cash while still allowing for growth should the middle or best case scenarios come to pass.
"Our costs have gone up quite a lot, like everyone’s have, so we’ve really been thinking about profitability. Scenarios are a really useful exercise because you can look at what might happen if things go well, or if they go less well, and right size the business accordingly."
The sad truth, according to the Nobel prize winning founder of behavioural economics, Daniel Kahnemann, is not so much that humans can’t take slower, more rational decisions but that most of the time we simply can’t be bothered to.
In his 2011 book Thinking, Fast and Slow, he writes "A general ‘law of least effort’ applies to cognitive as well as physical exertion. The law asserts that if there are several ways of achieving the same goal, people will eventually gravitate to the least demanding course of action. In the economy of action, effort is a cost, and the acquisition of skill is driven by the balance of benefits and costs. Laziness is built deep into our nature."
And although there is no universal panacea that will save us from our own cognitive frailties, there is one factor that does always tend to make things worse, concludes Sivanathan – time pressure.
"It’s not that if you extract time and all the other external uncertainties you will become a decision-making robot" he says. And neither is a decision that takes a day or a week automatically better than one that takes a month or a year. But for any given situation, time pressure is the enemy of good decision making, he advises. "There is a constant negative impact of reducing the half-life of the time it takes to make a decision."
So next time you feel pressured to make a quick decision, try to slow down, take a breath, and ask yourself whether more haste might ultimately result in less speed.
The upsides of slowing down
When you’re in a hurry things get missed and corners are cut. As often as not you’ll waste time having to revisit hasty decisions and rushed processes to fix what went wrong the first time around.
More strategic thinking
Slow thinking is rational, logical and thorough. It’s hard work but produces better results in the long-term. Fast thinking is all about mental short cuts and instant gratification – like a sugar rush it feels good but the effect is short-lived.
Better relationships with colleagues
If you are always mentally in a rush, you are more likely to be self-centred and fail to take the needs and views of other people into account.
Improved engagement and retention
Take the time to involve others in decision making – not only because you’ll get better answers but also because the feeling they are being listened to is a powerful source of engagement and job satisfaction.