Posts Tagged ‘decision making’

Four villains prevent you from making smart nonprofit decisions

“If you study the kinds of decisions people make and the outcomes of those decisions, you’ll find that humanity does not have a particularly impressive track record,” claim Decisive authors, Chip and Dan Heath.

Nonprofit organizations and the businesses that support them are not in short supply of critical scenarios that require smart decisions. Unfortunately, when our causes or clients need the best decisions from us, we seek out information that supports us and downplay information that doesn’t.

The Heath brothers explain that being merely aware of these shortcomings doesn’t fix the problem. In Decisive, you learn how to adopt a process for overcoming these dilemmas. The first step to fixing the problem is understanding the four villains of smart decision making.

Villain one–Narrow Framing: Steve Cole is the VP of research and development at the HopeLab, a nonprofit that fights to improve kids’ health using technology. Cole and his team wanted to find a firm that could design a portable device capable of measuring the amount of exercise kids were getting. Rather than choosing the “winner” of a giant contract from seven or eight bids, Cole ran a “horse race.” He hired five different firms to work on the first step—a much smaller portion of the project. Cole knew what he’d learn from the first round would make the later rounds more efficient. Furthermore, the firms would create “multiple design alternatives.” “Cole is fighting the first villain of decision making, narrow framing, which involves the tendency to define our choices too narrowly, to see them in binary terms.”

Villain two–Confirmation Bias: Our traditional habit in work and life is to develop a quick belief about a situation and then seek out information that supports our belief. This problematic habit is called the “confirmation bias” and is the second villain of decision making. For example, when the dangers of smoking were less clear in the 1960s, smokers were more likely to express interest in reading an article headlined “Smoking Does Not Lead to Lung Cancer” than one entitled “Smoking Leads to Lung Cancer.” This would be similar to an imagined scenario where bosses more often read an article entitled “Data That Supports What You Think” versus “Data that Contradicts What You Think.”

Villain three–Short-term Emotion: The third villain of decision making is short-term emotion. According to the authors, “When we have a difficult decision to make, our feelings churn.” We revisit the same arguments in our head and kick up so much dust that we can’t see the way forward. In these moments, we need perspective, assert the Heaths. In his memoir, Only the Paranoid Survive, Former Intel president Andy Grove recalls a dilemma in 1985 regarding the elimination of the memory chip line to focus on microprocessors in the business. He and the leadership deliberated for months. He asked his Chairman/CEO, Gordon Moore, “If we got kicked out and the board brought in a new CEO, what do you think he would do?” Gordon answered without hesitation, claiming the new CEO would get Intel out of the memory business. That’s when Grove said, “Why shouldn’t you and I walk out the door, come back in, and do it ourselves?”

A moment of clarity was gained by looking through the lens of an outsider.

Villain four–Overconfidence: The fourth villain is best understood by looking at a young four-man rock and roll group called the Beatles. They were invited to audition for one of Britain’s top two record label companies, Decca Records. “We were all excited,” recalls John Lennon. “It was Decca.” After playing 15 different songs, they anxiously awaited an answer. In a letter to the Beatles’ manager, Dick Rowe of Decca declared, “We don’t like your boys’ sound. Groups are out; four-piece groups with guitars, particularly, are finished.” Dick Rowe learned the fourth villain of decision making is overconfidence.

After the Heath brothers discuss the villains of good decision making in the introduction, the book is divided into four main sections, each focusing on one strategy to overcome smart-decision inhibitors.

It comes as no surprise that our daily work lives are full of opportunities to put the Heath brothers’ advice to work. Many of our decisions are mundane while others are very critical. How can we do better? Chip and Dan Heath have gathered an exhaustive amount of decision-making literature and introduced a four-step process designed to counteract these biases and improve our outcomes.

See Page to Practice book summaries related to this title:

Switch: How to Change Things When Change Is Hard

Buy-In: Saving Your Good Ideas From Getting Shot Down

Image credits: Chip and Dan Heath, wikipedia

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Destination: Sustainability

For nonprofit leaders who are tired of their current decision making paradigm, the more nimble and actionable process of “matrix mapping” explained in the book, Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, offers a fresh and immediately gratifying alternative.

This book will help you examine your current business model, identify areas for adjustments, consider income streams and ultimately assist with ongoing decision making. Nonprofit Sustainability by Jeanne Bell, Jan Masaoka and Steve Zimmerman is an essential tool for CEOs, EDs and management teams.

There was a quote from this book that especially resonated with me because I’ve heard versions of this so frequently during my years in the nonprofit sector. It goes as follows: “A new executive director was told by the board and the staff, ‘There’s a $300,000 hole in the budget that you have to fill.’ Not only is this a dishearteningly phrased directive, it’s an unproductive way to characterize a financially difficult situation. Behind this statement is the unspoken assumption that programs and their funding occupy two separate spheres rather than fitting into an overall business model for the organization.” (p. 109)

This excerpt compelled me to ask the authors, “What is the most common reason why nonprofit leaders look at programmatic sustainability and financial sustainability in isolation of one another?”

Steve Zimmerman responded by saying “It is difficult for board members and senior managers to look at both mission impact and financial profitability primarily because our systems aren’t designed to do so. Program evaluations rarely provide information about the full cost of the program and financial statements don’t reveal the impact that our programs are having. Likewise, in our board meetings we tend to discuss items down an agenda: programs then finances then fundraising. But all of these are deeply interconnected. The Matrix Map is a visual tool that integrates mission and money and allows leaders to make decisions while holding both programmatic and financial sustainability together.”

I also asked Zimmerman, Bell and Masaoka to explain their claim that “sustainability is an orientation, not a destination.” Zimmerman said, “One of the common comments that I receive from boards when we’re doing strategic planning is that they want a “sustainable business model.” It is often said in a way that implies that sustainability is a destination – once you get to the nirvana of a sustainable business model you don’t have to worry anymore and money will continue to come rolling in for perpetuity. We know the reality is that nothing is forever. Funding sources come and go and constituents’ needs evolve. So, what is sustainable today may not be sustainable tomorrow. As a result, sustainability is constantly evolving and requires an orientation of monitoring and decision making to make sure that your organization is sustainable at any given point and time.”

For more discussion about Nonprofit Sustainability, you can follow the authors: Jan Masaoka at Blue Avocado (www.blueavocado.org), which is an online magazine for nonprofits where the discussion on this topic and many others is continuing. Both Jeanne Bell and Steve Zimmerman contribute there and can also be reached via their respective organizations: Compasspoint (www.compasspoint.org) and Spectrum Nonprofit Services (www.spectrumnonprofit.com).

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