Episode 240: How to Make Decisions with Limited Data: Creating Forward Momentum
Thank you for taking a little bit of your day to listen to this episode of Around with Randall. As the world gets more complicated, gets faster, leadership becomes more important, and the aspect within the leadership element that I think we need to spend a few minutes talking about is decision making, whether it's health care or it's academics in higher ed, maybe it's secondary education, maybe it's social services.
So, it's food service or our home or housing insecurity, mental health challenges that come with nonprofits who serve in that area. The ability to make decisions is getting more complicated. And maybe the methodology, the philosophy that we have used for Time In Memoriam isn't the right way to do it anymore. Today, I want to talk a little bit about what we're looking at and how we make decisions.
What should we be contemplating when we do this, and how does that differ from the past? Decisions made today are so essential, particularly as there is a little bit more chaos. And maybe chaos is actually only a metaphor for speed, the speed of which things happen. It's increasing, but it's causing chaos and sometimes paralysis in organizations.
I want to start with the concept of decision making from a very high level, and then we'll kind of move into really the reality of the day that not making a decision on something is making a decision on something. I have many nonprofit clients, some in major ways, some in minor ways, that are struggling to make decisions, and they choose not to make a decision.
And that is a decision because then everything stops. It's an indication that none of the things that we are proposing that might be possible are actually important enough for us to move forward. There is a penalty for making a no decision or not making any decision. And that, I think, is an underestimated, understood and truly unappreciated important cog or component in decision making as a whole when you are stuck.
And I'm not saying it will get into the tactics here a little bit as we try to in every episode, when you get into the decision making process, it's over time. There aren't decisions. It is just horrendous. Particularly for a nonprofit and most particularly for philanthropy. If you have another revenue stream like a tuition or state dollars or Medicaid, Medicare or reimbursements or other service, you maybe you have a granting relationship with it that pays you not like a philanthropic grant, but you have a relationship with the government entity.
You provide, you know, mental support for kids. So the government's paying you. It's given to the revenue stream. You have more time. But if you want philanthropy to live, bigger dollars don't come from when there's no decisions because gift officers or people who are communicating the need don't know what to say. And so no decision is a decision.
I want to start there, but let's assume we need to make decisions. Let's talk about what leadership is today. In reality, the traditional leadership model really relied. And if you look back at writings into the 18 19th and 20th centuries on getting as much data, the completeness of it, time, analysis, planning to make decisions. In comparison, today it's all about speed and complexity and disruption.
And that whether it's technology or an AI, which we'll talk about a few minutes or it's just computerization, it's communication speed that in some ways we have to make decisions with such complexity, speed and disruption that it becomes harder if we think about it just in context. So let's go back in time and maybe not the perfect example, but one that I'm familiar with and read about.
If we think about decisions in the time of the military in the 1800’s and certainly before, there was no way to get 100% understood of the situation. Commanders would make decisions based on what information they had in front of them in that moment. And if they waited for all of the information, they never made a decision. And this is actually an interesting sidelight.
Nerdy people like me. This is the problem Abraham Lincoln had with many of his generals as the Union leaders in the Civil War, particularly someone like George McClellan, who was always looking for more information. George, me do a little bit of that same example, the complexity of the situation was viewed as well. I need more information. Part of the reason that Ulysses S Grant was chosen and has generally seen as the primary driver of the military part of winning the war, is he didn't wait to make decisions based on complete misinformation, because he knew there never would be.
Well, in some ways, that's kind of where we're headed back to. We need the understanding, the ability to make decisions without full information, the consequences for waiting, as we talked about, even if there's no decision, is paralysis. It's fear. If we don't get to decisions and move the organization forward. In some ways, and I'm not going to judge the political left or right.
But just what happened? The pandemic response was based upon this. We kept waiting for more information. In some ways, and there wasn't any. And so there was a lot of indecision and there would be we're going to be in school. We're not going to be in school. We got to be six feet apart. No we're not. Then then it's, we're going to wear masks.
No, we're not. In some ways, making a decision to be candid too early is just as bad as not making any decision at all. We're realizing this in kind of the technology world of adoption. We don't know what we don't know, so let's not use it. I'm not sure that's the best answer. Certainly, market shifts in what we see and how the world operates from a trade perspective.
All of these things of waiting too long can become paralyzing and create an immense amount of fear. So the philosophical shift that we have to make is this we have to go from precision to probability that modern leadership is more about aiming in the right direction and adjusting to be adaptable, than it is a guarantee. We're going to only go this way.
And what's really about strategic bets, about not guaranteed outcomes, that leaders have to get comfortable with calculated risk and a sense of ambiguity. We have to be willing to say we're going ahead. If we think about a circle this direction at 70 degrees, and in ten days, we may shift to 65 degrees. It's almost like a navigator. The way I think about the old World War II movies, adjusting the flight path depending on the wind, the altitude changes in in, in, in in the engine in terms of the speed of the aircraft taking celestial navigation.
They're adjusting come two degrees left to 271. That's what leadership has got to be about. I want to quote Jeff Bezos, who, you know, may or may not like. I'm not interested in that. But I do think his thought process on decision making and how he built Amazon, unbelievably important for us today, maybe for you to be using in your office, most decisions should probably be made with somewhere around 70% of the information you wish you had.
It's saying if you get to somewhere where you've got a majority or in this case, a plurality of information, and it gives you a sense of a door to walk through, then you should start walking through it. We will never again get a completeness of information in a time frame that we need to make the decisions that are required, and so we have to shift and become more comfortable.
As I discussed with the idea of ambiguity and about adjustments and that decision making isn't a one time decision, it's a multi time decision that we're going to continue to adjust as we learn more. So let's jump into the tactical. How do we do this with incomplete data. How do we do this when we only have 6070 80%.
When we want 100. Well, the first thing I would say when we talk about six different things you have to consider in this process is adopting a bias for action, number one, that you have to tell yourself, tell your team and write it on the board that we are not going to wait for 100% of the information. I'm going to empower myself, empower our team, empower the organization to act even though we have a little bit of uncertainty.
And in some ways, we might even put a time bound decision on this, i.e. within two weeks we're going to make this decision, or by Friday we're going to make the decision. Everybody go out and get as much information as you can. We're going to put it together. But by Friday we're going to decide what that does is from a philosophical perspective and from a leadership to declaratory perspective, tell everyone we're moving forward.
And I would also add then, which we'll get to in a minute, be open to adjustment. All too often, I find that organizations are not adopting this kind of basic premise that the bias we have isn't for the perfect decision, but for a decision that is based on all the information data we can get within a reasonable time frame because we got to move.
So number one, adopt a bias for action. Number two is trying to figure out the framework in which you want to operate. And what do I mean by that. We'll give you a couple of examples. There's in the decision making philosophy there's something called Oda oh oh de it's a loop meaning you're going to use this acronym. Here's what the acronym is.
It's observe, orient, decide and act in some ways is simplicity is gather data, make decision A, tabulate the decision and then adjust. But Oda, observe, orient, decide and act. The reason that this or in the end I'll give you another framework that's more, I think abrupt, but I think really interesting is, is that you want people to know what you expect of them.
Part of decision making, particularly if you're a large organization, maybe even a small organization, but it's a team that's in that it's informing a CEO and sector someone to decide. Good CEOs, good leaders are looking for input, looking for guidance, for expertise, for knowledge, for perspective. And then they make a decision. Well, what is it I want from my team to help me do that?
Do I just tell them, or am I actually interested in their opinion and that the decision framework, there's a number of them out there, but I like the two we talk about here today. Oda, Oda, observe, Orient, decide and act frame what we're looking for the team to make the direction known. A subpart of this is what I think the Amazon model has really elevated.
I think there were other ways of looking at it in the past, but they've really kind of solidified it. And I think it's been studied academically. I know it has been is the one the the two way door versus the one way door, a two way door, the way that Jeff Bezos and Amazon kind of built the Amazon brand.
And the Amazon empire is the two way door is that we can set a direction, walk through the door. But then we've very got to quickly figure out, was this the right door to go through, knowing that we can come back to steps and choose another door, meaning we can make a decision, we can start down that direction and the adjustment, particularly if it's a big decision, the adjustment may be to retreat a little bit and it may be a little costly, but it's not Seminole costly.
It's not unbelievably painful. We just have to adjust and we may have to pull back because it's a two way door. We can go through it and we can come back a one way door. It's a lot more complicated because the decision you make there is it's irreversible. We are going this direction. We may adjust on the other side of the door, two, three, five degrees, left or right.
But we're not coming back 180 degrees. And it takes more care in that decision because obviously it's irreversible in many ways or so. Seminal that it could affect the organization as a whole. But we got to move through it. When you come to this decision, is what we're looking at a two way door, meaning we can be a little more aggressive and make a decision now knowing we can come back.
Or is it a one way door? And once we do it, we're done. I think of the closures of universities, of the mergers of like boys and girls clubs that we've talked about. You've read about certainly the closing of hospitals. They're one way doors. Once we do this, we're kind of committed. Two way doors are, hey, we're going to look at maybe adding this program or taking this program away, or hey, there's a lot of different things we could do.
The reason that's important inside of the OTA loop observe, Orient side enact is, is that there's a lot less act on the backside of a one way door. So you have to figure out which ones are the consequential decisions and which ones are the program shifting or organizational shifting ones. Number three is in order to adjust, make those two, three, five, ten degree kind of pivots as you go through your decision making process, is creating a feedback loop.
What are the outcomes? Not the final ones, but maybe interim ones, or along the way ones that allow us to make that quick correction? What data do we need? Do we have a failsafe that literally tells us we're on the right direction? We're not? And are we getting the decision? Are we getting the data? Excuse me in a timely fashion that allows for a velocity of the next many decisions on the change of pace or change of direction, many left or right, two or 3 or 4 degrees if you don't have feedback loops.
I like data, but data can also be personal stories. Anecdotal. You hear the same anecdotal prospect live amongst a staff, or maybe your stakeholders. And I think of stakeholders as the community leaders in nonprofit world. And it's the same anecdotal. It comes from six different people, but they all said the same thing, and they aren't the same six people hearing from the same six feedback loops.
They're all over the place and they're independent of each other. That's data. That's a feedback loop. So you can have hard data. And what might be considered qualitative kind of the conversations. But use that feedback loop and be ready with your team to say, what is the feedback loop data. Tell us about the decision that we made.
Number four is leverage collective intelligence. Are there other places you can go get data that are not just from you? Some times the data that we have is data within a vacuum, and it's not data that's large enough cross-functional really, to get us the right perspective on the decisions and the adjustments that we can make. This may mean partnering with other organizations or looking at outside data sources.
Maybe you want to. What do you get? A trusted group of people and you do like an opinion poll group or a, you know, kitchen cabinet to say, look, we made the decision six weeks ago. What's going on in the community? What are you hearing? Maybe that's a part of your board or a board committee. The way you do this is that when you have this either hard data or qualitative kind of collective intelligence is some type of decision.
Huddles where you're getting that feedback. That's why. And I did a podcast on the idea of a kitchen cabinet, which is an unofficial group of leaders that maybe aren't fiduciary on your board but are connected to the community. That can give you a incredible feedback loop that is some type of leveraged collective information doesn't mean they make the decision, but they may provide you insight.
How do you do that? How do you get either data from the government, the community, other nonprofits, and the people in the community who might be able to help inform you about the decisions to reaching and what impact they have. Number five is set a clear decision criteria. Is it incredibly clear what the goal is that we made the decision on?
And have we been consistent about that? The goal generically shouldn't change very much. Now how you measure the goal could change a whole bunch. But if your goal is to, you know, decrease, you know, let's say a health issue in your community or we're going to decrease, you know, infants food insecurity that isn’t changing. How do you define it?
And then how do you measure against it? This then gets into the conversation of if you keep the clarity of the goal, what we don't allow to have happen is, is that we allow consensus to overwhelm decision making. We're back to what Jeff Bezos talked about 70%. If you wait for consensus, you're never going to get anywhere.
And particularly in today's world, there's very little times where there's any consensus. It just is the world we live in. So you've got to prioritize enough information and enough buy in, but not consensus. And that's based upon here was our goal. Did we reach it? The last part of that is can you document it? Can you see it in that evaluation reevaluation process?
Number six is, is that you build a culture that is tolerant okay, with risk.
Jason Jennings does a terrific job in his writings around the idea of small bets. I love to use it from a strategic planning perspective, and in doing so, I'm able to talk about do we have enough based on his premise, enough resources to leverage the strategy and the plan that you have, and it's not. How much of it can we undertake?
Well, that comes with the premise that we're willing to take some risks and they have to be reasonable risks. They have to be ones that are meaningful and are not going to overwhelm the organization. This brings into the issues of realizing what resources we have, what kind of communication we're going to execute on, how are we going to message certain decisions, how are we going to not punish people for bringing either things to the table, or the fact they were responsible for something in a very short span of time?
We're not going to punish them. When it didn't go quite perfectly up. You're out. You do that. You eliminate a culture that's open to risk. And so part of this conversation needs to be a tolerance. We're going to take a chance or two. It's going to be appropriate for us. Small bets Jason Jennings. And it's going to be meaningful against the goals that we're trying to accomplish.
And we'll make adjustments based on that risk. These are six things that I highly recommend you integrate into your decision making. And it can be big decisions or little decisions. If you're the gift officer or the plain giving person or you're an infrastructure whatever, take some of these things to your leader and say, hey, here's how we can improve.
And if you're the leader, get them down on paper and say, are we doing these things? Are we number one, adopting the idea of bias for action, we're going to prioritize not being in stuck in concrete. Number two is, is that we're going to have a process. We're going to think about, as I talked about OTA or a two way one day, or, excuse me, what two door or one door thought process number three, we're going to create feedback loop so we can adjust.
We know that the initial decision or initial direction isn't going to be the final one, that we're going to create a sense of a leveraged collective intelligence. We're not going to depend on internal data or limited data. We're going to look outside to see if what we're finding and feeling is actually happening. Then we're going to keep in mind this idea of a clarity around the initial reason we made the decision and what our goal was in that.
And then a just as we go based upon that overall goal. And lastly, we're going to build an internal acceptance of risk. We got to just can't take the safe road perfectly safe every time. Otherwise maybe we may be out of business. Decision making is really important right now on lots of different fronts, lots of different levels.
My hope was today is it gives you a context to think about how to do it and tactics to execute into doing it so your organization can be stronger, can make the decisions and adjust as it goes to the things that need to be done. When and if done well, what I've learned is great decision making instills confidence.
It brings people to the table. They're more willing to interject, to engage, to be a part of the solution. They are not don't feel paralyzed. And it allows us to go out and tell our story, which in the nonprofit world is pretty much everything we got so that we can tell what we need and how we need to match it with people's passions of what they're trying to accomplish, to make community a better place.
Don't forget to check out the blogs at Hallett Philanthropy. Two per week, and if you'd like to reach out to me, it's podcast at Hallett philanthropy.com. Decision making in interesting times. Challenging times. That was the subject today, but it embodies what I say each and every episode. That nonprofit work philanthropy has never been more needed. We are the gap between the free enterprise, capitalistic system that wants to make money, and the government that really is not all that efficient most of the time, where that whole we feel it.
And if you're not making decisions, you're not filling it. You become part of the whole, not the reason the hole fills. Please remember what I say at the end of every episode, because it's quintessential to who you are, what your organization is. And the idea of decision making. Some people make things happen. Some people watch things happen. And then there are those who wondered what happened.
In one sense, in comparison, today, people who don't make decisions are people who are wondering what happened. People who make things happen are the ones making decisions or setting the framework like we've talked about to make decisions and then in a second level, making decisions. So your nonprofit serves as a community. You become someone. Your organization becomes someone who makes things happen for the people, those that we serve, the community, that parts of the community that need it the most.
They're wondering what happened. That's the beauty of philanthropy and nonprofit work and what you do every day is critical to filling that hole between government and free enterprise. That allows people to be served in a more meaningful way, to make your community a better place. Man, I cannot imagine a better way to spend a life and a career than trying to figure out how to do just that.
I'll look forward to seeing you next time, right back here on the next edition of Around with Randall.
Don't forget. Make it a great day.