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Board decision making - Coggle Diagram
Board decision making
Well informed and high quality decision making does not happen by accident. Many of the factors that lead to poor decisions are predictable and preventable. Boards can minimise the risk of poor decisions by investing time in design of their decision making policies and processes, including the contribution of committees and obtaining input from key stakeholders and expert opinions when necessary
Historically the field on decision making was underpinned by the idea that the best decision making was done logically, lineraly and rationally
Herbet Simon argued that decision making had three phases: intelligence (defined as searching the environment for conditions calling for a decision); design (defined as inventing, developing and analysing possible courses of action) and choice (defined as selecting a particular course of action from those available)
Evidence based boards
The conscientious (effort), explicit (clarity) and judicious (critical and quality) use of the best available evidence from multiple sources to increase the likelihood of a favourable outcome
The first step is to recongise the multiple sources of evidence that we are (or are not) drawing from
Evidence based practice defines four sources - firstly it acknowledges that professional expertise is not to be ignored and should indeed be drawn on, although this is sometimes the only thing that board members might draw up, it is a key primary resource.
Rather than acting upon just one voice, we know that forecasts or risk assessments based on the averaged professional experience of many people are more accurate than those based on one person's personal experience
Secondly an increasingly recognised and utilised source of evidence is internal organisational data. In this increasingly digital world, the opportunities to collect and apply data to decision making are expanding rapidly
Research evidence provides an underutilised and vital source of information to bring into the boardroom. Sourcing the most up to date scientific evidence is important as a large number of studies indicate that this is more accurate than the opinions of multiple experts
The fourt and final source of evidence to be drawn from in the evidence based practice approach is that of the local context, specifically the key stakeholders and their values and concerns.
Evidence based practice also recommends a six step process that provides a lens through which to make decisions using the four evidence sources. These steps are
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Cognitive bias
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Bias arises due to the two different ways that we think, escribed as system one and system two thinking
System one thinking is fast, emotional, low effort, automatic and unconcsious
System two thinking is slow, effortful, concsious and deliberate
We are hardwired to make System One decisions which is useful for most everyday decisions but unforutantely not so good for larger, more complicated and more important decisions such as those that are often expected within a board context
Types of bias
Groupthink
The overriding desire for consensus and unanimity, leading to poor decision making in cohesive groups due to suppression of internal dissent and consequent inadequate evaluation
Confirmation bias
Our tendency to interpret and search for information cocnsistent with our prior beliefs, discounting contrary evidence
Anchoring effect
Our tendency to rely too heavily on or to overemphasise one trait or piece of informaation (often the first piece of evidence presented to us)
Hindsight bias
Our tendency to see past events as being more predictable than they were before the event occurred and therefore to believe that events in the future are more predictable than they are
Availiability bias
Our tendency to make decisions influenced by events or experiences that immediately come to mind or are easily accessible
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Framing effect
Our tendency to draw different conclusions from exactly the same information presented in different ways
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Mitigating bias
Kahnenam, Lovallo and Sibony created a 12 question checklist to quality control any decision making process in order to unearth defects in thinking
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