Prioritizing the projects and initiatives you take on is one of the most strategic decisions you make for your business. And you’re good at it, aren’t you? That’s why you’re the one in the Hot Seat. You make the decision, or the executive team has a big meeting that results in a decision, and everything’s okay, right?
But research from Stanford University indicates that the story doesn’t end there.
Confident Strategic Decision Making
It turns out that the level of confidence you, and the people around you, have in your decision has a really big effect on the implementation of your decisions. To understand this, Professor Baba Shiv of Stanford University’s Management Executive Program, suggests we imagine a military commander in the field. If he is not confident when issuing orders, then the soldiers in the field are extremely unlikely to be comfortable jumping up and storming the enemy position! As Shiv says, “If you are that military commander, you’ve got to be very convinced that the decision that you’re making out there is the right one.”
Now normally in decision making circles, this kind of “blind confidence” is not a good thing. Confidence leads to “commitment biases” and that bias leads to worse decisions. But recent research in “behavioural decision making” shows that there is a positive side to confidence. In fact, according to Shiv, the confidence with which you emerge from a decision has a direct impact on your project’s outcome. “It has a direct impact on what we call the wanting system in the brain, essentially the dopamine system in the brain… and therefore has a direct impact on how motivated you are, how engaged you are in the particular task.”
In other words, you would expect a better decision to yield more benefit than a bad one… and on average they do. But the outcome of even a bad decision can be “rescued” if the team is confident and excited by the decision they’ve made (see diagram, or if you’ve time, watch the video).
Confidence and Project Prioritization
So let’s look at the typical project prioritization process. Here’s the scenario; a group of executives sit in a room. One by one, nervous project managers advocate for their projects and the executives beat them up, undermining the need for the project, its likely returns to the organization, etc. These discussions are often little to do with the merits of the projects and are more about the politics within the executive team. In any case, it is the opposite of confidence building. The outcome of the meeting is a portfolio of projects around which there is little real consensus. In fact, these is quite a bit of doubt about the portfolio and, often, outright hostility and resentment about the outcome. Little surprise, then, that the implementation team suffers: their hearts aren’t in it because they suspect the work they are doing is worthless resulting in poor outcomes.
So what can we do? Is there a way to build consensus and confidence while simultaneously improving the underlying quality of the decisions? Can we easily improve the outcomes?
It’s not rocket science to do the job properly, but the application of good collaborative process, with decision-making tools underpinning it, in this area is huge. Not only will the executives end up selecting a much stronger portfolio of projects that really support the company strategy, but they will be very confident in the way they communicate. Analytic Hierarchy Process, a transparent and collaborative decision making process, leads to a team with a clear understanding of what they are doing and WHY they are doing it. They are all pointing confidently in the same direction and are emotionally bought in to what needs to get done.
So they deliver.
And what’s that worth? Well, I recently heard one “decision making practitioner” with decades of experience assert that he sees investments in improved decision quality yielding a 1000-fold return. Before you begin your next project prioritization and planning cycle, therefore, stop and consider whether there is a better way.
Have the confidence to try something new.
How to improve your project prioritization?
A great way to get going is to do a quick portfolio audit to see how you're doing today and to identify quick wins.
The output of the audit is a report telling you:
How well aligned is your portfolio with strategy
Identify which projects are doing well and which ones are struggling
Clear recommendations to improve alignment and how to address failing projects