Note from Art: Your decisions define you as a leader and a manager, yet we spend very little time in our busy lives finding ways to improve our abilities in this area. This Management Excellence Toolkit Series will help you recognize the challenges and pitfalls of individual and group decision-making and offer ideas on improving performance for you and your co-workers.

Part 1 of this series emphasized the importance of developing, updating and referencing a Decision Journal as part of your program to improve your decision-making effectiveness.  In Part 2, we focused on understanding how we make decisions and how various traps and biases often derail us. In Part 3, we tackle the power and importance of framing situations properly to improve your odds of success.

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We tend to view the world as individuals and organizations through frames, nicely described by Professor Michael Roberto, as:

“Mental models that we use to simplify our understanding of the complex world around us, to help us make sense of it. They involve our assumptions, often taken for granted about how things work.”

And

“How we frame a problem often shapes the solution at which we arrive.”

A Few Really Big Examples:

-The Cold War Overhang: Up until the moment of the terrorist attacks on that awful September day in 2001, the primary focus for defense planning purposes of the U.S. Government was the threat posed by other nation-states.  This thinking was a carry over from the Cold War, which of course had ended more than a decade earlier.

-Can you say Myopic? Analysis of General Motors documentation from the early 1970’s indicated the following:

  • The U.S. market is too isolated to be impacted by foreign automobile manufacturers.
  • Fuel will be plentiful and inexpensive for years to come.
  • Americans don’t care about quality. They want style and will upgrade every 18 months to 2 years.
  • We must promote our managers from within to secure our culture.
  • We’re in the business of making money, not cars.

And one of my famous quotes from GM: “We don’t need to make better cars, we need better customers.”

As the world changed, GM’s rigid view on the world made it nearly impossible for management to properly interpret much less respond to changing conditions.

And:

-3rd Place: Starbucks has consistently thought of itself as, The 3rd Place, right after home and work.

3rd Place thinking guided the development of the in-store experience where people felt welcomed and were encouraged to linger and relax. As the chain lost focus on this frame and flooded the stores with new programs and products at a rapid clip, the stores began to lose this atmosphere and customers voted with their wallets and their feet. A return to the original “3rd Place” formula was one part of the turnaround that Howard Schultz and team engineered upon Howard’s return to the CEO role a few years ago.

What the Studies Show:

Researchers have shown that our frame drives our decisions. A situation framed as a negative (a loss, a dire problem or a big risk) tends to evoke riskier responses than a situation framed as a positive.

A number of famous studies depict business or medical situations with identical outcomes (i.e. identical expected $ values or human outcomes) presented as both a negative and a positive. Our responses reinforce the perspective that we take more chances when faced with a negative frame and we’ll act more conservatively when faced with a positive frame.

Leaders & Teams: Your Frames Drive Decisions

We’re constantly constructing and acting upon the frames that define our view to the world, and of course, we’re making decisions based on these frames. And while framing is essential in our pursuit to understand and cope in the world, it also opens us up to host of potential decision-making pitfalls.

As a leader, your view to the world (your frame) has a powerful influence on your team members. To the extent they understand your frame, it becomes their frame, and they make decisions and priority calls accordingly. It works great if your frame is fairly neutral or, if your view is particularly accurate. However, paint a picture of an issue or situation as particularly positive or negative, or force your own potentially biased assumptions on a frame, and you create a cascading set of decision-making nightmares.

Groups form frames based on the individual views of the members and their ability to roll those views and assumptions into some form of “common view.” Of course, personal biases, politics, egos, power and other socialization issues, along with diversity of experience, access to data and many others all impact and potentially skew group frames.

5 Best Practices for Building Effective Decision-Making Frames:

1. Practice Awareness and Vigilance: There are no cures for Decision-Making traps, but as the saying goes, forewarned is forearmed. Be conscious of how you and your colleagues and groups are framing issues and be aware of how these frames may skew idea generation and decisions.

2. Create Multiple Frames for Vexing Problems: For example, a firm’s leaders viewing social networking as a waste of time might cultivate a highly restrictive policy, and minimize or eliminate any experimentation with these tools. It invites a “How can we restrict?” response.

An alternative frame of: “this is a big trend, how can we safely use social networking tools to better engage with our customers,” will invoke a completely different set of responses.

3. Frame issues as Neutral. Instead of introducing the biases observed in the studies towards risk-taking or risk-avoiding behavior based on whether a situation is framed as a negative or a positive, be careful to frame your situation as neutral. For example, “our competitor introduced a product at a brand new price and feature point,” versus a “We’re going to get hammered this quarter by our competitor’s new product.” The neutral wording will facilitate exploration of both opportunities (a rising tide and new market segment…along with a heavy learning curve for competitors), while the negative wording may invoke a crisis mentality and response.

4. Boss Hold Back: Your framing of a situation will guide everyone else. If you are looking for creative ideas, don’t communicate your frame in advance.

5. Always Understand How Others are Framing an Issue: Ask questions, clarify assumptions and if your co-workers or team members are falling into some of the framing traps described above, suggest neutral approaches, multiple frames and draw in outside perspectives.

The Bottom-Line for Now:

The world is tough enough without fighting our own human tendencies to interject noise into the environment. You’ve been forewarned, and now you are forearmed. Frame your situations like a management craftsperson. Measure twice, cut once.