In this paper, Eisenhart studies how organizations make fast strategic decisions and argues for why fast decisions are better for organizations. She establishes the following:
1) Fast decision-makers use more, not less information
2) Fast decision-makers develop more alternatives
3) Centralized decision-making is not necessarily fast
4) Layered advice emphasizing advice from experienced counselors is fast
5) Conflict resolution is critical to decision speed moreso than conflicts themselves
6) Integrations among strategic decisions and between strategy and tactics speeds the process.
Overall, faster decisions lead to better performance. By helping to promoting good patterns of interaction and creating an environment in which it’s easier to overcome psychological and emotional barriers to effective decision making.
As for links to my project, the anecdotes in this paper about how strategic decisions are made are useful, particularly the areas discussing the importance of immersion in real time information and the emphasis on real time communication. To me, that suggests that decision makers should spend at least some time observing users and adding access to qualitative data to the quantitative data sources mentioned in the paper.
Eisenhart, Kathleen. “Making fast strategic decisions in high velocity environments.” Academy of Management Journal. 32.3 (1998): 543-576.
Hickson, butler, gray, Mallory & Wilson, 1986 – differentiating strategic decisions
Article addresses two main areas:
1) How are fast decisions made?
2) What is the relationship between decision speed and performance
Set of arguments/propositions (543):
1) Fast decision-makers use more, not less information
2) Fast decision-makers develop more alternatives
3) Centralized decision-making is not necessarily fast
4) Layered advice emphasizing advice from experienced counselors is fast
5) Conflict resolution is critical to decision speed moreso than conflicts themselves
6) Integrations among strategic decisions and between strategy and tactics speeds the process
Overall, faster decisions lead to better performance.
Current (incorrect) hypotheses (545):
1) Comprehensiveness slows decision-making
2) Centralized decision-making is faster
3) Limiting conflict speeds decisions
Methods
Interviews in questionnaires with informants from CEO level down in eight organizations.
Findings
1) Fast strategic decision-making is associated with using lots of real-time, quantitative information (554)
a. For example: regular operations meetings, cash flow, inventory, competitors moves
b. Preference for real-time communication via face to face or email
This is likely because real-time information makes issue identification quicker, helps develop pattern recognition skills/intuition and helps decision-making groups practice responding to information as a group.
2) Orgs that evaluate many alternatives tend to evaluate many simultaneously, which is faster, while firms that evaluate few tend to do them sequentially, which is slower (556)
This is faster because comparing alternatives helps emphasize their strengths and weaknesses, reduces the psychological stakes involved in each option and provides quick fallback options if any one plan fails.
3) Centralized decision-making processes are not necessarily faster – two tiered advice process with wide range of inputs and reliance on experienced confidantes speed process.
The presence of wide range of advice and confidantes/counselors helps reduce the informational and psychological barriers to making a decision.
4) The best process for dealing with conflicts is “consensus with qualification”: the decision-making team tries to reach a consensus but if none is quickly forthcoming, the leader makes an executive decision.
This is much faster and better than developing a consensus, which takes a long time and often only happens with opponents leave, letting external deadlines drive strategic decisions, or just not consulting with a team at all.
5) Decisions are made faster when they are made in the context of other decisions – ie. an overall strategy with plans of action and fallback plans.
Concretely planning out a strategy makes it easier to analyze the pros and cons. Psychologically helps cope with the stress of uncertainty.
6) Fast decisions is better
a. Fast decisions promote learning
b. You get left behind if you don’t make fast decisions
Implications
1) Patterns of interaction are more important, such as:
a. Being continually updated with real-time information
b. Group decision-making
c. Fast decision making helps overcome cognitive and emotional barriers
