Evidence Based Decision Making involved ensuring that facts are used to make decisions to avoid change or leadership by assertion. Evidence Based Decision Making explores the different ways decisions can be made ranging from autocratic to democratic and intentionally chooses a method based on the decision type.
Rational or Irrational
There are two primary forms of decision making: irrational and rational.
Irrational decision making involves making decisions without logic. Typical historical methods have included divination, astrology and such. More common forms include flipping a coin, rolling a dice or going with "gut feel".
Rational decision making involves following a logical process to make a decision based on considering alternative options, analysis and selection.
Regardless of the method of decision making, following the decision we need to establish agreement and communicate the agreement. A decision that hasn't been communicated is often indistinguishable from one that hasn't been made.
There can be a place for irrational decision making in some business cultures, as there are times when subconscious decisions can be better than conscious rational decisions, especially during a crisis. However, most business decisions are better made rationally and evidence based. We will focus on how to make rational decisions.
How Decisions Are Made
Rational decisions are made by a fairly simple (and often implicit) process:
Objective: We start with an objective or goal, it needs to be clearly understood and have an owner/leader
Owner: The decision owner is the person who requires the decision to be made (this can often be harder to identify than you'd think)
Alternative options: We create some alternate solutions via creative analysis, problem solving and idea generation techniques.
Tentative Solution: We analyze the alternates against some criteria and then choose one to be our tentative solution
Deeper Analysis: We perform deeper analysis on the tentative solution to try and ensure it’ll meet the objective
Agreement: The group or individual decides to accept the solution (see below)
Communication: We communicate the decision as there’s no point making a decision unless it’s communicated or results in observable action
A good decision can't be made unless it's understood. To understand why a decision needs making, someone, or the representative of some people, needs to have an objective which requires a decision by the group. Again, this seems rather obvious but if you consider it the other way around it means that a group can’t make a decision unless it knows who wants the decision and why they want it. Apply that to many traditional management groups/boards, CCBs, business change projects, process improvement groups etc. and you’ll find it doesn’t always hold.
Decisions can be made without the owner present (models for doing that follow below) but a good decision can't be made if the owner isn't known and their objective clear. In the case of speculative decisions, a business makes to explore a market, having a clear owner and objective can seem impossible, especially for new product scope decisions - however market research exists to put evidence into these decisions by trying to understand the market and it's needs.
Evidence can come into rational decision making in several ways. Evidence (research, current metrics etc.) can be used in understanding the current position well which helps in terms of coming up with good alternative options. Also evidence can be used in selection of an alternate option to take forward as the tentative solution. This "fitness for purpose" decision is critically important from a business perspective as it is used in making Business Case choices and Portfolio Selection choices.
Evidence is the foundation of critical thinking. Good evidence needs to be:
- Accurate: Good evidence must be factual. Information that counters confidence in the evidence must be considered to avoid bias or incorrect evidence. Corroborating sources add to confidence in accuracy. Data must be correct and precise to the right level of detail to support the evidence.
- Sufficient: Good evidence will have enough weight to add confidence to the facts stated, but not too much as gathering too much evidence is not cost-effective and can reduce clarity. The amount of evidence will typically be proportional to the Risk Impact of the decision.
- Representative: Good evidence needs to be relevant to the population that it is referencing. A statement about the concerns of a particular customer segment needs to be sourced from that customer segment, not generically.
- Timely: Good evidence needs to be recent, as opinions and facts change over time. We can't make a meaningful decision on what to do next with our products based on what our customers thought 10 years ago.
- Authoritative: Sources must be credible and experienced in the specific problem domain, a software expert is not necessarily a business expert or vice versa.
- Clear: Good evidence needs to be well presented and easy to understand.
Evidence based decisions are critical for open and transparent leadership.
Different Types of Decisions
Different types of business decisions frequently need different decision making processes in terms of who is involved and how agreement is reached. Traditional processes have over simplified or simply ignored decision making instead just stating that a role, such a Project Manager, will make decisions. There are a significant variety of decisions that need to be continuously made in business management and software development, they have different characteristics that require different ways of reaching agreement.
For example, consider a traditional Change Control Board (CCB) making a decision on whether to approve a change request or not. This group is unlikely to defer all decisions to a single leader who makes all scope decisions - if it does then what is the point of forming the group? On the other end of the spectrum, a decision that a business makes on whether or not to acquire another business is unlikely to be an entirely democratic choice made by the entire organization.
Even in more democratic, or even fully holocratic, businesses that do include everyone in strategic decisions such as acquisition, every single person is unlikely to be involved in every single change request approval as large group decision making is time-consuming and expensive.
Reaching Agreement in a Group
Reaching agreement in a group can be achieved in a range of different ways from autocratic to democratic and holocratic. As part of Evidence Based Decision Making this technique is used to illuminate the choice of decision making model required for different types of decision within a group.
This technique defines a set of group decision making models on the scale of autocratic to democratic. The characteristics of the decision helps you choose an appropriate model for making that decision.