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Consultants have a say in every element of compensation, from cash bonuses to performance share units, helping craft the complicated formulas used to calculate payouts. (istockphoto)
Consultants have a say in every element of compensation, from cash bonuses to performance share units, helping craft the complicated formulas used to calculate payouts. (istockphoto)

Talking Management

Transcript: Why decision making at a company suffers with more information Add to ...

This Is Karl Moore of the Desautels Faculty of Management at McGill University with Talking Management for The Globe and Mail. Today I am delighted to be in Vancouver with Julian Birkinshaw from the London Business School.

Julian, the working title of your new book is Fast Forward. What are some of the key ideas that are going to be a part of that book?

BIRKINSHAW - So the book starts with this very simple premise that information in the world is ubiquitous. Search costs have pretty much shrunk to zero, we can pretty much get access to anything whenever we like. That creates a number of pathologies in organizations. We have all heard the concept of analysis paralysis, the idea that essentially we get kind of frozen because there is so much information we can gather we never know when to stop.

As an antidote to that, what we have to do is think in terms of the scarce resource, if you like, of the second half of the information age and that scarce resource is our attention - our capacity to attend to and focus and make decisions on things in an efficient way.

For me the biggest sort of single challenge that large organizations face is how to become more decisive, to basically figure out ways of creating decisive action in order to make things happen more quickly. Learning and experimenting along the way and also to figure out a way of tapping into what you might call the emotional conviction of our people.

The risk of having an information based economy is that our decision making becomes incredibly sterile. If you think about it, everything gets boiled down to numbers and sort of logical rational arguments and we park all this stuff, which goes under the banner of emotion or intuition or gut feeling.

MOORE - How as a manager do I tap into that emotional side that you talk about?

BIRKINSHAW - So, let’s be very practical. You are running a meeting and you are trying to tap into views. Let’s put the numbers on the table, let’s see how far the numbers take us, and then let’s say, "Ok, on the basis of that, what additional insights are we now able to bring from our intuition, from our reservoir of experiences, what do we feel about this decision?"

Jeff Bezos at Amazon is very famous for this. He says essentially there are two types of decisions we make at Amazon - there are the purely rational ones, where we have done all the data, where we can prove this website is better than that one. Those are great decisions, he says. But then there are these other decisions - should we launch the Kindle, should we get into movies - where there is no way rational narrowed down decision making can help us.

He says on those decisions we get the data but then we start brainstorming and we then figure out what our intuition tells us and we defray the risks as much as we can but ultimately we are not afraid to make the big calls because we know you cannot make those decisions in a rational way.

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