Posts Tagged ‘decision making’

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3 Traps That Cause CIOs To Make Bad Decisions

Wednesday, August 17th, 2011
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CIOs Often Don't Realize That They've Made A Bad Decision Until It's Too Late!

CIOs Often Don't Realize That They've Made A Bad Decision Until It's Too Late!

How do you make decisions? We’d all like to think that we carefully weight the available evidence and then use our past experiences to make the right decision each time. However, the reality is actually quite different.

As CIOs we are asked to make some very big “bet the company” types of decisions. If we don’t know why we sometimes make bad decisions, it may cause us to hesitate and wait too long before making a decision.

It turns out that there are 3 different reasons why a CIO can end up making a bad decision. We’re going to take a look at each of these hidden decision making traps and show you how to identify them and, even more importantly, how to avoid them…

The Anchoring Trap

John Hammond is a researcher who has looking into why CIOs make bad decisions. His research has revealed that CIOs (along with other decision makers) struggle to make complex decisions.

We’ve developed ways of coping with making the “big” decisions. We use what are called heuristics which are basically little unconscious routines to reach a decision. Normally this works just fine. However, it’s when they don’t work that we run into troubles.

Is the population of the United States greater than 100 million? What is the population of the United States? It turns out that if I had asked you if the population of the United States was 50M in my first question, most of you would have guessed a much lower number in answer to my second question.

The reason that we do this is the same reason that CIOs can make bad decisions: we give way too much weight to the first information that we receive on a topic that we’re going to have to make a decision on. We say that this first blast of information “anchors” our following thoughts on the subject and clouds our judgment.

CIOs can deal with this problem by taking the time to try to view each decision that they have to make from multiple perspectives. Also remain open minded – see the thoughts of others in your organization who may be better positioned to view this issue from a different angle.

The Status-Quo Trap

Let’s all face it: we like things the way that they are. When it comes to making decisions this bias does not go away.

When we have to make a decision, we prefer to choose those options that will keep things pretty much the way that they are as opposed to introducing radical change.

The researchers who have looked into why we fall into the status-quo trap report that this is a deeply engrained part of who we are. We are actively looking for ways to shield our ego from anything that could result in damage to the way that we see ourselves.

In order to overcome this decision making trap, while making a decision CIOs need to remind themselves about what their goals are: what do they really want to accomplish. Sticking with the status quo might be the right way to go, or maybe it isn’t.

Make sure that you don’t allow yourself to be fooled by what you might think your switching costs are. It’s never easy to move from the status quo to something else, but it might not be as hard as you are imagining it to be.

The Sunk-Cost Trap

A sunk cost is something that we’ve spent either time or money (or both) on in the past that we can never hope to get back. The problem that CIOs run into is that once the cost has been realized, it can cloud our future decision making.

Specifically, once we’ve committed ourselves to investing in a project or an employee, we find it much easier to continue to invest in them as opposed to cutting off the flow of funds and / or time.

The reason that we make this kind of mistake is very simple: we don’t want to admit that we made a mistake in the past. By admitting that we made a mistake, we will be publically opening ourselves up to criticism and nobody wants to do that.

In order to avoid falling into this decision making trap, we need to work hard to mentally set aside decisions that we’ve made in the past when we are making new decisions. This is also a great time to find others in the organization who were not involved in the previous decisions and ask for their views.

What All Of This Means For You

An important part of the job of being a CIO is to be able to quickly make the right decision, no matter how big the question is. It turns out that this can be harder to do than we might think: there are three decision making traps that CIOs often fall into.

The three decision making traps that CIOs often fall for include placing too much weight on the first information that they receive, trying to perpetuate the current status quo, and making decisions that justify our past decisions.

Being aware of these decision making traps will allow us to detect when we are starting to fall into them. CIOs will always be asked to make important decisions, we just need to make sure that we are able to make the best decisions possible.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: How do you think that you can make decisions without being influenced by seeking out evidence that supports the way that we currently see the world?

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P.S.: Free subscriptions to The Accidental Successful CIO Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

As a CIO you are going to be called on to make decisions. A lot of decisions. Do you have any thoughts on

Let’s face facts shall we? Cloud computing appears to be the real deal. It can no longer be considered just yet another IT fad. It sure looks like every company will be using cloud based computing resources eventually. Since this appears to be inevitable, what should CIOs be thinking about right now?

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CIOs Need To Learn: Plans = Bad, Decisions = Good

Wednesday, May 18th, 2011
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There's Got To Be A Better Way To Make Strategic Decisions

There's Got To Be A Better Way To Make Strategic Decisions

When you are CIO you will quickly come to dread (or maybe you already do) the annual strategic planning process for the IT department. Talk about choices: mobile devices, privacy issues, cloud computing – who can pack strategic planning for all of these issues into one short period at the beginning of the year – there’s got to be a better way…

Why The Way That We Do It Today Is Broken

CIOs know that they have a problem when it comes to strategic planning – it just doesn’t work in most IT departments. What they don’t understand is why it’s broken. Michael Mankins is a consultant who has been studying the way that firms make strategic decisions, and he thinks that he knows where we’re going wrong.

He believes that IT departments are making two fundamental mistakes when it comes to strategic planning. The first is that we treat this type of planning as an annual process. The problem is that issues that need us to make strategic decisions seem to come up all throughout the year, this leaves us unable to make key decisions when we need to.

The other mistake is that all too often we focus on individual IT silos when we make strategic decisions (network, data centers, applications, security, etc.). Instead, we need to be operating at a higher level and looking at what such a decision means for the IT department as a whole.

A Better Way For CIOs To Make Decisions

What is needed is a better way for CIOs and their IT departments to make strategic decisions. In order for this to happen, the way that we go about making these types of decisions needs to be changed.

First, we need to consider strategic decision making to be a separate task from plan making. This means that we will be able to start up a strategic planning session at any time during the year without having to tie it to the overall planning process. Based on the decisions that are made in the strategic planning session, we can then go back and make modifications to our plans. However, by separating these two activities we can allow them to process independently of each other.

When we do strategic planning, we need to make sure that we limit ourselves to dealing with only a few key issues. This means that instead of allowing ourselves to get bogged down in having to step through each of our IT silos, we instead move the discussion up a level and focus on what it means to the IT department as a whole.

Strategic planning does not happen at a single point in time each year – instead we need to be able to do it at any time. By arranging things so that issues can be discussed throughout the year, this will allow the discussions to be able to focus on a more limited number of items and that should help the discussions reach better conclusions.

Finally, we need to make sure that we don’t just do a lot of talking about strategic issues – we need to make real decisions. By clearly defining what will be discussed and keeping the discussion focused on the issue at hand, CIOs can ensure that good discussions result in great decisions that cause real actions to be taken.

What All Of This Means For You

CIOs put a great deal of time and energy in to annual strategy planning sessions; however, the results of these efforts are often ignored. More often than not major strategic decisions are made more off the cuff. In order to change this situation, CIOs need to do away with the limitations of time and vertical IT business units.

Instead, CIOs need to separate the process of making strategic decisions from the planning process. This allows both to continue without being blocked by one another. They need to limit the focus of the strategy planning session in order to ensure that the right decisions can be made. Finally, they need to establish a system so that strategy decisions can be made throughout the year, not just at the beginning.

As IT becomes an ever increasingly important part of every company, CIOs need to reshape the way that their IT department makes strategic decisions. By making the changes that we’ve discussed, CIOs will find that they can make more (and better) strategic decisions throughout the year. This will allow their IT department to do what it was originally designed to do – help the company do more and do it more quickly.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: How many items do you think should be considered during an IT strategic planning meeting?

Click here to get automatic updates when The Accidental Successful CIO Blog is updated.
P.S.: Free subscriptions to The Accidental Successful CIO Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

How long until you end up in jail? They say that power corrupts and that absolute power corrupts absolutely, so it sure seems as though just about every CIO will eventually become corrupted. How far along that path are you? Would it help if you had a chance to talk to someone who had already screwed up – do you think that maybe what they’d have to say might cause you to sit up, take notice, and stop doing bad things and start doing the right things?

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4 Ways That CIOs Can Start To Make Better Decisions

Wednesday, May 11th, 2011
Image Credit CIOs Need A Tool To Help Them Make Better Decisions

CIOs Need A Tool To Help Them Make Better Decisions

An important part of the job of being a CIO is the ability to make good decisions. Lots of good decisions. In fact, the ability to make more good decisions than bad decisions is arguably what allows a CIO to keep his / her job. Now the only problem is that it’s really, really hard to make good decisions all the time. To help you do a better job of this, I’m going to share with you four decision making tools that will help you every time you have to make a decision.

A New Way Of Making Decisions

CIOs need a new way to make correct decisions. Our ultimate goal should be to find ways to make the right decision more often than not. One way to do this is to adopt the “evidence based decision making” approach. This form of decision making rejects using gut feels and relying on past limited personal experience and instead is based on evidence and logic.

The problem that most CIOs run into when they try to apply evidence based decision making to their organizations is that it runs counter to the way that things are currently done. Every company has its share of stories about gutsy managers who just knew what the right thing to do was, and did it. What we forget are the stories about the managers who thought that they knew what to do and ended up doing the wrong thing.

Ask For Evidence

CIOs are always being presented with requests for something. More often than not it is for funding, but it can also be for resources or even simply for permission to proceed. You need to take a careful look at each of these requests.

When a CIO is using the evidence-based approach to making decisions, he or she needs to ask the people who are making the request for evidence. They are proposing doing something, they need to be able to prove to you that by taking the action that they want to take, good things will happen. If they can’t prove it, then you need to reject their request.

Look At Logic

When plans are presented to a CIO, they are often backed up with the results of surveys, charts and graphs of data, and lots of other impressive looking results. When presented with this type of information, CIOs need to be on the alert.

All too often in our very busy lives we tend to accept what is presented to us at face value. What we really need to be doing is taking a step back and looking more closely at the underlying data.

The question that you need to be asking yourself is if the results that have been drawn from the data really make sense. Are there any gaps or leaps in logic that really just don’t hold up? You’ll be amazed at how often you’ll find things that don’t support the conclusions that have been reached. When this happens, you need to send the team making the request back to the drawing board.

Experiment & Reward

Not every project is going to succeed. In fact, in the world of IT some projects fail in a spectacular fashion. Things really don’t have to be this way. If CIOs could become better decision-makers then a lot of this could be avoided.

One way to avoid big IT project failures is to encourage small IT project failures. That’s not as bad as it may sound. CIOs need to create an environment in which employees are encouraged to start pilot projects and to try out new ideas using trials before the CIO has to commit to a much larger project.

Many of these smaller projects will fail. This is a good thing – far better to have a small project fail and learn from it than have a much larger project fail and learn nothing. CIOs need to reward IT staff that work on projects that fail – everyone needs to see that there is much to be learned from each project no matter how it turns out.

Find Wisdom

Perhaps the simplest way for CIOs to make better decisions more of the time is for them to have one simple realization. If a CIO can understand that they don’t know it all, that there is still a lot that they need to learn, then they’ll be able to make better decisions.

Far too often CIOs assume that they know everything that they need to know in order to make the right decision. However, the reality is much different – there is no way that they know what they don’t know. Admitting that you don’t know it all is the first step in being open to collecting more information and becoming a CIO who makes better decisions.

What All Of This Means For You

All too often CIOs lose their job because they made bad decisions. It turns out that a big part of being the CIO is the ability to make a lot of good decisions. What is needed are tools that will help a CIO to do a better job of making the correct decision.

Four such tools exist and can be used by CIOs. The first is to demand evidence when a proposal is made. The next is to test the logic behind any proposal that is made. To ensure that the IT department can support the CIO in making good decisions, the CIO needs to allow trial programs to be run. These trials need to be allowed to fail and IT employees have to be rewarded for uncovering information before a bigger investment was made. Finally, CIOs need to teach their staff that they don’t know everything and everyone must respect the fact that there is much more for them to learn.

Although CIOs deal with technology, much of the their day-to-day job has to do with teaching. In order to make better decisions, they need to take the time to teach their IT department how to look at opportunities and how to use the information that is available to make the best decisions each and every time.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: How do you think that a CIO should react to an IT trial program that failed?

Click here to get automatic updates when The Accidental Successful CIO Blog is updated.
P.S.: Free subscriptions to The Accidental Successful CIO Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

When you are CIO you will quickly come to dread (or maybe you already do) the annual strategic planning process for the IT department. Talk about choices: mobile devices, privacy issues, cloud computing – who can pack strategic planning for all of these issues into one short period at the beginning of the year – there’s got to be a better way…

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Posted in decisions | 2 Comments »

It Turns Out That Top-Down Decisions Are What CIOs Need To Make

Wednesday, February 24th, 2010
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To Get An IT Project Done On Time, The CIO Needs To Make Some Decisions

To Get An IT Project Done On Time, The CIO Needs To Make Some Decisions

What’s Wrong With The Way That We Schedule IT Projects?

At the end of the day, an IT department is simply a collection of projects. Some of these projects are short lived (“we’ve got an outage!”) and some are much longer (“let’s install a new ERP solution”). However, it turns out that today’s CIOs have been taking the wrong approach when it comes to scheduling these IT projects and it shows.

All too often once the decision has been made to fund a project, the CIO takes a hands off approach until the project has been completed. What this means in practical terms is that the planning for the project is done by the project team itself. This is where things start to go off-track from the very beginning.

Put yourself for a moment in the shoes of the poor IT planner who has just been handed a large IT project. Sure, you’re excited about the opportunity to manage so much responsibility; however, you also realize that not delivering the project when you say that you will can sink your career. What will you do?

Simple – it’s called “sandbagging” . What you will most likely do will be to add extra time to the project so that when things start to slip, the end date for the project won’t be impacted. Shucks, if you can get away with it you’ll add a lot of extra time to the project so that you just might be able to deliver it early and get the admiration of your bosses for being such a good project manager.

Take this situation and then consider what happens when what the project manger is working on is just one part of a bigger project. Additional time will be added to each of piece of the project and eventually the “time padding” will grow so large that you may have doubled or even tripled the real time that the project is expected to take.

The Power Of Top-Down Planning

The way to solve this is for the CIO to step in and supply some top-down planning. This is where the CIO sets the dates for the project and hands these dates to the project team. Jay Bahel reports that a recent study of 75 large IT projects revealed that the ones that were the most successful were the ones that had their milestone dates set in a top-down fashion by the senior IT leadership.

Why does this type of heavy-handed approach to setting IT project dates work so well? It’s actually pretty simple. By establishing the dates by which work needs to be completed, the CIO is sending a very clear message to the IT team – this is your goal, make it happen. This sets up a sense of urgency within the team and it can go a long way in preventing those internal conflicts that always seem to arise as a team tries to set dates for a project.

The Role Of The Core Team

Yes, yes – I know that things will be different when you become CIO. However, let’s assume for just a moment that even you won’t be able to spend all of your waking hours lording over any single IT project. What can be done to keep things on track and moving towards the milestones that you have laid down?

Creating a so-called “core team” that keeps a watchful eye on an IT project can be a great help in ensuring that the project stays on track. It’s important that this team not be too large – 4-6 senior management leaders should do the trick. The role of this team will be to bring the interests of both IT and the rest of the business to the table in order to manage the project.

The core team is ultimately responsible for making sure that the CIO’s project milestones are met. In order to do this they will have to resolve the conflicts that arise during the project as well as ensuring that the project team is able to interface with the rest of the business in order to complete project tasks.

What All Of This Means For You

Moving to a top-down project planning process will require changes to be made in your IT department. Expect some bruised feelings especially from the project managers – they’ll feel like you are taking some of their power away from them.

Picking the members of the core team that will be watching over the IT project is not something to be done lightly. Not only do they need to bring solid set of skills to the table, but they also need to be able to get along with each other.

Once again, it becomes clear that a CIOs job is not necessarily to actually do things, but rather to make things happen. When it comes to IT projects, the CIO needs to show the rest of the IT department the way by setting timelines and milestones in a top-down fashion…

Do you think that top-down IT planning would help your IT department’s projects to be more successful?

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What We’ll Be Talking About Next Time

I believe that one of the reasons that it is so hard for a CIO to get the IT department to align with the rest of the business is that finding the correct opportunities where alignment is possible can be a big challenge. Well I’ve got some good news for you: it looks like such an opportunity is getting ready to show up and it’s called XBRL…

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Posted in IT project | 5 Comments »

Faux Market Secrets: How CIOs Capture Innovation

Monday, July 13th, 2009
CIOs Can Use Faux Markets To Identify Innovative Ideas

CIOs Can Use Faux Markets To Identify Innovative Ideas

So picture this: you’re a CIO and you desperately want to be seen by the rest of the C-level executives as something more than a simple cost center. What to do? If only there was some way that you could tap into all of that incredible creative energy that we all know lives in the IT department.

If you could harness that energy and apply it to innovative projects, you’d be a company hero. Guess what? The power of Faux Markets is exactly what you need to do this…

What Is A Faux Market?

You know that things are getting fancy when we start using French words! A Faux Market is simply a term that refers to using simulated market forces to make a decision. Perhaps an example would show what I mean. A good case study would be GE Research.

Back in 2005 GE Research had a problem. They had too many product ideas that had been submitted and only $50,000 to spend on investigating them. Clearly they need to make some hard decisions as to which ones they would persure.

The way they picked which projects to work on was by using a faux market. They had their 85 employees spend three weeks buying and selling any one of 62 proposed projects. At the end of the three weeks, GE ended up with a  prioritized list of the top projects that its employees thought had the most value. The project that won was an machine intelligence algorithm that a researcher had proposed but which had not yet traveled through the normal management bureaucracy.

Why Use Faux Markets?

All too often IT departments have a bewildering array of possible projects, technologies, or directions that the department can choose. Sometimes senior management will huddle and make a decision, sometimes no decision gets made. Faux markets offer an alternative.

A faux market tool allows a firm to quickly sort though large numbers of projects or proposals in order to attempt find those that will provide the most bang for the buck. Firms believe that this approach offers them the best chance of finding the next blockbuster product or solution.

Not A Silver Bullet

Faux markets can be a big help; however, as with everything else they do have their drawbacks. One such drawback is the that the voting process does not provide much insight - there may be no penalty for backing a bad idea. Just because a proposal is popular does not necessarily guarantee commercial success.

Final Thoughts

Using faux market tools to quickly sort though a large stack of ideas can provide IT departments with a way to identify innovative ideas no matter where they come from. However, a group vote alone isn’t enough in most cases.

A two step process where voting is initially used to narrow a large list down into a more manageable list of less than 100 candidates is a good first step. The next step can be to use a prediction market allow employees to buy and sell the candidates in order to see which ones go up in value. This will reveal the true winning ideas and you will have found a way to apply IT to enable the rest of the company to grow quicker, move faster, and do more.

Questions For You

How do you process new idea suggestions today? Do you have employees vote on things in order to sort them out? Are these just popularity contests or do they take market factors into consideration? Do you think that faux markets could help you capture more innovative ideas? Leave me a comment and let me know what you are thinking.

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What We’ll Be Talking About Next Time

As a CIO, you’ve got some challenges facing you. You’re managing a diverse and potentially distributed work force of highly skilled and talented IT professionals. You need to find a way to keep them challenged, and yet at the same time enable them to find ways to work together. Have you considered Alternate Reality Games?

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Posted in business opportunity | No Comments »

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