Smart Decision Culture: deciding well in organisations

Arriving at smart organisational decisions in an uncertain and complex world is a challenge. The world is becoming more complex and less predictable. Even under volatile conditions, managers at all levels of the hierarchy in organisations are required to make decisions every day, some of them with major consequences.

Complexity is increasing. What one person could once oversee alone now poses difficulties even for teams of experts. Whether a decision was smart often only becomes clear in hindsight. Added to this are the handling of large volumes of data, the unpredictability of sometimes dramatic changes, and the speed and opacity of developments.

There are also obstacles within organisations themselves. Flatter structures carry the risk of chronic upward delegation. In some corporate cultures, the top makes decisions alone and is increasingly overwhelmed as a result. Some decision-makers find the major changes very hard and are outside their comfort zone with the growing ambiguity. Organisational decision-making processes often leave system intelligence out of the picture. And finally there is non-knowledge, in people as in organisations.

To prepare organisations for these challenges, managers and organisational developers need to rethink. The Smart Decision Culture concept, SDC for short, effectively supports this process of change. It is based on the findings of modern systems theory and on the knowledge of neuroscience.

The starting point of the SDC concept is the view of organisations as complex social systems. This abandons the traditional assumption that organisational phenomena can be researched or explained causally.

Organisations are communication systems. The most important communicative event in these systems is the decision. An organisation makes decisions for as long as it exists. When no more decisions are made, it disappears from the scene.

In systems theory terms, one can only speak of a decision when it is followed by corresponding follow-up decisions in line with the initial decision. Many decisions in organisations remain declarations of intent that are not followed by any further decisions.

Contrary to what is often assumed, employees and managers are not part of the communication system. They are what are known as relevant environments. They act, as it were, as players in a game and make an important contribution to organisational communication. The game with its rules exists even without the players. However, it is only brought to life through their participation, that is, through their communicative contribution.

This fact is highly relevant for decision-making processes in organisations. If the knowledge of managers and employees is to be taken into account in decision-making processes, it must be fed into the communication process. If this does not happen, it is of no use to the organisation.

The strong dynamics of their own that organisations develop have a determining effect on managers and their behaviour. If collectively anchored expectations are not met, including by managers, the organisation can react unexpectedly and very strongly. This reaction in turn affects the managers and the way they define their role.

The origin of these reactions is culture. It often exerts a massive, unintended and unconscious influence on the way decisions are made in organisations. Frequently, the result is that no smart decisions are made or can be made. A common cause is that available information does not flow into the decision-making process.

In today’s complex world, it is no longer about making right or wrong decisions. What is needed is smart decisions.

This also changes the task of leadership. It no longer consists in making the right decisions oneself. Leadership ensures that all relevant information available inside and outside the company is fed into the ongoing communication process. How well or poorly this communication process is designed affects the quality of the decisions made.

Culture is like jelly: try to grab it and it slips through your fingers. So what is culture? In the SDC concept, it is understood as an undecidable decision premise. This means rules of the game that are simply there without anyone having explicitly decided on them, and that have a massive effect when they are disregarded.

The more violent the reaction from the system, the more certain one can be that it is a cultural issue. Culture is something that is simply there, that no one can see and that no one has decided. Nevertheless, it has a determining effect on the organisation and on the people in it.

It can be assumed that this informal something called culture, linked to affects and not directed at specific objectives, influences the way decisions are made in companies.

For this reason, the SDC concept does not ignore the demanding topic of corporate culture. It is quite deliberately addressed as well, because this invisible something can considerably support or hinder the making of smart decisions.

Neuroscience sees the human brain as a dynamic, self-organised super-system. It consists of a large number of neurons, that is, nerve cells, linked together in a network via synaptic connections. These neural networks have a massive influence on what happens in the psyche: on readiness to perceive, readiness to act, readiness for emotion, and motivation.

Contrary to earlier assumptions, the brain can change and learn throughout life. The technical term for this is neural plasticity. The brain is understood as an organ that functions in a similar way to a muscle.

If neural networks are activated frequently because a person repeats their typical patterns of perception, thought and behaviour, the networks become stronger over the course of a lifetime. Increasingly well-worn paths emerge: patterns of experience and reaction that run automatically and often unconsciously for their “owner”. The reverse also applies. If a network is no longer used, it slowly breaks down, and the person shows a particular behaviour less often.

In learning, new neural networks are built according to this principle. The more often the new behaviour is performed, the stronger the connection becomes. The less often a behaviour is practised, the weaker the neural connections become. New neural networks therefore lead to changed behaviour and experience.

According to Roth, all memory functions have one thing in common: they are based on changes in the brain that depend on experience and form the basis of learning (Roth, Fühlen, Denken, Handeln, 2003).

New neural networks therefore play an important role in successfully mastering the challenges ahead. The SDC concept uses the brain as a resource- and solution-oriented organ and builds on neuroscientific findings. In this sense, it supports the personal development of managers and up-and-coming managers with regard to the tasks ahead.

The brain has an evaluative function. It identifies behaviours that can harm or benefit psychobiological well-being. A distinction is made between cognitive and affective evaluation systems.

It can be assumed that all experiences with objects and situations, together with the associated feelings and bodily sensations, are stored in the emotional experiential memory. In affective evaluation, the brain draws on these stored experiences. In this way it helps people to behave in a way that allows the greatest possible psychobiological well-being.

The brain therefore relies on stored experiences with situations and objects, the somatic markers. These markers react within milliseconds in the categories “good” or “bad” and trigger a corresponding feeling or bodily sensation. People can therefore experience positive and negative markers.

To build neural networks, the SDC concept makes particular use of positive somatic markers, which are linked to positive affective reactions and pleasant bodily reactions. This draws on resources that the manager already has. On the basis of a self-determined attitude, the manager develops appropriate behaviours from them.

Brain research thus provides insights into what happens in a person’s head when a decision has to be made. The basis of decisions is a completed evaluation. The brain has two ways of evaluating matters: it uses reason, that is, the cognitive evaluation system, or the emotional experiential memory, that is, the affective evaluation system.

The two evaluation systems are fundamentally different. Reason works slowly and thoroughly and follows the law of logic and rationality. The emotional experiential memory reacts comparatively quickly with diffuse feelings.

Ideally, reason and the emotional experiential memory agree. A smart decision is reached when reason, experience and emotions are involved in a balanced way. The SDC concept gives particular consideration to this important aspect.

Anyone who speaks of good leadership instinctively also thinks of management teams. There is often still a conviction that successful corporate management is closely linked to charismatic personalities. However, the complexity of the tasks to be solved makes it necessary to set up working and decision-making teams in organisations in order to reach sound decisions.

Today more than ever, corporate success is associated with good interplay within management. The quality of decisions becomes apparent at two points of observation. The first: was a smart decision made that incorporated all available information, opinions and hypotheses? The second: is the decision supported across the company, and are corresponding follow-up decisions made in line with the initial decision?

Today’s complexity means that many decision-making processes involve conflicting objectives and paradoxes that overwhelm individuals. It is obvious that contradictory opinions and interests often clash in the process.

The prerequisite for good decisions is then to evaluate the different perspectives and, despite all differences of opinion and interests, to arrive at sound decisions. This increases the chance that the decision will be followed by corresponding follow-up decisions in the organisation. Only then can one speak of the decision being implemented.

This process does not run by itself. It needs suitable structures, processes, conventions and clarification of roles, as well as communication behaviour characterised by a balance between push and pull styles. The SDC concept addresses all these aspects.