Making Good Decisions Essay

In order to determine whether a leader is making good decisions, Vroom and Jago suggests these three criteria: 1) the quality or rationality of the decision; 2) the acceptance or commitment on the part of subordinates to execute the decision effectively; and 3) the amount of time required to make the decision. In order to achieve a quality and rational decision, knowledge and experience is crucial, which suggests that a leader should have adequate knowledge and skills to make sound decisions. But beside the intellectual and skill aspect of leadership, it is also important that leaders should develop a leadership style that would enable him to penetrate the culture of his organization to initiate his decisions. Time is also an important consideration in the effectiveness of a leader’s decision since it determines whether an action plan or strategy is timely and relevant to the current business situation. Today’s business environment is characterized by rapid, dynamic and ever-changing circumstances that may pose challenges to leaders of an organization especially in their decision-making processes. As observed, by Thenmozi, “an organization environment is not some set of fixed, impersonal forces but rather a complex, dynamic, web at people interacting with each other”. For new and aspiring leaders, new ideas and revolutionary thinking is not enough to create good business decisions but rather, decisions should be based on relevant factors that may significantly affect the organization as a whole. To illustrate this point, consider the leadership experience of Ron Johnson, the former retail executive of Apple who was hired as CEO for J.C. Penney, a department store chain in the U.S.. After being hired as CEO, Johnson launched a flurry of relatively new ideas in a department store context that includes changing the store’s image and advertising approach; taking out the store discounts and promotions; and overhauling the company’s organizational structure. Although Johnson made an impressive career with Apple, the effectiveness of his strategies and decision making did not translate on J.C. Penney, which eventually resulted to failure. Johnson’s case is not isolated. In fact, several new executives have attempted to create revolutionary decisions that resulted in failure just like what happened with HP and its former CEO, Carly Fiorina . In Fiorina’s case, most analysts believe that her decisions backfired because she failed to consider the traditions and culture of her organization. Being new to HP, Fiorina is expected to incorporate fresh ideas to the old and bureaucratic organization. Unfortunately, her decision-making and strategies did not work out primarily because she failed to consider HP’s culture. Evidently, it is difficult to determine whether a leader is making a good decision or not. One particular challenge to the realization of a leader’s plans is the inherent tendency of an organization exhibit resistance to changes . And so, the soundness of a leader’s decision could not be fully evaluated because it was not implemented correctly in due to organizational resistance to change. For the same reason, a leader’s decision would still depend on factors such as knowledge, leadership skill and his implementation and ability to overcome resistance.

Assumptions in a Business Context

Assumptions can be considered as projections, forecasting or something that is believed to be true despite lack of concrete evidence. Quite often, individuals and organizations assume something about the future, which influence their decision-making. Among the common assumptions that may apply in a business context are projected demand or sales for the next month, the emergence of a fad or fashion and other guess or hypothesis about something that would come to pass. The importance of assumptions is that most business decisions are strongly influenced by them and so it is crucial that assumptions should reflect a knowledgeable and intelligent guess in order to mitigate risks. It should be noted that knowledgeable assumptions are triggered by predictable events. It is the cause and effect notion that makes assumption more realistic. However, assumptions should not only be based on a particular event. Often times, successful assumptions are a result of analyzing the ripple effects of several factors that may affect the outcome of a particular event or scenario. For example, let examine the statement that the demand for SUVs would continue because gas prices would continue to rise. The first question is what could be the basis for this assumption? Why are SUVs related with gas prices? Is there a relevant and concrete connection between SUVs and gas prices? Evidently, this assumption is based on the fact that SUVs are fuel efficient vehicles and that people would choose it because of its economic benefits. Unfortunately, not all SUVs are fuel efficient. In fact, most SUVs require more fuel and produce greater amounts of pollutants because they are generally larger and heavier than typical automobiles. Therefore, the assumption that SUVs will continue to be in demand based on fuel price is incomplete and quite irrelevant to the nature of SUVs. Another well-known assumption in the airline industry that is quite interesting to evaluate is the notion that there was a need for an airline that provided no added amenities. In the past, air travel is characterized by excessive amenities such as free meals, freebies and other extras, which also increases the airlines’ fare. Currently, the intense competition between airlines and the demand for a cheaper air travel alternative has drastically changed the way airlines provide services to their customers. As observed by Michael O'Leary, Ryanair’s CEO, “Air travel has gone from being a romantic to being functional”, which reflects the shift from the expensive yet pampered air travel into a low cost air travel that only provides basic amenities. The assumption, therefore, that airlines will operate with less or no added amenities is indeed realistic and should be considered.

References

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