The Savvy Director Blog

How much information is enough for a board to make a decision with impact?

The best boards can make decisions without perfect information. Waiting for perfect information often results in a missed opportunity. Analysis paralysis is a description applied to the inability to make a timely decision while waiting for more and more data. I’d like to suggest that it’s just an excuse to procrastinate. (I’ve been there.)

For board directors, the good news is they don’t have to make significant decis...

At its core, a board of directors is the ultimate decision-making body for an organization. The board’s ability to make sound decisions based on consideration of reliable facts, coupled with the good judgment of its individual members, is a key element of organizational success.

That makes it important to understand the factors that lead to good decision-making as well as those that detract from it. One risk to good decision-making is what’s known as decision fatigue. The term refers to the d...

You’ve read the material. You’ve seen the presentation. You’ve listened to management’s request. Now it’s time for the board to make a decision. It’s an important decision, too. You’re expecting a robust discussion.

But the room is quiet. Maybe a couple of directors ask a question or two, just for clarification. Now it looks like the board chair is about to call for a vote.

What’s going on? Groupthink, that’s what. Your board has fallen victim to Groupthink.

We’ve all been there, at one tim...

Accurate thinking is a process that helps us differentiate between relevant and irrelevant facts. It’s an important skill to have whether we’re reviewing board materials, presentations, books, newspapers, or even when watching our favorite political news television channel.

The phrase was coined by success guru Napoleon Hill in the 1930’s. I’m endlessly fascinated by the influence of Hill’s 17 Principles of Personal Achievement that have been read in multiple languages and adapted by thousan...

Here’s a familiar scenario for most board directors. You’re reviewing management reports in preparation for an upcoming board meeting. There’s a report on a just-completed project, or maybe a proposal for a new one. You take a quick look. Ho-hum. Nothing new there. It’s just as you thought – the project was a success and the proposal makes sense.

Maybe you’re right. Or maybe it’s confirmation bias at work.

Confirmation bias has a profound impact on all of us, in terms of how we think and – ...

We all believe that groups make better decisions than individuals. There’s power in numbers, isn’t there? Otherwise, a board of directors might just as well consist of one person.

But is it true? Do groups really make better decisions?

How do groups go about making decisions, anyway? More importantly, how should they be making decisions to improve the odds of achieving the best outcome?

And what is the boardroom reality when it comes to decision-making? Do boards really make decisions? Or h...

Have you noticed that even a board made up of individual creative thinkers can prefer the status quo over change? If you’ve noticed this tendency, what you’re seeing is status quo bias – just another cognitive bias that affects our decision-making.

You know the saying, “If it ain’t broke, don’t fix it.” In other words, if things are working, we’re content to keep them that way. Simply put, status quo bias negatively affects our ability to make decisions – our ingrained preference for stabilit...

There are no HiPPO’s in the boardroom, are there? Yes, there are when HiPPO stands for “Highest Paid Person’s Opinion.”

The HiPPO effect is when the highest paid person’s opinion carries more weight than anybody else’s in the room. That’s because we subconsciously endow highly-paid people with a degree of authority that they don’t necessarily deserve. It’s human nature to believe they are smarter, savvier, and more strategic than the rest of us.

In a boardroom context, the HiPPO is probably...

It’s happened to all of us. You’re at a board meeting involved in a lively discussion. But when you take a moment to step back from the conversation, you realize that the topic is rather trivial. In fact, it doesn’t deserve the time and energy that board members have been pouring into it.

Nevertheless, everyone has an opinion and insists on having their say. The discussion goes on and on, well past the time the relatively unimportant matter should have taken. It seems odd, because a more impo...

Critical thinking is a key skill for board directors. But does that mean a director is expected to be constantly negative, cynical, and hyper-critical?

Not at all.

Critical thinking isn’t about criticizing. It’s about how you approach problems, issues, and arguments. It’s about asking questions like ‘Why?’ or ‘How?’ or ‘What happens if?’ It’s about objectivity, having an open mind, and relying on evidence to understand what’s really going on.

And when your understanding is deeper, your co...