The 7 Habits of Highly Effective Decision Makers

Habit 2: actively manage knowledge

Genesis Management Consulting Limited

“Improving lives through better decisions”

The underlying purpose of the series is …

… about helping you to improve people’s lives

by helping you to make better decisions!

The introductory slide show gave us an overview…

found at The 7 habits Overview

The decision ring of influence

reminding us that strategic decisions

have a far-reaching impact

1. get the basics right 2. actively manage knowledge 3. communicate visually and verbally 4. prioritize ethical implications 5. embrace complexity 6. “think like a shrink” 7. use tools and technologies

and summarized the 7 habits of highly effective decision makers

Where organizations can - and do - get the basics wrong

in the first habit we looked at:

What actions can be taken to get it right

How getting the basics right involves answering six key questions

the common knowledge management traps

in the second habit we look at:

some of the behavioral challenges and some of the tools available

how to improve decisions through effective knowledge management.

common knowledge-related traps

more than 60%* of respondents categorized knowledge management as either “very poor” or

“could do better”

(* 2010 Genesis global survey)

what are the common errors?

insufficient time

failure to deal with complexity

too much reliance on financial data

unfocused data collection

Untested assumptions

No insights

Knowledge not captured

common knowledge-related traps

Bias and misperceptions

even our in-house IT systems can be frustrating

unavailable data unusable data

decision information cuts across processes and functions

so how can we be more effective?

effective decision makers see knowledge management as a process to be dealt with proactively

insights information capture

with two objectives:

to capture the decision making process

• learn and improve

• re-play decision

• test assumptions

• explore options

to support the decision making process

• sense the future

• support intuition

• generate insights

• establish the facts

knowledge management process

Knowledge drivers define

requirements

Data is processed to yield insights

Knowledge management system captures the data,

knowledge and process

but also …

can be facilitated by the right tools but also hindered by behavioral problems

behavioral problems the right

tools

insights information capture

actively managing knowledge

behavioral problems the right

tools

insights information capture

this slide show will consider each of the elements of active knowledge

management

knowledge has to be improved, challenged, and increased constantly, or it vanishes

behavioral problems the right

tools

insights information capture

knowledge drivers define

the information requirements

the knowledge management process the inputs:

knowledge drivers: the elements of the decision process drive the information requirements

information requirements

example decision: should we acquire company x?

Driver Example Knowledge sought Objective Double market share By how much will our market share

increase after the acquisition? Situation appraisal

How will it change the competitive dynamics of the market?

Who are all the market players and what will be their possible reactions to our takeover?

Option generation

What are the potential terms of the deal?

What are the potential combinations of share swaps, cash, guarantees and debt that could be offered?

3 important questions

what knowledge do we already have in the organization?

what knowledge do we know we don’t know?

what knowledge do we not know we don’t know?

“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don’t know. But there are also unknown unknowns. These are things we do not know we don’t know.”

United States Secretary of Defence Donald Rumsfeld

focused search: use hypotheses

track down the source, verify and capture it.

broad search: use external inputs and creativity

remember from Habit 1…

effective decision makers plan their information gathering ...

not enough too much

unreliable

… and get the balance right

uncertainty reduction? credibility of

source? impact on outcome?

effective decision makers measure

the cost of obtaining information against

the value of that information

"There's no such thing as knowledge management; there are only knowledgeable people.”

“Information only becomes knowledge in the hands of someone who knows what to do with it.”

Drucker

the knowledge management process the system:

the knowledge management

system captures the data, knowledge

and process behavioral problems the right

tools

insights information capture

all information & knowledge housed in one place: accessible relational scalable secure integrate-able

the knowledge management system captures the data, information and knowledge

the knowledge management system must capture the process

to learn and improve to re-play the decision to test assumptions to explore options

checking the results

of a decision against its

expectations shows

executives what their

strengths are, where they

need to improve,

and where they lack knowledge or information

the knowledge management process the insights:

data is processed to

produce insights

behavioral problems the right

tools

insights information capture

Data

Information what? who? where? when?

Knowledge how?

Insight and wisdom why?

Understanding

Context independent

insight is the ability to grasp the key elements of a complex subject, person or

situation

only with true insight can we find

the creative, disruptive solution that changes the

game!

true insight reveals the system …

its is more than just an aggregation of the underlying knowledge and

information

one method alone will not create insights

data analytics

visualization

systems thinking

crowdsourcing

simulation & games creativity exercises

to obtain insights, engage the right brain

computers can simulate much of the

left-brain activity

logical sequential

calculating …

insights come from the right-brain

holistic context

simultaneous synthesis…

intuition VERSUS

rationality

intuition AND

rationality

“A moment’s insight is sometimes worth a life’s experience”

the knowledge management process behavioral problems

behavioral problems

the best knowledge in the world is still subject to interpretation-bias and

misperceptions (behavioral economics)

recognition of your bias is not enough in itself to prevent you being influenced by them

see habit 6: “think like a shrink” for more on this topic

and misperceptions appear in many forms ….

ease of recall

seeking confirmatory evidence

overconfidence

anchoring

loss aversion sunk cost fallacy

misaligned objectives group-think

champion bias

“A point of view can be a dangerous luxury when

substituted for insight and understanding.”

the knowledge management process the right tools:

the right tools

there are a multitude of tools that can improve the capturing and conversion of knowledge

capture

share

generate insights

manage

analyze

simplify

systems think

model

visualize

simulate

see habit 7: “using tools and technologies” for more on this topic

find the right tool for the task for instance …

one tool cover almost the full spectrum of requirements

others help in a broad area

others are more specific

The Parmenides’ EIDOS software suite is comprehensive.

Consideo covers a wide-range of areas and is excellent in systems modeling and insight generation

however, tools are just tools and need to be applied with experience and intelligence

THOUGHTstream facilitates crowdsourcing and long-distance facilitation

Links to these tools available on the Genesis website on “The 7 Habits” page

or broad-based KM support Laminin Solutions coordinated with Genesis in this “Lean Information” presentation

even if the right tools are just paper, pencils and dialogue!

a simple tool the Genesis decision room: tapping into the power of the brain

a single room … …data, charts, research, presentations, web-sites, flip-

charts, etc are on display…

…to absorb, discuss, debate, draw, challenge in free-flow with the intention of developing insights…

why?

rational, conscious minds have limited capacity

letting knowledge sink into the unconscious and allowing it to develop its own links and patterns taps into our full mental powers

further stimulation through dialogue with others will further enhance the process

the subconscious needs time and

space to

roam

habit 2: actively manage knowledge summary

behavioral problems the right

tools

insights information capture

Check 1: Do you develop a knowledge management plan based on the key steps of the decision process? Check 2: Do you keep all your “knowledge” – data, information, analysis, insights, conclusions and process - in one central repository? Check 3: Do you look for “unknown unknowns” as well as the obvious “known unknowns” Check 4: Are you capitalizing on the tools, techniques and methods that could optimize your decision process? Check 5: Are you really focused on reaching creative insights that can identify innovative solutions? Check 6: Are you working at keeping the behavioral biases from corrupting the decision?

using this slide show … a check-list …

your question: can our

organization improve the

effectiveness of our decision making by

improving our knowledge

management?

through helping your organisation to take better decisions …

… you will make a positive impact on peoples lives!

for more information about the 7 habits series and other decision making support…..

Habit 1: get the basics right

The 7 habits of highly effective decision makers - the overview

Genesis web-site download all the slideshows at our web-site

Genesis Management Consulting Limited

Genesis is a strategy consulting firm with a mission of “improving lives through better decisions”

We do this by building individual and organizational competency through: • Decision coaching • Decision training • Decision support

This presentation is one of a series of articles that discusses decision making in more detail. For queries on in-house presentations or further information, please contact Simon Gifford at sgifford@genesis-esp.com or visit our blog at www.genesismc.co.uk/blog

Editing & graphics: M. Conidaris