“Change is the only constant”, an expression that has become a reality in today’s society, and is impacting our decision-making. As business leaders, we must constantly adapt to new circumstances, which can create uncertainty for corporate governance processes. As a management team, you need to make sure that your team is aligned and ready to reduce uncertainty in decision-making.
To every business decision, there is a layer of uncertainty. Business leaders often lack the time to create a comprehensive framework for sound decision-making. By adopting clear strategic tools within your management team, you will be better equipped to improve your decision-making processes in times of change.
Decision-making affected by internal and external factors
There are several factors that can influence uncertainty within organizations, both external and internal. A striking example of an external factor is the corona pandemic. The world was (and to some degree still is) in a state of constant instability, where all companies were forced to adapt to new market conditions. Markets, industries and, business processes were disrupted, as the economy took unpredictable turns. Additionally, new customer habits, values and, preferences emerged. These were changes that businesses and business leaders had to manage.
How do you meet these challenges as a leader?
In complex situations, you can rely more heavily on your instincts than we do on logic. We face increased risks that the decisions won’t be beneficial to the business in the long run. In order to reduce the uncertainty, you can use strategic management tools to navigate in these situations and prevent yourself from instinctive decisions. But how do you proceed with this approach?
Create a clear picture of your current business situation
It is widely accepted that all business strategies rely on three main components; the current situation, the future state of the business, as well as the roadmap to get to the future state. A key starting point is to identify the current status of the team through a situational analysis. It can provide significant insights to everything from team mindsets and attitudes toward business uncertainties to collective competencies within the team. A situational analysis is a crucial part of the strategic decision-making process and can subsequently provide the foundation for sustainable and long-term decisions. To promote sound decision-making for business leaders in uncertain times, your team can analyse your current business situation. Instincts will be replaced by rational behaviour based on competence.
How can we help?
Governance@Work is designed to help your management team understand your team’s mindset regarding specific corporate governance areas. You can find a link to our knowledge area for corporate governance here. There you can learn more about improving your corporate governance by building a high performance board and management teams.