There is a high cost of analysis that is often not considered during decision making. Understanding this cost can make your organization more effective.
In most organizations, analysis and consensus are considered positive actions. No one wants to make a hasty decision or take an important action without having enough information to accurately weigh the pros and cons. However, like most things in life, too much analysis can be a very bad thing .
Most of us have heard of “analysis paralysis,” where a team or leader seems unable to make a decision and constantly revisits available facts and data. This scenario is incredibly frustrating, as teams seemingly make a decision, only to revisit that decision and perhaps reconsider. In dramatic cases, so much reconsideration occurs that team members lose respect for their leader's ability to make a decision and stop putting any real effort into the day's decision for fear it will be quickly revised.
Although this scenario seems obvious, the arrival of total analysis paralysis is not immediate , and there are several opportunities to identify and mitigate analysis paralysis. Constant review of decisions is often the result of not considering the cost of analysis, delay, or additional consensus building. In many situations, taking the beaten path today is a cheaper and quicker approach than making a near-perfect decision several months from now.
Start with price progress
A key element in analysis paralysis is always assuming that more information and more studies are highly valuable. This often does not happen and indecision and delays in analysis are often costly . You may not need to write a check to a supplier, but this delay in investigation could impact critical deadlines or disrupt other projects that depend on your effort.
Just as you would apply appropriate due diligence to a financial decision, use the same diligence when deciding whether to invest in further analysis or delay an important decision.
Understand the “known unknowns”
An early trap many leaders fall into when making a complex decision is spending time trying to get answers to unknown questions. For example, it is impossible to accurately predict outcomes ranging from economic conditions to whether a software vendor will deliver on its promises to release a critical new feature.
If you can identify these “ known unknowns ,” you can begin to plan for whether various outcomes will have a specific consequence and use this information in your decision-making process. For example, if a software vendor fails to release a critical update, could you successfully complete a project without any elements that depend on that feature? Otherwise, you can make the difficult decision today to postpone a project and redeploy valuable resources elsewhere, rather than agonizing over a decision based on factors outside your control.
Consensus can be costly
Many corporate cultures celebrate consensus building and suggest that it is always a good idea to “shop around” whenever you are making an important decision to gather information and reach agreement. Depending on the decision, this can become a never-ending exercise that quickly leads to total analysis paralysis.
Consensus-building can be comforting, which is why many leaders fall into this trap to some extent. Getting input from colleagues and ultimately getting their agreement that you are making the right decision can spread risk and give the impression that the leader was diligent in making the decision.
However, consensus building comes at the expense of progress and many people seek more consensus than necessary. While this may seem innocent, achieving consensus often involves additional analysis, compromise and planning. If you spend several days addressing the concerns of a colleague who is ultimately unaffected by your decision, you have wasted resources unnecessarily.
Furthermore, the benefit of risk sharing in consensus building often means that you will have to provide several guarantees to the people whose consensus you seek. In risk-averse organizations, it is easier for someone to say no than to bless your decision and share the risk of any potential failure. You may spend months assuring multiple individuals that their concerns will be addressed while a competitor passes you by or important deadlines are missed.
Map key metrics
As part of understanding the known unknowns, document how you would change a critical decision if one of those known unknowns were finally understood. Suppose your software vendor suddenly releases a critical update. Suppose you have mapped out which elements of a crucial decision you can change. You can avoid additional analysis or pay any “progress tax” as you have already planned for this scenario .
It's impossible to map out every potential change in external circumstances that could impact your decisions, but identifying, understanding, and mapping out how you will respond to a handful of known critical unknowns will show that you've done your due diligence and save your team from potential analysis paralysis if the external environment changes.
We all know people who seem to struggle with a simple choice, spending hours analyzing a cheap purchase or where to have dinner. In these cases, it is clear that the energy invested does not compensate for the potential negative risk. Yet in many organizations we celebrate the corporate equivalent of spending hours reading reviews of a $5 purchase under the banner of due diligence or consensus. Recognizing the costs of this behavior and ensuring we are spending our time wisely can provide benefits that far outweigh the risks of trying to make a “perfect” decision.
