The Organization’s Decision Making Trio
Organizations achieve sustainable success in part by improving their ability for all leaders, and employees to make decisions. In most cases, poor decisions are more of a threat to an organization that other risk events. The success of organizational sustainability depends on the effective use of decision making, knowledge management and sense making. This is the “trio” of skills for operational success.
The organization’s leader needs to understand the effects of uncertainty (i.e. opportunities and threats) to create a decision-making process that helps the organization meet its strategic and operational objectives. Most people in an organization are involved in decision making, so the process must be clearly defined and carefully monitored in organizational sustainability. Decisions are where thinking and doing overlap. For this to happen within an organization, a decision must be logically consistent with the organization’s risk management program and the willingness of the operations to agree they can do what is decided. Decision making involves a defined process and should be handled this way.
Sense making is used to monitor changes in the external operating environment (context). It seeks to make sense of what is happening out there, shy it is taking place, and what it means. Sense making is always performed retrospectively because it is not possible to make sense of events and actions until they have occurred and there has been sufficient time to construct their meaning with respect to decision making in the organization.
All organizations need to develop the capacity to continuously create new knowledge. Knowledge creation involves the management of tacit and explicit knowledge. It works best when there is a process that generates new knowledge by converting tacit knowledge into explicit knowledge. Tacit knowledge is the personal knowledge that members of the organization carry around in their minds. It is hard to formalize or communicate this knowledge to others. It consists of subjective “know-how,” insights and intuitions that are derived from performing tasks over a long period of time. Explicit knowledge is formal knowledge that is easier to transmit between individuals and the organization. It may be codified in the form of work instructions, procedures, operational controls, rules, and other forms.
Organizations that make better, faster, and more effective decisions will have a decided competitive advantage. Decision making uses knowledge to improve its ability to have successful outcomes. It also records what is learned during the decision-making process in the knowledge management system. Sense making takes the information from the scanning of the external operating environment and either stores it in the knowledge management system or tries to make sense of the information and make it available within the actual decision-making process. To embrace organizational sustainability, it is important to build a learning organization. Only embedded, organization-wide activities to identify, create, store, share, and use knowledge can give knowledge management the role it requires to help with decision making and provide part of the foundation necessary for the sustainability journey.
Dr. Bob Pojasek
Sustainability Legend | ESG Reporting & Disclosures | Uncertainty Risk | Pollution Prevention Expert | Process Improvement | Organizational Sustainability Reporting | Sustainable Procurement Professor
Chairman, Education and Research Executive Board (EREB)
VCARE Academy Inc. Managing Director
Center for Corporate Performance & Sustainability
📩 rpojasek@sprynet.com
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