Following Eisenhardt, Judge/Miller define decision duration as
“the time between the first reference to deliberate action such as scheduling a meeting or seeking information, to the time in which a commitment to act was made.” Because decision duration reflects the slowness of a decision, we reversed the scale for our dependent variable to reflect decision speed. This reverse scaling was achieved by subtracting decision duration from 25, yielding a more intuitive metric for decision speed in which high values reflect fast decisions and low values, slow decisions.”
The notion of perceived decision speed and quantitatively measured duration is also supported by Wally/Baum, who derives primary information about the pace of decision-making from scenario responses. The specific measures used by Wally/Baum are as follows:
“Decision-making pace 1: The respondents recorded the number of days that their firms would most likely take to reach decisions on each of six events as they occurred. This measure captured the perceived speed of decision-making. Decision-making pace 2: We asked three 5-point Likert questions about the respondents’ firms’ decision-making speed. (…) An index of responses on the second pace measure ( = .70) served to validate the primary measure of organizational decision speed.”
Interest in studying the speed at which strategic decision-making occurs emerged from the work of Bourgeois/Eisenhardt, who inductively pointed to an association between firm performance and speedy decision-making. The fact that decision speed is a more recent field of research with a lower number of contributions in the field is pointed out by Eisenhardt:
“There has been little research on fast strategic decision-making.”
Referring to Bluedorn/Denhardt, Judge/Miller quote similarly:
“Despite the growing recognition of the importance of the speed with which decisions are made, little is known about this phenomenon.”
In the Eisenhardt’s observation and analysis of high velocity environments has put special emphasis on the following influencing factors of decision speed:
- planning and real-time information,
- timing and number of alternatives,
- power and the role of counselors,
- conflict and resolution and
- fragments and decision integration.
(1) Planning and real-time information:
Eisenhardt’s empirical evidence suggests that fast decision makers use more, not less information, than do slow decision makers. This finding contradicts prior research, which suggests that the consideration of few alternatives, obtaining inputs from few sources of expertise and limited analysis shortens the strategic decision process
This traditional perspective, which argues that the greater the use of information, the slower the strategic decision process also argues that comprehensiveness slows the strategic decision-making process. As opposed to this prior stream of research, Eisenhardt proposed that the greater the use of real-time information, i.e. information about a firm’s operations or environment for which there is little or no time lag between occurrence and reporting, the greater the speed of the strategic decision process. Eisenhardt assumes three reasons why the use of real-time information quickens the pace of strategic decisionmaking: The first reason lies in the fact that real-time information speeds issue identification, allowing executives to recognize problems and opportunities sooner- The second line of argumentation reasons that managers who attend to real-time information actually develop their intuition, which aids them to react quickly and accurately to changing stimuli in their firm or environment. The third reason claims that frequent review of real-time information develops social routines in a group, needed to respond rapidly when pressing situations arise.
(2) Timing and number of alternatives:
The greater the number of alternatives considered simultaneously, the greater the speed of the strategic decision process. But multiple alternatives are likely to slow the strategic decision process. So ‘multiple alternatives’ as comprehensiveness, which includes being “exhaustive or inclusive in the generation and evaluation of alternatives.”
In addition a similar conclusion can be reached that multiple alternatives accelerate cognitive processing and hence, decision-making speed. Other justifications for this positive correlation include perceiving multiple alternatives as a form of fallback position. If one alternative fails, executives can quickly shift to a new one Additionally, having simultaneous alternatives reduces the ‘escalation of commitment’ to any one option. This implies that decision makers who pursue multiple options have a lower psychological stake in any one alternative and thus, can quickly shift between options if they receive negative information on any alternative.
(3) Power and the role of counselors:
The greater the use of experienced counselors, the greater the speed of the strategic decision process. The fact that political factors influence the pace of decisions has initially been pointed out that resistance by influential people was a leading cause of delay in making strategic decisions. Alternatively, when few executives are involved, a decision process can be rapid. For example autocratic decision-making in situations in which speed is essential. According to this perspective, centralized power quickens decisionmaking. Eisenhardt states two reasons for an experienced counselor to speed decision-making. The first reason is that the counselor speeds up the development of alternatives, providing a quick sounding board for ideas. The second reason is that an experienced counselor supports a team in dealing with the ambiguity of high-stakes in decisionmaking.
(4) Conflict and resolution:
It indicates no pattern linking decision speed to either the general level of conflict within a team or conflict on the decision studied. This finding contradicts the argument that conflict influences the length of a decision process. For example conflict and disagreement creates interruptions in the process. Hence, from their perspective, increasing conflict slows the pace of strategic decisions. So the greater the use of active conflict resolution, the greater the speed of the strategic decision process. It is supported that the fact that an active, induced way of conflict resolution leads to faster decisions than a passive process of decision-making where decisions are forced due to external deadlines and events rather than taken deliberately.
(6)Fragments and decision integration:
The final distinction between slow and fast strategic decision-making lies in the web of relationships among decisions. The greater the integration among decisions, the greater the speed of the strategic decision process. Teams attempting to integrate strategic decisions with one another partly by tactical plans made faster strategic decisions. In contrast, the teams making slower decisions treated decisions as discrete and even disconnected events.
There are two reasons why the integration of decisions leads to faster decision-making. The first reason is that decision integration helps executives to analyze the viability of an alternative more quickly. The second reason is that it helps them to cope with the ambiguity of high-stakes decision-making by providing a better understanding of alternatives and in turn a feeling of competence and control.
Eisenhardt’s findings on influencing factors regarding decision speed can be
summarized by the following quotation:
“The evidence suggests that fast decision makers use more, not less information, than do slow decision makers. They also develop more, not fewer, alternatives. In contrast to current literature, this study found that centralized decision-making is not necessarily fast, but a layered advice process, emphasizing input from experienced counselors, is fast. The findings also indicate that conflict resolution is critical to decision speed, but conflict per se is not. Finally, integration among strategic decisions and between decisions and tactical plans speeds, not slows, decision-making. Such integration helps decision makers cope with the anxiety of high-stakes decision-making.”
It can be stated that the personal determinants of strategic decision speed are the following features:
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Cognitive ability: Level of intellectual capability brought to a decision. This is also referred to as the individual cognitive complexity or informationprocessing skills.
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Intuition: Nonconscious ability to code, sort and access the meaningfulness or relevance of the outcomes of past decisions efficiently.
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Tolerance for risk: High tolerance for risk appears to be associated with high tolerance for ambiguity and a willingness to decide.
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Propensity to act: High energy and activity levels are associated with ambition, energy and decisiveness. Energetic and active executives will perform the intelligence, design and choice activities of decision-making in a highly focused manner.
Morover the structural determinants of strategic decision speed are
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Centralization: This concept refers to the concentration of authority or decision-making power in a firm. The more centralized an organization, the less authority is delegated by top executives. The underlying notion is that autocratic decision-makers make faster decisions in part because they rely less on consultation it is expectes that organizations with concentrated power produce faster strategic decisions because when few people are involved in a decision-making process, little conflict occurs, reducing needs for information sharing and consensus seeking
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Formalization: Wally/Baum’s concept of formalization refers to the extent to which firm policies, job descriptions, organization charts, plans and objective setting systems are articulated explicitly, usually on the basis of written communication. Formalization may slow the first two phases of the rational normative decision-making process, intelligence and design, by encouraging the collection of much data and extremely thorough analyses of alternatives Formalization may also slow the decision-making by encouraging organizational inertia, routine, rule-like behavior patterns that detract from adaptive responsiveness and thereby impede executives’ ability to choose flexibly.
Speed, timing, and number of alternatives:
Faster decision making was associated with more alternatives. How these alternatives are sequenced is crucial to the pace of decision-making. Rapid decisions were characterized by simultaneous consideration of multiple alternatives, and the slower decisions were characterized by sequential consideration of fewer alternatives. Analys alternatives are difficult to assess in isolation e.g.: when one is first looking for a car, look at several cars. Secondly having simultaneous alternatives reduces the escalation of commitment to any one option. It is easier to shift between options. Finally simultaneous alternatives provide a fallback position.
Speed, power & the role of the counselor
No pattern linking decision speed to power concentration. Some autocrats were fast but others were slow. What was important was the prcoess whereby CEOs gathered advice. Fast teams had a two-tier advice process:
first tier: the CEOs sought counsel from all members of the top management team, but in the second tier they focused on obtaining advice from one or two of the firm's most experienced executives. These people were called counselors by Eisenhardt. Slow teams either had no counselor or had a less experienced executive in the counselor role.
Speed, fragments, and decision integration
The final critical difference lies in what she calls the web of relationships among the decisions. Fast teams attempted to integrate strategic decisions with one another and with tactical plans. Slower teams did not try to connect or integrate these strategic decisions.
Decision integration helps executives to analyze the viability of an alternative more quickly. It helps them cope with the ambiguity of high stakes decision making. The development of concrete ties with other major decisions and decision details may alleviate the anxiety that can plague executives as they face high-stakes decisions.
CONCLUSION
How does strategic decision speed link to performance? Faster decision making is associated with better performance. Eisenhardt hypothesizes that slow decision makers learn less. Executives learn by making decisions, but if they make few decisions, as slow decision makers do, they learn very little. The teams making fast decisions engage in behaviours to cope with this anxiety & build confidence. One tactic is to rely on the counsel of experienced executives. Another tactic is to tie together strategic decisions and concerete operating plans. Fourth, the findings link fast decision making with effective performance. These findings suggest a configuration of cognitiv e, political, and emotional processes that are associated with rapid closure on major decisions.
References
George P. Huber: Managerial Decision Making
Thomas L. Staaty: Decision Making for Leader
http://www.unisg.ch
Bourgeois/Eisenhardt, 1988; Eisenhardt, 1989a; Eisenhardt/Bourgeois, 1988
Hickson/Butler/Gray/Mallory/Wilson, 1986
Hickson et al., 1986; Mintzberg et al., 1976
Anderson (1983) and Schwenk (1983)
