Most research on decision making tends to focus on individuals. This report brings together some of the most accessible evidence from research about group decisions. The report aims to provide simple, practical tips to help organisations become more intelligent collectively and to help groups make better decisions. Based on the stages of the decision-making process, it describes for each of these how to make the most of the capabilities of the group.
The report is easy to work through. It has five sections covering different dimensions of group decision-making (composition, dynamics, decision-making process, the decision rule, and uncertainty). These are easy to follow and digest, and extensive references are provided at the end of each section for those who want further reading.
The descriptions of common pitfalls in group decision-making at the start of each section will resonate with most board members (and probably their executive teams as well!). The practical tactics for overcoming them—drawing on a wide range of disciplines and behavioural insights—will be welcomed.
In our experience, boards rarely make time to discuss and agree how a forthcoming decision will be made. The Nesta report is very clear that the method (decision rule) that will be used to make the final decision should be decided in advance. This ensures everyone involved understands the shape of the process and what their contribution will be. The report offers a decision rule checklist to help this process and explores a range of relevant considerations
The report also offers several other insights applicable to conditions for effective decision-making:
- Diversity in its broadest application is the most important factor in a group’s collective intelligence. Both identity and functional (e.g., different skills and experience level) diversity are necessary for better problem solving and decision making. However, when forming groups with high diversity, time must be taken to establish shared goals and agree communication norms.
- When the external world is uncertain or unstable, traditional sources of expertise often fail, due to overconfidence. This is when novel data and insights gathered through crowdsourcing or collective intelligence methods—capturing frontline experience—are most important. Boards should be wary of the kind of ivory tower decision-making process they and their executive teams are often vulnerable to.
- Group size should be optimised according to the decision type, as well as available resources and time. Increasing the size of a decision-making group is an obvious way to increase access to information and expertise. This is not an argument for increasing board size but more a pointer to how organisations could be better at leveraging the ‘wisdom of the crowd’ for certain tasks (e.g., generating ideas, prioritising options (especially eliminating bad options), and improving forecast accuracy).
- Many, if not most, boards strive for a consensus decision. The report questions whether groups should push themselves to find the optimal solution or group consensus because, in many cases, they don’t need to. There is nothing wrong with ‘satisficing’ which helps to maintain quality under pressure by agreeing in advance what is ‘good enough’.
- A board’s decision-making capability should not be taken for granted. Specific training to enhance decision-making is a worthwhile investment, no matter how experienced individual directors might be or how capable they think they are. Important skills to train for include probabilistic reasoning to improve risk analysis; cognitive flexibility to make full use of available information; and perspective taking to correct for assumptions.
