Tough Times, Wise Decisions

In a time when “flattening the curve” requires universal participation, when, how, and who to re-open requires tough decisions. Wise business leadership is needed more than ever before.

There’s no shortage of talks, posts, or tweets on our need for wise, capable leaders who pursue the common good; who balance big-picture thinking with next-step management. But predicting outcomes becomes much more complex as systems and people interact in unexpected ways.

We need our leaders to do the right things, in the right way, against the right time frame. The real stand outs can navigate intrinsically complex circumstances, make smart decisions, and inspire others to do the same.

Two challenges commonly surface in complex circumstances: unintended consequences and difficulties in making sense of a situation. Unfortunately, many leaders tend to overestimate the amount of information they can process: humans have cognitive limits. More than ever, leaders need input from others to grasp complexities and determine how they affect other parts of the system.

A leader must be able to keep the big picture in clear view, while attending to all of the small executions that will lead to the right outcomes. They need wisdom.

Wise Leadership Defined

Socrates believed that wisdom is a virtue, acquired by hard work: experience, error, intuition, detachment and critical thinking; and that the truly wise recognize their own limits of knowledge.

Wisdom is also a paradox: based partly on knowledge, shaped by uncertainty; action and inaction; emotion and detachment. Wise leadership reconciles seeming contradictions as part of the process of wisdom, for wisdom is a process.

“Wisdom is not just about maximizing one’s own or someone else’s self-interest, but about balancing various self-interests with the interests of others and of other aspects of the context in which one lives, such as one’s city or country or environment or even God.” ~ Robert J. Sternberg, Wisdom, Intelligence, and Creativity Synthesized (Cambridge University Press, 2007)

Wise leadership is a combination of elements, including intelligence, self-awareness, acknowledgement of personal limitations, humility, patience, and emotional resilience. To put it in the simplest terms, wise leadership is the ability to think and act using knowledge, experience and understanding, to make good decisions.

According to Sternberg, “leaders are much more likely to fail because they are unwise or unethical than because they lack knowledge of general intelligence.”

Six Abilities

Professors Ikujiro Nonaka and Hirotaka Takeuchi shared their research on the six abilities of wise leaders in the Harvard Business Review article, “The Big Idea: The Wise Leader.” They found that it isn’t just uncertainty that challenges leaders, rather, it’s leading people to adhere to values and ethics. They point to six essential abilities:

1. In complex situations, wise leaders quickly perceive the true nature of the reality; the underlying issues for people, things, and events taking place now, and projections for future consequences. Their explicit and tacit knowledge (honed by a love for learning), perspective (broadened by open-mindedness and their habit of asking “why?”), and creativity allows them to envision a future before jumping to decisions.
2. Wise leaders practice moral discernment: they make decisions about what is good for the organization and society, and act on it. They strengthen their discernment with:
   1. Experience (especially facing adversity and overcoming failure)
   2. Adherence to values/ethics (self-awareness of values and ethics, which are modeled in business and organizations)
   3. Pursuit of excellence (not to be confused with perfection)
   4. Learning (a breadth and depth of subjects, including history, philosophy, literature, and fine arts.)
3. They enable symbiotic learning by providing opportunities to interact closely with—and between—others; wise leaders develop relationships, and the spaces to nurture them. Today, that may mean more virtual meetings and the development of new groups, teams, and networks, as well as technology skills.
4. Wise leaders use applicable metaphors and stories to communicate their experience and understanding into tacit knowledge that all can understand. Great stories describe relationships (between people, places, times, or things). They don’t have to be long, but the right story, at the right time, can call others to take right action.
5. They nurture wisdom in others through mentoring, apprenticeship, and distributed leadership. Mentoring focuses on learning to achieve competence, proficiency, skill, know-how and wisdom. Apprenticeship focuses on sharing experiences, contexts, and time.
6. Wise leaders bring people together and inspire them to take action. They understand and consider differing points of view, emotions, needs, and the element of timing. Wise leaders embrace the paradoxes of life; they refrain from either/or thinking, and cultivate a both/and mindset.

The Process for Tough Decisions

Simple systems are extremely predictable and require few interactions or interventions. And while complicated systems have many moving parts, their operations are predictable; there are clear patterns. Complex systems may operate in patterned ways, but their interactions are continually changing.

Wise leaders continuously assess and adjust for new data, as well as all of the possible consequences of a change:

1. Identify subject matter experts and resources. A wise leader relies on data, but also ensures that the right questions are being asked, to (and by) the right experts.
2. Collect accurate, verifiable, and reliable information. Recognize interests, goals, and values to create context for the data.
3. Evaluate and annotate findings. While you may be tempted to discard information that may be unreliable, incomplete, biased, etc., save the information with notations for future reference.
4. Create time and space to reflect on the information. Examine it with your mind, gut, and heart, by asking yourself:
   • “What is socially just?”
   • “Who stands to benefit the most?”
   • “Who is most at risk?”
   • “How will this impact the future?”
   • “What are the impacts today?”
   • “What is the right thing to do, right now?”

Sometimes, taking more time before acting is the wisest thing to do. To be sure, action is important. But give yourself time to embrace the elements that make you wise, as well as the paradoxes:

1. Recognize your limits, and ask for help when needed. Act with humility and courage.
2. Acknowledge feelings, practice temperance in expression, and strengthen your emotional resilience.
3. Allow time and space for others, as well as self. Be patient, forgiving, and show mercy.
4. Practice compassion and fairness. View situations as they are, with a dispassionate, clear eye of human nature.
5. Demonstrate your ability to cope with adversity: be brave, persistent, and act with integrity.
6. Embrace ambiguity, practice gratitude, and cultivate hope that more shall be revealed.

The Wisdom of the Crowd

If you have wise subject matter experts, research indicates that their aggregate knowledge will exceed the knowledge of any one individual expert. But there’s a caveat: diversity and process.

As researchers from Duke University found, averaging cancels error when the crowd wisdom is based on two factors:

1. Diversity: your subject matter experts should bring diverse perspectives. For example, one expert may focus on short-term goals, and the other on long-term goals.
2. Process: your subject matter experts should not be influenced by others before sharing their findings.

When making decisions, you’ll also need to decide how much weight you give to their wisdom, as well as yours. This also comes in to play when you can’t find enough qualified subject matter experts, or when there simply isn’t a model or path to follow. That’s when wise leadership is put to the test.

In highly complex systems, when there is information overload or not enough pertinent data and analysis, how do you make high-stakes decisions?

In October 2019, Harvard Business Review author Laura Huang published an interesting article on the topic. According to Huang, it’s important to recognize two factors: what is the level of unknowability, and what is the context.

When there is just not enough information (when the level of unknowability is high), and, when there is not a proven model or schema (when there is not a map or context), you’ll need to use your inner wisdom.

Wisdom of the Inner Crowd

Researchers recently shared their findings on how the wisdom of the inner crowd can boost accuracy of confidence judgments.

“Analytical and simulation results show that irrespective of the type of item, averaging consistently improves confidence judgments, but maximizing is risky…our results suggest that averaging—due to its robustness—should be the default strategy to harness one’s conflicting confidence judgments.” ~ Litvinova, A., Herzog, S. M., Kall, A. A., Pleskac, T. J., & Hertwig, R. “How the ‘wisdom of the crowd’ can boost accuracy of confidence judgments,” Decision, February 2020

These finding suggest that similar to the wisdom of the crowd, averaging yields better results. Of course, navigating through a pandemic is new for most leaders. But, wise leaders are keen observers, have learned how to recognize patterns, and rely on mental models. They challenge themselves to make tough appraisals and learn from the consequences. When it comes time to reflect on the information they’ve gathered and analyzed, they apply the wisdom of the inner crowd.

Wise Leadership and Emodiversity

Are you experiencing brain fog? Or, maybe it’s a combination of brain fog, pierced by a wide range of emotions. This is no surprise; stress can wreak havoc on our cognition and emotions. But take heart: wise leaders benefit from emodiversity.

In the May 2019 issue of the Journal of Experimental Psychology, researchers published their findings on emotions and wise reasoning. In the past, theories suggested that the downregulation of emotion may lead to better decision making. But new research finds that recognizing and balancing emotions stimulates insights, and better reasoning.

Emotional awareness is key. Knowing what you feel, and how often you experience the feeling, may be more effective than knowing why.

A Wise Leadership Journal

If you aren’t already, keep a journal. Give yourself permission to write your thoughts and feelings for a minimum of five minutes, without any editing: no grammar, spelling, or content corrections. Allow yourself to go longer, if needed.

A journal will also allow you to track your inner crowd. As Dan Ciampa wrote in Harvard Business Review, “The More Senior Your Job Title, the More You Need to Keep a Journal” (July, 2017), learning what is important and what lessons should be learned happens after the fact. It allows for more meaningful, and productive, exploration of alternative solutions.

The Balance of Positive and Negative Emotions

Wise leaders understand that both positive and negative emotions work in the decision making process. Positive emotions open us; they expand our social, physical and cognitive resources. Negative emotions serve to limit our thoughts and behaviors; they help us to focus and act more decisively in times of stress or crisis. But an imbalance can sap our energy and lead to brain fog.

Research conducted by organizational psychologist Marcial Losada, PhD, along with psychologist Barbara Fredrickson, PhD, finds that a 3:1 positivity-to-negativity ratio is ideal for optimal functioning. Wise leaders track their ratio, and when needed, increase positive moments.

To reduce the impact of negative moments, practice mindfulness meditation; observe your thoughts without judgment. If you are getting caught up in negative thinking, try these tips suggested in Fredrickson’s book, Positivity: Groundbreaking Research Reveals How to Embrace the Hidden Strength of Positive Emotions, Overcome Negativity and Thrive (Crown Archetype, 2009):

1. Recognize and counter negative thinking habits (always/never, most/least, internal/external).
2. Distract yourself from rumination.
3. Practice mindfulness (observe without judgment).
4. Limit your exposure to bad news streams.
5. Avoid gossip and sarcasm, and increase positive feedback to others.
6. Practice gratitude, and smile more.

Wise leadership envisions the best possible future for everyone. As Stephen S. Hall writes in Wisdom (Random House, 2010),

“In an age of reason, thought will seem like wisdom’s most esteemed companion. In an age of sentiment, emotion will seem like the wisest guide. But when human survival is paramount, social practicality and science are likelier to lead us through to better times.”