Insight into Strategic Decision Making (McKinsey)

The most recent issue of McKinsey Quarterly includes (as usual) a lot of great information about strategic decision making, including an interview with three successful senior executives well known for making the “tough calls” that all business owners—large and small—need to make from time to time.

The three executives—Sir Martin Sorrell, CEO of WPP; Randy Komisar, a partner at Kleiner Perkins Caufield & Byers; and Anne Mulcahy, Xerox’s chairman and former CEO—each offer different insight, but combining the three provides a balance picture of what goes into strong strategic decision making.

And the fact that the insight varies is appropriate: no two companies or leaders are alike, so strategic decision making is always going to be a local affair. Yet within that variety, three key insights emerge:

1. Process is important, but don’t become enslaved to it, especially data gathering and decision-by-committee. Process should frame the decision, but should eventually yield to intuition.
2. Gathering and balancing out a diversity of opinion can help a leader get a better picture of the “truth” and, importantly, check their own biases at the door. This “balance of bias” is a tricky art and among the more fashionable (read: elusive) trends in management consulting. But its core inspiration—that diverse views can lead to good decision making—is worth remembering.
3. Sometimes you have to let go: of opportunities, of projects, of entire product lines. Accepting opportunity costs as an inevitable element of strategic decision making can be a big kick in the gut—especially for visionary leaders who have a knack for spotting new opportunities. But it also clears the head, thereby increasing the chance that the opportunity costs you inevitably have to accept are worth paying in the end.

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