What Do You Do When One of Your Decisions was Wrong?

Decision-Making

Even the most carefully crafted plans sometimes go wrong.  It is bad enough when these decisions are personal; but worse when they are corporate, or organizational. This is because there are more people involved, and the consequences are public and usually costly. There is great potential for embarrassment  and sometimes more serious consequences. Yet, one cannot ignore such a decision even when it has been proven to be erroneous. That is where strategic flexibility comes in.

According to Shimizu and Hitt (2004), strategic flexibility is the ability to “identify major changes in the external environment, quickly commit resources to new courses of action in response to those changes, and recognize and act promptly when it is time to halt or reverse existing resource commitments.”

 I have devised a four step strategy with the acronym: RACE.

Recognize: This step requires that you recognize the mistake and cease making decisions or taking actions that advance the organization in that direction. There may be the temptation to hide this mistake, but this step also requires that you admit this error to parties that need to know.

Assess: You must assess the new situation, including the facts, changes, both internal and external, and get a status report. Failure to stop and take stock could cost more time and expenses later when it becomes obvious that you have missed critical issues during the process.

Chart: Using all the information gathered in the previous step,  plan to chart a new course. This will take into account all previous plans, new contingencies that led to the present situation, making sure to include ongoing monitoring processes that will ensure prompt response to changes in the external environment.
 
Execute: After an experience where a decision has gone wrong, there may be a tendency to be reluctant to take bold steps in new decision making. However, it is necessary to move forward because the work of the organization must continue. Therefore, armed with the confidence that you have done all due diligence, you must boldly execute the new plan.

Strategic Flexibility: Organizational Preparedness to Reverse Ineffective Strategic Decisions
Katsuhiko Shimizu and Michael A. Hitt
The Academy of Management Executive (1993-2005)
Vol. 18, No. 4, Decision-Making and Firm Success (Nov., 2004), pp. 44-59