#331 Maximize Your Organization's Growth by Mastering Decision-Making

Most organizations are not set up to really embed learnings, so the next time that learning loop is executed, we're doing it better. And that's why this is that critical differentiator in growth and performance, because organizations who are great at this are those that are growing faster than others. Welcome to Embracing Digital Transformation, where we explore how people, process, policy, and technology drive effective change. This is Dr. Darren, Chief Enterprise Architect, educator, author, and most importantly, your host. On this episode, AI and Organizational Paralysis, Leading Through Uncertainty with Dr. Rebecca Homkus, Professor, Advisor, and High Growth Practitioner. Rebecca, welcome to the show. Thank you so much for having me. Hey, when we first talked, I was really excited because we're going to talk about digital transformation, AI and all that stuff. But you have a unique perspective on it. And I thought, hey, this would be really fun to have you come on the show and give us another angle of what's going on and why organizations are kind of stalled right now. And it's not all AI's fault, which I want to hear this, why it's not. But before we do that, everyone knows on my show that I only have superheroes on the show. And every superhero has a background story. So, Rebecca, what's your background story? No secrets here. No secret identities given away. What's your background story? Oh, thank you so much for asking. Thanks again for having me. So, my name is Rebecca Humkes. I am an adjunct faculty at the London Business School as well as Duke. but I only spend actually a small percentage of my time at the business schools, focused only on our exec side. I spend most of my time working directly with teams and organizations who are focused on high growth strategy. So that's there in companies who want to develop, execute, and innovate on their strategy, which of course increasingly means integrating AI and digital technology into that. So I live between Miami, London, and San Francisco, working with teams in every industry all around the world. And I also spend a bit of time writing more on the economic thought leadership as well as my previous book. So all of those things together. Okay, well, wait. So you're a jet person, right? You're on all the time. I'm on a plane a little too much. A little too much. So any tips and tricks for people who travel a lot? Well, you, as I do, travel quite a lot. And so any of the standard tricks just don't work for people who travel a lot because there's no way you can adjust to the different time zones and do that. So I have three things that work very, very well. So I work out first thing in the morning, every morning, regardless of what time zone you're on. So whatever time you think it is, you know, between 5, 6 a.m., whenever you get up, I work out first thing in the morning. Hydration really does matter. So drinking lots of water and then consistency. So kind of sitting in the same seats on the planes, trying to take the same flight. So you kind of have all of that aspect. So as much as I can manage those three things, first morning workouts, hydration, consistency, I do, and it works for me. Well, there you go. I'm going to have to start trying that, the same seat on the airplane. I mean, so I got a book early. You got a book early, yes. It doesn't have to be the exact same seat, but kind of roughly getting into this. In the rough area, right, right. Bodies like consistency. So then if you travel with someone else, you're going to get frustrated because you're used to your flow in the airport and exactly where to go. So bear that in mind. though yeah no that that that's that's like my wife she goes slow down exactly wait i am i'm here when she travels with me she's like what what's going on i says this is my routine this is how i there you go you know exactly what it is yes that's awesome all right so let let's dive into let's dive into the big the big topic of today which is i see a lot of companies completely paralyzed yes they don't know what to do they've stopped their hiring um they're putting in they're they're falling back from what i'm seeing they're kind of falling back to the way you things used to be pre-covid into these because there seems to be like some security in that i i don't know i are you seeing the same sort of thing yeah i'm certainly seeing a lot of paralysis and And paralysis is not happening just because of what's going on with AI technology. Paralysis is happening because we're facing a lot of uncertainty as leaders right now. You know, whether that's kind of terror policy or geopolitical uncertainty or changing dynamics of your customer base. When we're faced with all of these shifting trends, you know, our brain does not like uncertainty. It gives us a psychological uncertainty, but also this emotional uncertainty is the reason is because we can't predict the future. And that sounds silly, but we can't. So when you're facing all this uncertainty, especially around AI and technology, we're unable to predict. And therefore, we almost convince ourselves the best thing we can do is wait for more certainty until we can predict better. But that's actually exactly what we don't want to do, right? Because we just simply can't predict the future. What really differentiates these high-performing teams right now is they're good at making great decisions, even though they can't make great predictions. They're really focusing on building decision making as a core strategic capability rather than trying to perfect their prediction making. But I'll also say paralysis is also scary for the reason that it's not just you're moving slower than everyone else. Paralysis is scary as a team because growth and performance are a muscle. And if you keep delaying decisions and delaying action until you can get this perfect information, which will never come, you're actually losing that muscle. So we've already spoken about working out. If as a team you're in paralysis for six months, it's like not going to the gym for six months, heading in tomorrow morning, expecting you to get a great workout. You're not. Yeah, it's going to be bad. Yeah. So paralysis really must be avoided. That doesn't mean being chaotic and just trying everything. But again, really thinking about my job as a leader is to build the strategic capability of decision making, even though I can't make perfect predictions. Okay. So, I mean, decision-making, when I think about it, there's good and bad decisions, but that's the outcome of decision-making. You said good decision-making. That doesn't mean that every decision that I make is a good one. Is that right? Or am I seeing it wrong? This is the real paradox of uncertainty is that we cannot judge a decision by the outcome. Because things are shifting around us, we could have made a great decision that doesn't get a great outcome or actually a not great decision, which gets a great outcome. And so one thing that really these high-performing teams do is they've codified what makes a great decision at our team. Like what are the characteristics of a great decision regardless of the outcome that could involve how many team members need to be involved, how quickly you make it, whether or not you need it. That is so counterintuitive, Rebecca. I know. I'm sorry. Because when I make a decision, I want the outcome to be good, right? I mean, that's the reason I'm making the decision. But what you saying is especially today I can necessarily predict that outcome because we can predict the outcome we saying as a team this is how we are going to get better at making great decisions So look, and this is what agility is. Agility is making good decisions quickly aligned with strategy. And so your job is to put the ingredients in place that your team can make these great decisions, even though we can't predict the future, which is things like codifying decision making rights. knowing who makes what decisions about what aspect, knowing who needs to be involved decisions. Sometimes that's centralization. You know, Airbnb centralized all their product management decisions after COVID because that was the best for them at that time. Sometimes that's decentralized in decision making, bringing it much closer to the market or the customer. There's no right or wrong, right? What holds you back as a team is when you don't have clarity of some of these critical elements. Again, what makes a great decision here? okay so i'm sure you have a formula because you have a book right so you have a formula in this so what what are the things that make a good decision what or decision making i because i want to kind of separate the two the decision is the outcome of a good decision making process or team that's highly effective in making decisions right is that am i seeing that right That's what we're trying to dive into. If you think about our starting point, we're facing a lot of uncertainty. Where AI and Gen AI and agentic technology is going, all of these other aspects we've been speaking of. Our job as leaders is to make great decisions, even though we can't make great predictions. And this is what's happening, is that a lot of folks are moving all of their resourcing to building prediction models, trying to get better and better at predicting the future. Whereas what sets these high-performing teams apart is they're boosting decision-making capability. And there's a couple of ingredients that always need to be in place. One is a very clear strategy. And that doesn't mean this high-level vision or mission. It's being very clear, what are we trying to achieve and why? Because if I understand that, I can make better decisions quickly. Another is deciding as a team, how can we codify decision-making rights? How can we make sure what I call these critical, repeatable decisions, we know who owns them and why? and why the ownership is there. And then you've got to decide as a team, and it's going to be different by every team, you know, how much data or time or involvement you need. But if we don't decide and codify what makes a great decision, we can't empower folks across the organization to make great decisions because everyone will be paralyzed that I'm not making a great one. So yes, you want every decision you make to be great, but there's a lot of compounding factors in our current environment. And instead of trying to manage those factors down, we need to get great at executing within that environment. okay so executing great within the environment almost i mean covey talks about um circle of influence and circle of concern yeah so that sounds to me like you're kind of talking a little bit about that is things outside of my influence i can't do anything about so take those basically out of the decision making well they may have a factor but there's nothing i can do about it so I'm not going to dwell on that. Is that part of it? In a way. In part, his strategy is deciding what we want to do. And I call these his strategy stances, is that in traditional growth strategy, we only go into two modes. We wait to analyze the environment, then we take decisions and act. But we actually have this whole opportunity set, right? We can wait and analyze. We can wait and watch as in there's not going to be enough data or historical research. All I can do is watch the environment. And we can wait with a very purposeful mode to be the second mover. So we've actually got a lot of waiting stances, but you also have a lot of acting stances. We can act for results, but we can also act to shape and act to learn, is that there's a lot of shifting trends in the industry that you can act to shape. And this isn't just for the large players. Smaller businesses can act to shape too, but certainly the more scale effects you have, the more you can act to shape. But the most underutilized stance is what I call acting to learn, where I'm probably resourcing. I'm taking purposeful action in the environment to learn more about the environment. And then I'm integrating these learning in and what we call these learning loops. And so part of, again, exceeding in our current environment is not limiting yourself to a few stances, but taking the opportunity of all the ones you have in front of you. all right so that that's very different than what i mean most people make decisions to affect like revenue i mean let's just be really honest that's what most people or or profitability but i like what you said there there's there's different decisions to make or different motivators for the decision stance is is the word there's different stances that you can take and you sometimes if you have identified a couple key trends in the industry and you've articulated your beliefs and these trends and you really need these beliefs to pan out in order for your business model to be successful you want to be doing two additional things you want to be shaping the environment in your favor which could be through regulation or lobbying but also partnerships or other aspects of consumer adoption but you also want to be learning because we want to be moving into this parallel pathing of as i'm executing my strategy and i'm making these decisions we've been speaking about i'm also testing my beliefs and integrating that learning in. This is the ultimate power move. You know, four words I sum it up as, learn faster, grow faster. That is the key differentiator. Organizations that learn faster are going to be organizations that grow faster. So in order to learn, I've got to be open to it. I've got to be open to it. And look, theoretically, every single leader says that they're open to learning and they love learning. Show me a leader who says I don't like learning. But here's the push is many of us talk about being learners, but we really are what we call being a teaching organization in that we have webinars or lunch and learns, or we have book clubs and we send around articles to each other. Those are all great things, right? Listen to podcasts like this, of course, but that's being a teaching organization. Being a learning organization means I have identified these critical learning loops in the market. I am proactively trying to close these learning loops, then in and grinning that learning back into the organization. If you think about this very simple loop, you know, execute, insight, embed. I execute in the market. I get an insight. I embed that learning in the organization. Now, we've had loops forever, the classic John Boyd OODA loop. But this critical loop, and if you think about it, Darren, that opened to you just said, a lot of times we're not. I'm executing in the market, but I'm not really executing looking for insights. I'm just trying to get the plan done. I'm executing to get the results. Or I get an insight, but if it doesn't confirm with something I'm doing, I'm probably ignoring it or I push it to the side. And let's say I'm actually looking for insights and get one. Most organizations are not set up to really embed learnings. So the next time that learning loop is executed, we're doing it better. And that's why this is that critical differentiator in growth and performance, because organizations who are great at this are those that are growing faster than others. That really interesting How do I build that kind of muscle up and what does that look like in in a small organization let say it my production company for the podcast yeah right the the decision making is really easy i don't have to build consensus or anything it's me right yeah um so but how can what does that look like for a company or an individual how do i bet that show me what that because i i i don't think my audience quite can wrap their head around it so a learning loop is a critical repeatable activity for growth so it's anything you do as a team that's critical so it means it really matters it's repeatable you're going to do it more than once and if you do it better you're going to grow faster so for a podcast a learning loop could be on finding new guests. A learning loop could be marketing a new channels, maybe an Instagram or TikTok versus LinkedIn. A learning loop could be launching a new vertical, right? All of these things could be possible learning loops. You say, hey, if we get better at this, which means we do it faster with less friction, we're going to grow faster. It could be converting audience members or audience to feedback would be another example. Identifying two or three of them, again, critical, repeatable matters for growth saying right now here's the friction and here's how long it takes and if i can take something from six months to three or three months to one or one week to two days and i've eliminated a bit of the friction i'm gonna start growing faster so it's that simple again let's repeat you find the most critical repeatable stuff for growth to identify two or three friction points and two or three ways to do it better and then keep trying to go and we're saying this in a general, but this is also the key differentiator for AI as well. So much of what we're building inside organizations in an AI factory are really commoditized. If you really want to start differentiating by using all these all-the-shelf tools, you've got to build up your learning velocity. All right. So I love that. You mentioned one thing that I want to understand a little bit more. The success factor of me doing this for my show would be growth. Yes. Right. For deploying an AI, it might be, I don't know, higher accuracy or lower cost. So that outcome that I'm looking at, because that's an outcome that I'm looking for, doesn't necessarily mean that I'm going to get that outcome if I do this. It just means that I'm able to make that decision quickly. Right. And then at what time do I say, well, that didn't work because my outcome isn't matching my expectation? Do you see where I'm going with that, Rebecca? Yes. If we think about building, if we want to go on the AI aspect, if I'm thinking about building my AI loop where I'm bringing in data, I'm cleaning and normalizing it, I'm building some algorithms. Let's say I want to predict where the next growth channels are going to be. I've got to bring in previous data, clean it, normalize it, build algorithms, get predictions. The challenge with all those steps is they're relatively commoditized. Maybe you have proprietary data that others don't, but most data can be bought, and most companies dramatically overestimate the value of their data. Cleaning and normalizing data are commoditized steps. Algorithm deployment, commoditized steps. Most software is bought off the shelf. So if you want to truly build differentiation, you can maybe have a little bit of a chance in your data, but the key is how many times you go around that loop because it becomes this self-fulfilling flywheel. If our model gives us better predictions, then it's going to get more usage because more team members or if we're selling it, more companies will use it. If we get more usage, we're going to get more data. If we get more data, we can build better and better algos. If we build better algos, we can get even better outcomes. And think about this loop going around. And any individual step can be copied. But if we are better than anyone else at closing that learning loop, again, reducing friction, increasing velocity, we're going to grow faster than others. on. Yeah. Okay. I, I, all right. I get it. I get it better now. I'm a little slow. No, no, no, but all right. So it's the outcomes may come or they may not, but because I have this closed learning embedded learning loop, I can make adjustments to it. Um, and it may be that I abandon it completely. That decision. Maybe. Yeah. And I'm pushing on this because in, In the world of AI, we're getting very, we're spending a lot of time on the feature differentiation. You know, this step versus that step, this software versus that. These will all eventually normalize into commodities. If you want to actually build differentiation as a team, this learning loop is where you need to focus, not just on any individual step and trying to optimize that. Because that's what's unique to your organization. That's what's unique to your organization. That's how you can build kind of this learning advantage. Again, learning advantages happen when there is a steep learning curve that you are able to get up as a team. If I'm trying to watch what you're doing and I'm seeing how well you're doing, I can have more money than you, but I still can't copy it if you've gotten the advantage of the learning that I have not. And this is why I love this notion is that we're thinking everything gets competed away in a world of AI. But this learning velocity, this learning curve advantage is still there if you're really willing to lean in and build a muscle here. I love how you're calling it building a muscle because, like you mentioned before, this paralyzation that we see out there, people just, I don't know what to do, is causing atrophy in the organization. Let's just wait how I know more. We're seeing a little bit less now, perhaps, than I saw a year ago. But certainly, you know, two or three years ago, executives were saying, you know, Rebecca, I don't want to invest in the next blockchain. I don't want to kind of get on the wrong curve. I'm just going to kind of wait and see where this goes. At a high level, we're seeing a lot less of that. Most are leaning in knowing that they need to understand and start transforming with this technology. But our adoption curves are really all over the place, right? But if I think about those who are really differentiating in performance, it's those who are leaning in and building the learning advantage with their AI models, not just focusing on the AI models themselves. Okay. Well, and that's going to be true for any new technology that comes down the pipeline then, right? If I can get these learning models in place. And this is a fundamental principle of building agentic workflows as well. You know, I often, I'm going to use a very basic metaphor, but I often describe when people are frustrated with their first agents. It's like, an agent's like a brand new graduate out of school. Yes, on paper, they're super smart, but they're really not useful to you at all. It's only when you're kind of willing to lean in and patients kind of think of the mentoring they are able to do the training and learning to make the agents useful we've got to have that same mentality we sometimes think things you know out of the box to use a metaphor are going to be useful but they're not there's learning careers advantage in all aspects of the model um which which i i appreciate because i use a lot of agents with my podcast and a lot of a lot of things that i do and yeah they they really cool at first and they uh it that pretty dumb everything looks do that right it's this weird kind of loop of it looks sexy and amazing then you dig in and realize that it actually wasn't very useful or made some silly mistakes and then only after time you'd be able to build on something that truly amplifies your work Right. Yeah. And I'm seeing the exact same thing. So it requires patience, but patience with your foot on the gas. I guess it's the right word, right? Yes. Think about patience. I have patience knowing that I'm going up a steep learning curve, but I've got to be focused on going up the curve. Yes. At what point do I say this is the wrong direction? You know what I mean? Because I'm on this learning curve, all right, and it's not getting quite where I want to go yet, but it's moving. At what point do I say, you know what, major pivot is what I need to make now. How do I determine that? Or do I never hit that? At an individual learning loop level, this will happen when you've essentially gotten the gains from learning. Now, theoretically, of course, there's never no end to learning. You and I both know that. But practically, there's a point where the, you know, optimizing the returns of time are much more focused, bringing it to another area than there. So when I'm not getting these incredible returns by focusing on a learning loop, I assume that that's scaled, for lack of a better word. And I'll move on to some other aspects. I like that. And, you know, at a strategic level, if we really want to get ahead, the difficulty is, let's say I'm executing two or three strategic priorities. I'm working across many learning loops and doing so. Our temptation is when we sit down to review, we ask the question, are we on track to plan? And this is a very tempting, reassuring question. We tend to ask this question. And I sit in many team and board meetings where they start every review with this question. And the challenge with asking this question is it assumes there was only one track. You got it right the first time and the situation hasn't changed. I would love for you to tell me an industry where those variables are true. And so the power question is to ask at the start of a review, has the situation changed, right? Has the situation changed? It opens our mind, and growth mindset's very important in this world, to, hey, we might not have nailed everything the first time. It empowers people on the team to share these critical learnings that we've been speaking about. And sometimes when the situations change, being on track to plan may or may not be a good thing, but we can now discuss what we should be doing in that changing situation. Now, if the situation hasn't changed and we're not on track to plan, then we can assess what is off on our execution. But the key is not to separate strategy and execution, which we unfortunately do sometimes. We've got to always think about these reviews together. I like that because I'm a big ad. This is very agile-like. Yes, yes, yes. but agile typically only sits in the bottom or the middle and and upper management is never involved right i mean they're what they call them they're the chickens and and not the pigs right the pigs are fully committed yeah and you know the executives sit on the outside going yeah you guys aren't running fast enough um so we're going to give it to another team um what you're talking about is very different this is like hey what has changed i i like this i like this approach quite a bit. What I'm trying to focus on is small shifts in how you lead or manage a team that can make big differences in performance. And that's one. Starting a review meeting with has the situation changed versus are we on track to plan because of that reason. Again, a lot of what I do and I love has a lot of principles of agile. The problem is, you know, adopting agile has become a religion almost inside organizations with too many terms, too much structure, and it becomes very frustrating. Right. And there's a lot of it that works very well. And there's a huge disconnect. You have it working very well in teams, but can't scale. You have senior executives claiming they want more agility, but not really understanding how to get it. And so I always go back to the definition of agility is making good decisions quickly aligned with strategy. That is the role of leadership. Have a very clear strategy with clear boundaries and codify decision making rights so teams across the organization can make good decisions quickly aligned with strategy. that's it that's the formula right and that i and that's that's awesome but i it really is i mean i can't i can't this is what's been missing in a lot of organizations i've seen and and some that i've seen successful have been able to pull this off if people want to learn more i mean where they go besides going to london business school of course yes i will be remiss if i don't say you can come visit us on any of our wonderful campuses. But no, please, please connect with me on LinkedIn or just go to the website, RebeccaHumpkes.com. I write a monthly newsletter where I talk about some of these key topics and how they manage for leaders. And you can connect with me and, you know, all these other resources on the website as well. And I'll place this podcast on the website as soon as you put it out as well. Perfect. And you've got a book that's out right now? Yes. And I wrote a book about a year and a half ago called Survive, Reset, Thrive, leading breakthrough growth strategy in volatile times. And it's meant to be an end-to-end playbook that helps you do this. I found the challenge with a lot of business books is A, leaders don't have time to read them anymore. And there's just too many out there that are very dependent on, you do this in a recession, you do this when it's time for innovation, you do this in this time. And that's not the reality we have right now. We can't as leaders wait for the market to tell us when it's a good time to grow. We need to build a playbook that will work in any market. So I tried to bring together the best bits and bobs of all the other frameworks out there, including things like Agile, into one playbook for my very busy leaders. Gotcha. All right. So you can get that on Amazon anywhere, right? You can get that on Amazon or wherever you buy books. All right. That's awesome. Rebecca, thanks for coming on the show. This has been wonderful. Thanks so much for having me. Now I got to go adjust everything that I'm doing, right? Or maybe just work through very small shifts. The small shifts. Yeah. Thank you. Every time I talk to someone, I learn something new. And today, absolutely learned a lot of really cool things that I can use. So thanks again for coming on the show. Thank you for having me. Thanks for listening to Embracing Digital Transformation. 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