What is the role of leadership in an organization? Contrary to the traditional image of a sole individual steering the ship, leaders have an obligation to empower everyone in their organization to make sound and ethical decisions in negotiations and other contexts, write University of California, Berkeley, professor Don A. Moore and Harvard Business School professor Max Bazerman in their new book, Decision Leadership: Empowering Others to Make Better Choices.
During a virtual event moderated by Harvard Business School professor Deepak Malhotra, Moore and Bazerman shared principles on leadership and decision-making from their book. “The thing that leaders can most affect are the decisions of the people they lead,” said Bazerman; consequently, “we’re interested in the decisions not just of the leader but of all of those people who are influenced by the leader.”
Don’t Neglect Ethics
“Great leaders create the norms, structures, incentives, and systems that allow their direct reports, organizations, and the broader stakeholders to make decisions that maximize collective benefit through value creation,” Moore and Bazerman write in Decision Leadership. They emphasize the importance of “setting the stage”—creating environments in which people can make good decisions.
As a result, the leadership and decision-making book focuses a great deal on ethics, noted Malhotra during the book talk. He asked if effective leadership thus must embody a certain type of leadership, such as moral leadership or ethical leadership. “Is there such a thing as being a great leader when you’re not thinking about maximizing collective benefit or value creation?” Malhotra asked.
According to Moore, leaders who ignore the ethical implications of their decisions face profound moral, legal, financial, and other risks. “To pretend that business decisions don’t have ethical implications ignores a key dimension on which decisions will be evaluated,” he said. “Effective leadership must consider the wider consequences of any decision,” which is by definition an ethical consideration.
“If we think about some of the failed leaders of the past decade,” added Bazerman, “whether it’s Adam Neumann [of WeWork] or Elizabeth Holmes [of Theranos] or Travis Kalanick [Uber], we see people who dramatically influenced the behavior of others.” Such leaders caused harm in part “because their leadership was so devoid of the ethical dimension,” Bazerman said. In particular, these leaders failed to consider “how to help people make ethical decisions that will make society better off.”
Beyond Changing Hearts and Minds
Decision Leadership offers advice on how leaders can create cultures, environments, norms, and systems that will promote high-quality ethical decisions within their organizations. As such, the authors argue that the real task of leaders is not just to change “hearts and minds”—that is, persuasion—but to fundamentally change what people do. Wise leaders, they argue, design the organization to steer people toward better, more ethical decisions.
“We have nothing against leaders who inspire change by influencing culture, changing how others think and feel,” said Moore. But Decision Leadership offers more useful, less costly tools for prompting better decisions, he said.
Many of these tools draw on the concept of “nudges” offered by Richard H. Thaler and Cass R. Sunstein in their book Nudge: Improving Decisions About Health, Wealth, and Happiness. Nudges steer people toward better decisions rather than relying on persuasion. Moore and Bazerman gave the example of organizations that make it convenient for employees to get vaccinated against Covid-19, such as offering the vaccine at work, instead of trying to convince the skeptical of the benefits of being vaccinated.
Rather than leaving hearts and minds out of the equation, Bazerman said, he and Moore aimed to add a consideration of “strategies that will get the behavior done, even if people’s hearts and minds aren’t changed at all.” In recent decades, the tech industry and many governments have embraced the world of behavioral economics and nudges. Bazerman predicted that in the next decade, more business will make use of these tools to spur wiser decisions. In so doing, organizations will move in the direction of collective leadership and away from a more autocratic leadership style.
Experiments in Leadership and Decision-Making
During the talk, Moore, Bazerman, and Malhotra discussed several proven strategies for prompting better leadership and decision-making in organizations, including creating a culture in which employees feel empowered to speak up when they see something wrong, finding ways to encourage leaders to be more open to accepting advice, and running experiments to test the likely success of a decision rather than basing it on intuition.
Google runs thousands of experiments every year to test new ideas and initiatives, Bazerman noted, but “a lot of companies are behind the curve on thinking systematically about how to learn over time.” That’s a strategic mistake, he said: “If you have a company, and you have an idea about how to change some behavior at your 22 offices across the globe involving millions of customers, why wouldn’t you want to test a new idea on 10,000 people first so that you can find what works, tweak it, and make it better over time?”
What leadership and decision-making strategies have you found to be effective in prompting better decisions in your organization?