CFOs and decision-making fatigue: A whirlwind of implications

Finance leaders, charged with driving strategic decisions and unlocking enterprise growth, have confronted a series of major disruptions. The COVID-19 pandemic may have subsided, but CFOs continue to grapple with geopolitical risks, high inflation and borrowing costs, and supply chain disruptions.

Navigating these obstacles—while still keeping the business on course to meet its strategic goals—has expanded the CFO’s role. The emergence of new technology has also widened the breadth of their responsibilities, making their jobs even more complex and critical, as depicted in this year’s CFO Agenda. Facing a fast-burning platform, speed matters. And the stakes can be high.

Michael Roberto, trustee professor at Bryant University and a frequent speaker at Deloitte LLP’s Next Generation CFO Academy, has seen what can happen in this scenario: indecision. He’s watched executives fail to respond quickly enough to what’s playing out in front of them. “I’m continually struck by how many managers tell me, ‘It took us too long to make some key decisions. And by the time we did, we’d lost ground or fallen significantly behind.’”

Roberto recently interviewed 35 senior executives and surveyed over 200 of them as part of his ongoing research into indecision. He spoke with the CFO Insights team about how data can actually make decisions harder, why ‘pain avoidance’ can lead to indecision, what CFOs can learn from college quarterbacks, and more. Here’s a sneak peek into his interview.

Q: With the availability of technologies (like AI and machine learning), shouldn’t effective decision-making be easier than ever?
Roberto: Yes, we have more data at our fingertips than ever before. But it can be overwhelming. Executives can end up wallowing in it, saying, ‘Why don’t we do a little more analysis?’ or ‘Can’t we look at this a different way?’ They can go deeper down that rabbit hole than ever before, trying to get more certainty about the decision they are going to make. I’m not against analytics or data, but executive teams can end up investing all this time in belaboring their decisions.

Q: So, are we at the point where there is simply too much data available to CFOs?
Roberto: Analysis paralysis is a big driver of indecision. One executive told me, ‘As an undergrad in economics and an MBA student, I succeeded by being super analytical. When I became a manager, I still thought there was a right answer.’ But now you can go forever looking for the perfect answer. And there’s not necessarily a right answer in strategy; there’s the best answer, given the information you have. I hear a lot about the fear of failure driving decisions. Management teams can get indecisive because they feel as though there’s no tolerance for an experiment or a pilot that does not work well.

Q: How much does mindset play into a lack of decisiveness?
Roberto: Several executives will engage in what I label ‘pain avoidance.’ They know exactly what to do, but they also know that the execution of that decision may lead to a challenging technology implementation, or involve really tough personnel decisions. Knowing the execution of the decision would be difficult, executives will have meetings where they expressly make no decision—or delay it as long as they possibly can.

Continue reading our conversation with Michael Roberto—and uncover tips for how to develop your organization’s “decision intelligence”—by reading our full article below.