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Incremental Decision-Making Process?

As the name suggests, incremental decision making is step-wise. Decision-makers consciously refrain from making drastic changes to policy or organization. Drastic changes may lead to mistrust, lack of buy-in, and ultimately failure of drastic change to be successfully implemented.

Incremental decisions are tempered by compromise with stakeholders, and they tend to focus on short-term conditions rather than long-term desired states.

For example, think about the actions taken by the Federal Reserve and Department of Treasury prior to the $700 billion bailout. We witnessed Fannie Mae and Freddie Mac be taken over; we saw AIG rescued; we saw Bear Stearns demise eased through Fed action. These were piecemeal reaction to the moment; they were not long-term actions. A $700 billion bailout would not have been possible when the first signs of financial trouble on Wall Street emerged. Thus, an incremental approach was needed, ultimately proving inadequate to address the significant problems in the financial sector.

We can continue with this example through additional decision-making lenses.

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