As a leader in your firm, how do you know when it’s time to decide? And, of course, how do you know what to decide? How do you reach the "The Go Point," as
Michael Useem , director of the Center for Leadership and Change Management at Wharton, puts it?
Now, the entire notion of studying decision-making may seem too great a mountain
to tackle, but I suspect Prof. Useem’s comeback would be along the lines of, "Maybe,
but because decision-making is so important, I had to do it." Here’s
what he in fact says in the Knowledge@Wharton article (downloadable
pdf available here) discussing his work: "it’s striking to me that people
in mid-level office — sometimes in high office — are just not great at knowing
when to pull the trigger, and how to pull it when they do."
So what makes a great decision-maker?
Some would posit that it’s never looking back—Jack Welch, among others, was famous for this. But is that optimal? Useem would say it’s not. Here’s his "executive summary" on good decision-making:
"I think the basic premise that underlies the book — I think it just underlies reality — is that decision making as a skill is learned really by making decisions. Critically though, [it means] looking back on those decisions, to make certain we don’t make the same mistake twice, that you have some sense for what went right as well."
Learn from your personal history, in other words, but don’t be paralyzed by it.
More telling are the examples of real-life decision-makers Useem cites, from his wide-ranging interviews—everyone from front-line firefighters to the CEO of Lenovo, the Chinese PC manufaturer. In fact let’s start with him: Mr. Liu came from a state owned and operated research center where his budget was handed to him every year, until he broke away 22 years ago with a handful of friends to create what is now the world’s third-largest PC maker. Coming out of that cloistered environment, how could he approach decisions on what to manufacture, how to market, who to hire, how to price?
The answer?
He enforced on himself a discipline of learning how to decide. For over 20 years, every Friday afternoon, every week, he sits down with his half dozen or so top direct reports, and they review everything they’ve done that week—which decisions were good and which were awful.
But this discipline needs to be balanced with intuition, doesn’t it? Yes, but here’s the dirty little secret about developing good "intuition:" It in and of itself is the end result of relentless discipline. Useem cites the example of a 21-year-old firefighter arriving with a convoy of trucks at a monstrous wildfire in Alaska, eager to jump off the truck and charge the mountain immediately, who is brought up short by the team leader (all of 29, himself). Here’s what happened:
"Burritt just stood there. He just literally stood there, as if there was plenty of time, nothing going on: the look of total cool. And then he very methodically began to ask people on the fire team: “What’s going on? What do you see? Where’s the fire going? What’s the wind doing? What’s the texture of the ground material?”
"After about 10 or 15 minutes of careful data gathering and a working through, Bob Burritt said, “Okay, here’s what our plan is.” And he said, “I want this team to go over to that fire, this team over here. In 25 minutes you’re going to report back to me. We’ll evolve our thinking and decision making in due course.”
And to this day the 21-year-old, now a senior "Incident Commander" for the US Forest Service, thinks whenever he enters a fire zone: "Burritt."
Which brings us to speed in decision-making. When is it a virtue and when is it a vice? For some people (police, emergency room personnel, bond traders), there’s rarely any such thing as too quick on the draw. For others—Boeing, for example, in the go/no-go decision on whether to commit to the 787 "Dreamliner"—the decision can span years. And should.
Sometimes, indeed, procrastination itself can be a virtue. It’s possible that the situation you’re being asked to decide about will be, in military speak, "OBE" (Overtaken By Events).
Robert Rubin, particularly in his role as Treasury Secretary under Pres. Clinton, was famous for exercising "maximum optionality," which he described thus:
“I don’t want to make decisions that are so big that they’re monumental. I want to make a decision when it has to be decided and I want to get as much input. I want to see how these political forces are arrayed.” He was known for saying: “We’re just not going to make that decision now. We’re going to make it when we have to make it.” That’s a way of saying there is a spectrum."
But how "certain" is certain enough? I’m personally fond of the Marine Corps rule: When you’re 70% confident people are 70% behind you, go.
Useem cites the example of John Chambers at Cisco, who has an extraordinary track record of picking astutely among potential M&A acquisitions. How does he do it? He relies on a handful of key advisors who have zero personal agenda. In his case, the two key people happen to be Larry Carter (CFO of Cisco, and five years older than Chambers, erego not someone aspiring to Chamber’s job), and to John Morgridge, non-executive chair of Cisco and former CEO. Who in your universe is similarly experienced, and similarly devoid of an agenda? Who could be?
And what about bad decisions, because when all is said and done, bad decisions happen to good people? Useem tees up a doozy: In the July 1863 Battle of Gettysburg, Robert E. Lee gave the famous order to a commander named Richard Ewell to "take that [strategic] hill, if practicable." Historians evidently agree it was quite "practicable" for the Confederacy at that moment.
But Ewell equivocated, and ultimately decided not to take the hill, despite urgent arguments to the contrary from colleagues on the scene. Two days later, "failure to take that hill for the Confederacy fed directly into Pickett’s charge, which is what ends Lee’s campaign in Pennsylvania in the North, and it’s the beginning of the end of the Confederacy."
After the war, Ewell admitted "mistakes were made" and he was responsible for "his share." One historian, in fact, described it this way: “In the moments when Richard Ewell just stood there, some of the most consequential seconds in American history were ticking off. And he did nothing.”
The moral? When it is time to decide, be prepared.
Summing up? Sure, I’ll take this shot at it:
- As with many things, you learn to become a better decision-maker by making lots of decisions. Practice, in other words. Just temember, as our friend Mr. Liu at Lenovo exemplifies, to revisit them periodically to see whether they were any good. Did you hit the notes?
- Pay scrupulous attention to when to decide: Too soon is too uncertain, too late is too much missed opportunity. The "70%/70%" rule seems about right to me.
- Gather your trusted, unbiased, raw facts advisors, and listen hard.
- When in doubt, adopt a "bias for action."
