Most of the time we do a pretty good job when choosing what to do. But the human mind is prone to certain errors in judgment. Read this article from the author of The Go Point to find out what they are and how you can avoid them.
Problem: Analysis Paralysis
Tool: The 70 Percent Solution
Only professors and journalists get paid to say, “On the one hand….” When the rest of us continue to mine and massage the data in pursuit of perfect knowledge — and thus perfect certainty — we are edging toward that clinical condition of decidophobia, fear of facing a go point.
The Marine Corps battles this syndrome with the “70 percent solution.” If you have 70 percent of the information, have done 70 percent of the analysis, and feel 70 percent confident, then move. The logic is simple: a less than ideal action, swiftly executed, stands a chance of success, whereas no action stands no chance. The worst decision is no decision at all.
Analyze, but not overanalyze: that is the message Hewlett-Packard executive vice president Ann Livermore sends to HP’s Technology Solutions Group, a $30-billion-plus business that en-compasses enterprise storage and systems, software and services, and employs 95,000 IT professionals. She places a primacy on “fast enough” — decision making based on sufficient information, not perfect data. GE teaches the same at its retreats. By requiring ranking managers to vote up or down, individually and publicly, on a variety of proposed changes, GE avoids the endless analysis that compromises decision tempo.
Drawing upon his own tumultuous experience as president of Pakistan since 1999, Pervez Musharraf says that while a leader must hear opposing views and engage people in the deliberations, he or she “must never suffer from paralysis.” Moreover, in reaching a decision, rarely are all the data available to be sure of its outcome. “Decisions are two thirds facts and figures,” Musharraf contends, and “one-third a leap in the dark where you don’t have all the facts.” If you increase the short side of the equation, you’re too impulsive, but if you increase the other side, you’re not a leader.
Problem: Mistakes Happen
Tool: Tolerate Them — Once
Short of perfect information and analysis, mistakes are sure to happen. The secret, says Peter Pace, is: “Don’t beat yourself up. If you’re not making mistakes, I don’t need you in my organization,” which in his case includes some 2.4 million uniformed troops. “I want you doing 90 percent right in a big universe rather than 100 percent right in a small universe.”
Charles Elachi directs the Jet Propulsion Laboratory, NASA’s contract agency for unmanned space missions, including the 2004 Spirit and Opportunity Mars landings that found evidence of water between layers of volcanic rock. Given the technical complexity of space flight, Elachi insists that every significant pre-mission decision at JPL receive intense peer appraisal and even outsider review. To ensure disciplined decision making during a mission, he also insists on resilience. “We operate under very heavy pressure,” he says. “Many critical things are riding on our decisions. You have to have nerves of steel. Everyone involved in the project has to keep calm and composed so that we can think clearly about what is happening. Anyone who panics under pressure is just in the wrong business.” To instill those steel-like nerves among his 5,500 employees, Elachi requires less experienced workers to witness JPL veterans making decisions.
Predictably, though, some of JPL’s decisions do go wrong. A mission to Mars in 1998 ended in such a high- profile, costly failure that the mission’s top two managers were ready to resign. Elachi would not let them. “Normally, when a project fails, people look around for someone to blame,” he says, “but if you hang the person who made the mistake, you’ve also lost a lot of experience.” Instead, Elachi told the two managers, “We have spent $400 million training you. You have to learn from those mistakes, and I’m sure you will not repeat them.” Six years later one of the managers was serving as a mission director and the other as a deputy manager for the highly successful Spirit and Opportunity trips to Mars.
Problem: Rush to Judgment
Tool: Preserve Optionality
Many decisions come with looming deadlines: the battle is lost, the market opportunity gone if you do not act in timely fashion. Even without a deadline it can still be tempting to get the hard business of choice making over with. The more one can tamp down the uncertainties and let the pieces fall in place before deciding, however, the more likely one will reach the right go point.
As U.S. treasury secretary from 1995 to 1999, Robert Rubin faced a string of momentous decisions ranging from the bailout of the Mexican peso to China’s application to join the World Trade Organization. Time and again, Rubin elected to keep his “choices open for as long as possible,” a proclivity that his then deputy Lawrence Summers calls “preserving optionality.”
As CEO of Scottish Power, an energy producer with major operations in the United States and United Kingdom including extensive wind farms, Ian Russell makes investment decisions entailing hundreds of millions of dollars at a shot. One of his new power plants alone can guzzle $350 million; wind farms have consumed $3 billion. With so much riding on each go point, a rush to judgment on any one decision could result in a strategic error from which recovery would be extremely costly.
Not surprisingly, Russell takes his time in making such choices. “Let’s be careful,” he warns, and to that end he works to ensure that his team understands the decision options, appreciates their upsides and downsides, and knows what might go wrong with each so that the company does not look “foolish in a year’s time.” For decisions of such scope, Russell counsels waiting three, six, or even twelve months to diminish complexity and reduce uncertainty as much as possible before pulling the trigger.
Reprinted from. Copyright © 2006 by Michael Useem. Published by Crown Business, a division of Random House, Inc.
Michael Useem, the author of The Go Point and The Leadership Moment, is the William and Jacalyn Egan Professor of Management at the Wharton School, University of Pennsylvania, as well as the director of its Center for Leadership and Change Management. Professor Useem takes his students to the ends of the world — the Antarctic, the Andes, and the Himalayas — to learn about their personal and professional go points.