Feb 8, 2009
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Making Good Decisions: Tips for Management
In Why Decisions Fail (Berrett-Koehler, 2002), Paul C. Nutt makes the astonishing statement that “failure is four times more likely when decision makers embrace the first idea they come across…” What can cause the manager to make these kinds of choices? What are some ways to prevent these mistakes?
One major contributing factor is familiarity. Most decision makers have substantial experience in both the industry and company culture in which they work. This experience, while very helpful in most regards, tends to create a paradigm within which potential solutions are often limited. The reasons for making familiar choices are often obscure, if not forgotten.
For example, most oil drillers will tell you that you should drill a wildcat well by a river or creek, because the vast majority of big, successful discovery wells are found by flowing water. This statement is true. If asked why, the drillers will offer vague explanations about subsurface geology being made evident by surface water features. This is really not true. The actual reason history shows most successful wells drilled by water is this: when drilling first began, there were few roads capable of dealing with the heavy drilling equipment, and road building added great cost to the effort. It was simply easier for the equipment to be floated in on a barge or two, then set up as close to the water as possible. As a result, the new discovery wells were always close to the water, and worked the best because the oil reserve was un-depleted! Subsequent wells (further from the river) always tapped into the smaller, remaining reserve. Today, many oil speculators spend substantial amounts of money to build a good road across miles of undeveloped land to find a drill site close to a river. The error continues to spread, and has become self-fulfilling. Familiarity often leads to tunnel vision, which in turn leads to tunnel thinking.
Corporate climate, too, can lead to jumping to the first potential solution that comes to mind. Managers are often pressed for quick fixes, either overtly or by a more subtle pressure to repair or perish. When managers are rewarded for “rapid response” above “best practice”, the results can be disastrous.
This latter error can be avoided by diligently applying a decision-making process which values option gathering, investigation of root causes underlying visible problems, and modeling potential solutions to uncover unintended side effects or consequences (e.g. resistance, fallout, and blowback).
Tunnel vision, on the other hand, usually requires some outside help to remedy. While a viewpoint from “outside the box” need not come from outside the organization, it is essential to solicit some ideas form trusted peers who are not as close to (or experienced with) the business at hand as you are. If you have access to other managers within your organization, but not within your specific discipline, this will likely work well.
Managers can arrive at their own “clean sheet of paper”, with a bit of effort. They can research similar problems in diverse industries, searching for solution models they had overlooked. The key to success in this search is to approach the manager’s own organization as a system of task-defined components, and examine the connections between the components rather than the inner workings of each component. This allows the manager to be freed from the industry-specific paradigm that limits the manager’s perspective.
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