All in all, our decision-making equipment is pretty sound. We don’t follow the lead lemming over a cliff. We can’t be fooled into thinking that a 99-cent lure is a meal. We don’t try to catch car fenders with our teeth. Then again, it wasn’t a dog who launched New Coke. So there are a few bugs – little design flaws of the mind – that can have big consequences.
People are clinically overoptimistic, for instance, assigning zero probability to events that are merely unlikely (such as a massive iceberg in the path of a really big ship). We see “patterns” in the random movements of stocks the way our ancestors saw bears and hunters in the scatterplot of the night sky. We make choices that justify our past choices and then look for data to support them. Not only do we make these errors; we make them reliably.
That’s the good news. Predictable errors are preventable errors. And a few simple techniques, like those below, can help you steer clear of the most common wrong turns. They can get you to your go point, that decisive moment when the essential information has been gathered, the pros and cons weighed, and the time has come to get off the fence.
Decision Making Problem: Authority Is Not Bestowed
Tool: Pursue Responsibility – For some, responsibility is simply bestowed: a princess is handed the kingdom upon the passing of the monarch; a favorite son inherits the family business. For most, however, the authority to make decisions must be actively sought.
Born in the Bronx of an interracial marriage, Jaime Irick thrived from his earliest days by tackling new challenges. In high school, he jumped into sports; at college, he took on social service projects. After graduation, Irick joined the military, qualified as an airborne Ranger, and found himself promoted up the officer ranks. Back in civilian life, he repeatedly asked for larger and stretch assignments. “I’ve never been fully qualified on paper for a job that I’ve had,” he told me, yet he so readily embraced his duties that ever more responsibility came naturally his way.
With a new MBA degree in hand, Irick brashly contacted GE’s chief executive, Jeffrey R. Immelt, with a simple message: “I always wanted to run something.” The personal appeal to the CEO worked. Today, as director of sales in General Electric's Homeland Protection division, Jaime Irick plays a significant role in one of Immelt’s growth businesses.
Madhabi Puri Buch did much the same at ICICI, one of India’s premier banks, which she joined in 1997. With little experience in fairly specialized fields, she tackled a succession of responsibilities, ranging from Internet trading to mortgage financing. Finally, she asked chief executive K. V. Kamath to give her a crack at running the “boiler room” of the bank, the back office that handles the enormous volume of paper, telephone, and electronic data that surges through the bank every day.
“In the past,” she explained, “I had been given assignments where I had no experience. Yet they worked well!” Now she upped the stakes by taking on one of the bank’s least glamorous but most critical operations. Her friends thought she had been “sidelined.” Instead, Buch mastered the essence of still another banking function by taking responsibility for deciding how to remake it.
Decision Making Problem: Unfamiliar Responsibilities
Tool: Appraise the Past – In embracing new responsibilities, past decisions can serve as a natural curriculum for avoiding future mistakes.
Liu Chuanzhi was working at the Chinese Academy of Sciences in 1984 when his country commenced its momentous liberalization. Inspired, Liu formed what would become Legend Group, at first distributing a few foreign personal computers and eventually morphing into China’s largest PC producer.
In 2005, rechristened as Lenovo, the company acquired IBM’s personal computer line, making it the number three PC producer globally. As a young man, Liu had wanted to become a fighter pilot with the People’s Liberation Army. Instead, he became one of the world’s most successful entrepreneurs.
When Liu left the state-sponsored research laboratory in 1984, he knew nothing about how to build an enterprise, so he set about learning to do so by studying his own go points in minute detail. At the end of every week, Liu and his top aides met to review major decisions of the past five days. Many errors were committed, he told me, but the weekly debrief helped “to ensure that we don’t make [the same] mistakes in the future.”
Thanks to the reviews and lessons drawn from them, Lenovo was able to weather China’s economic gyrations while others faltered. By routinely looking back on his decision processes, Liu Chuanzhi constructed his own decision template for going forward.
Hold After-Action Reviews
The after-action review can be monthly, quarterly, yearly, or even daily, depending on the decision-making tempo. In July 2004, I watched a wild land fire crew in action against a raging blaze in Yosemite National Park. Every afternoon, the incident commander, operations director, planning chief, and a dozen responsible firefighters gathered to review the present day’s decisions and decide on the next day’s actions.
At the end of each fact-drenched, disciplined review, a participant would pose four questions: What had been planned for the day? What actually happened during the day? Why did that happen? And what should be done next time? Round-robin style, each crew member addressed each of the topics. Only in that way could firefighters stay on top of a situation that changed constantly with the fire’s ever-changing momentum. The principle: study the past, even if it is only yesterday, and heed its continuing lessons.
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Michael Useem, the author of The Go Point (Compare Prices) 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. Visit The Go Point for more information.