Decision Making 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.
Decision Making 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.
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Reprinted from The Go Point: When It’s Time to Decide (Compare Prices). Copyright © 2006 by Michael Useem. Published by Crown Business, a division of Random House, Inc.
