Decision making - Examples

My last blog has been a great topic of discussion with some of my close colleagues and friends. We had great debates and even examined some of the decisions made in political/corporate world in the context of what I had written. I am reproducing few of the points here.

Before I dive into the topic, let me state one key point – Decision making is an Art, not a science. If it would have been science, we would have got more than 99% of the decisions right. The fact that the % of decisions that are right is close to 50%-60% (as per research) makes it an Art.

Independent of the frameworks, Decision making is not easy and gets very complicated as we go higher in the Organization primarily for two reasons - one, lack of data to bank upon to make decision and two, the usual timeframe to know the outcome of decision is few years. Hence, CXOs who have the history of making better decisions are usually in demand and get highly paid for this ability.

Before we examine some key decisions in the context of my framework, I’d like to place two disclaimers:

Disclaimer 1: Hindsight, all of us are smart. Hence, examining the decision is not about being judgmental about the person who made the decision but more to learn from the experience.

Disclaimer 2: Leadership is all about having view points and I do understand every one of you may have a view point on the decisions that we are examining which could be different from that of mine. I respect your view points and would definitely like to read them.

George Bush’s decision on Iraq War – One of the points we examined in the preliminary stage of decision making is for Leader to have an open mind. I think here is a case of premeditated decision and looking for data to substantiate it. One of the challenges as we move higher in the organization is that people will say what we want to listen. Having a premeditated mind is one of the biggest pitfalls of a Leader. Independent of the result of the war, here was a case where a decision has been made and rest of the world looked for data to justify it.

Drake fails to patent oil drill – In 1858, Seneca Oil Company sent Edwin Drake to Pennsylvania to investigate ways to extract oil from the ground. Oil bubbled up in the area but the idea of drilling for it seemed far-fetched. Drake met with one failed attempt after another but finally figured out a way to get a cast-iron pile deep into the earth’s surface, and in August 1859, he struck oil 69 feet down - first ever oil drilling. But neither Drake nor Seneca had patented the drill. Other entrepreneurs began using this method to extract oil and due to the boom, the oil prices lowered thus putting Drake out of business. Here is a case of missing strategic implications – looking at the scope and timeframe. Expanding the scope of looking at the invention to enhance the business could have resulted in the idea of patenting it to generate additional revenues. Also, looking at it across time frame could have demonstrated that the invention could result in oil being available in surplus and thus lower prices. Patenting the invention could result in controlled oil extraction thus demanding higher prices. Hence, it is important to examine scope and timeframe for all our decisions.

Ford resisting changing model T, Kodak not embracing changing trends in photography are examples of not involving people closer to work in decision making. Ford model T (1908 – 1927) was the first mass produced automobile and provided America with reliable low-cost transportation. However, when Chrysler and Chevrolet were producing more stylish and technologically advanced cars, Ford continued to stick to model T. This has resulted in Chrysler taking lead over Ford in car sales. Similarly, Kodak could not embrace the changing trends in photography like Instant photography, lower priced film roll and Digital photography. Both in Ford and Kodak, employees have noticed the changing trends but were not involved in decision making process. There are innumerable examples of such situations including the recent failure of Borders and Barnes & Noble to adapt to the internet revolution.

Anna Hazare campaign - Inclusivity is critical for the success of the decision but Leader has to make the final decision. Group decision making has rarely been successful as no single member of the group would take accountability for the decision. Anna Hazare’s campaign against anti-corruption is a classic case of such a situation. While his and the core team’s intent is honorable, failure to bring the core team together and make decisions has resulted in the campaign losing steam from a very formidable position. There is lack of coherence amongst the group and core team members were stating different views. No clear direction was set and this created confusion amongst public in terms of next steps for the campaign. Anna (or a designate) making final call on the campaign (after hearing view points from all stakeholders) could have resulted in much larger success to the anti-corruption movement.

Infosys iRACE – Infosys introduction of iRACE is an excellent decision that has gone wrong primarily for its failure to socialize the decision with key stakeholders (in this case, employees). With changing expectations from the customers and increased level of complexity in work, Infosys introduced the idea of mapping positions with experience and skill levels. Infosys, through introduction of IRACE, was trying to drive a cultural change in the Organization – focus more on technological and skill expertise to move to next levels in the organization as against purely growth enabling such promotions. Such a cultural change requires huge communication drives and socialization with employee base across all levels before implementing changes. Failure to do so has resulted in a reputational loss for the firm from an employee perspective. As a reactive measure, Infosys created sub-committees at various levels in the organization to address concerns of employees. However, proactively driving campaigns explaining the need for change and assessing the right time to implement iRACE could have resulted in better success of the program.

There are few other decisions where it is difficult to say what could have gone wrong with them. In hindsight, we could say it was a missed opportunity. Examples of such decisions are Yahoo declining to buy Google; and Yahoo declining Microsoft overture to buy it. In hindsight we could say that Yahoo should have grabbed those opportunities (may be second situation would not have arisen if they bought Google in first place) but difficult to say what we would have done if we were in Jerry Yang’s position.

When I reflect back on my decisions, there are many that I wish I can go back and change. But more importantly, such reflection provides valuable lessons for my future decisions. Your thoughts??