When I think about decision making there are a number of myths that come to mind and in this blog, I’m going to explore some of them. First of all, you might wonder why I consider decision making so important. The simple fact is that you are the composite of all the decisions you’ve made and so is your business.
You and your business may be successful and that is because you’ve had some pretty good outcomes from the decisions you’ve made. However unless you’ve got a solid process for making decisions then your future success is not guaranteed, because the output from your decision making is not guaranteed.
Let me explain, let’s assume you use the most simple of decision making processes i.e. the toss of a coin. The probability of you making a good decision with a good outcome is 50/50, i.e. heads or tails. So if the first time you use this process and call heads and it’s ‘heads’ and you win then you’ve had a good outcome from your decision-making process. You’re happy and perhaps start to feel that you’re good at decision making because you’ve had a good outcome.
I’m going to assume you’ve quickly realized the fatal flaw in this decision-making process, because the next time you use this same process to make the same decision the resulting outcome is not guaranteed, it’s still a 50/50 probability. Now very few of the people reading this will use the toss of a coin as their decision-making process. However, if you don’t have a consistent decision-making process then to some extent you might as well. Obviously I’m using this as an extreme example.
Small business owners feel that they don’t have the time or the resources to improve their decision-making skills and that others make decisions better (note I didn’t say have better outcomes). Let’s explore this:-
Myth No.1 Big businesses are better at making decisions.
This myth is easy to put to bed. Examples are easy to find, the decision of AOL and Time Warner to merge in 2001, then the biggest merger in USA history at $350 Billion Dollars, was an absolute disaster for shareholders with 100’s of Billions of Dollars of Shareholder wealth going up in smoke. There were plenty of warning signs during the decision-making process that should have stopped the merger dead in its tracks but for various reasons, they pushed ahead anyway.
Coke’s decision to launch ‘New Coke’ in 1985 is another decision that puts this myth to bed. In 1983 Coke was losing the market share to Pepsi at what they considered was an alarming rate (around 1% a year). Pepsi was using its famous blind tasting test in a brilliant marketing campaign which showed that consumers preferred the sweeter taste of Pepsi to Coke. In response, the management at Coke launched a project to develop a new sweeter version of Coke that they felt would better compete with Pepsi. It took 2 years to develop and in blind tasting tests, it did indeed perform better than Pepsi with a 6 point advantage over its traditional rival. It was launched on the 23rd of April 1985 with a massive marketing campaign.
What Coke didn’t take into consideration was the reaction to their decision to stop production of the original recipe coke. The decision to stop production produced a storm of negative press and comments. 8000 calls a day to their consumer line and over 40000 letters of complaint. So much pressure was applied to the management of Coke that they had to reverse their decision after just 79 days and restart the production of the original recipe coke-a-cola (now called ‘Coke Classic’). The new recipe was eventually dropped in July 2002.
Could Coke have had a better outcome from their decision-making process, obviously yes. Their fundamental mistake lies in the information gathering phase, they never considered the reaction to the withdrawal of the original coke because they never asked the question. The questions they asked were all focused on whether ‘New Coke’ beat Pepsi in the taste tests.
Myth No.2 Access to resources improves your decision making.
You’d think that Governments with their access to massive resources would be good at making decisions, after all they have access to pretty much everything they could possibly need to make a great decision. However, we see time after time that Governments make really poor decisions. There are a huge number of examples to choose from, everything from ‘white elephant’ infrastructure programmes to decisions to invade another country.
Kennedy’s bay of pigs invasion.
“How could I have been so stupid?” President John F. Kennedy asked that after the Bay of Pigs fiasco. He called it a “colossal mistake.” It left him feeling depressed, guilty, bitter, and in tears. One historian later called the Bay of Pigs, “one of those rare events in history — a perfect failure.”
What happened? In 1961, CIA and military leaders wanted to use Cuban exiles to overthrow Fidel Castro. After lengthy consideration among his top advisors, Kennedy approved a covert invasion. Advance press reports alerted Castro to the threat. Over 1,400 invaders at the Bahía de Cochinos (Bay of Pigs) were vastly outnumbered. Lacking air support, necessary ammunition, and an escape route, nearly 1,200 surrendered. Others died.
Declassified CIA documents help illuminate the invasion’s flaws. Top CIA leaders blamed Kennedy for not authorising vital airstrikes. Other CIA analysts fault the wishful thinking that the invasion would stimulate an uprising among Cuba’s populace and military. Planners assumed the invaders could simply fade into the mountains for guerilla operations. Trouble was, eighty miles of swampland separated the bay from the mountains. The list goes on.
Professor Irving Janis felt that Kennedy’s top advisors were unwilling to challenge bad ideas because it might disturb perceived or desired group concurrence. Presidential advisor Arthur Schlesinger, for instance, presented serious objections to the invasion in a memorandum to the president but suppressed his doubts at the team meetings. Attorney General Robert Kennedy privately admonished Schlesinger to support the president’s decision to invade. At one crucial meeting, JFK called on each member for his vote for or against the invasion. Each member, that is, except Schlesinger — whom he knew to have serious concerns. Many members assumed other members agreed with the invasion plan.
Have you ever kept silent when you felt you should speak up? President Kennedy overhauled the decision making processes at the white house, allowing a much more robust and challenging environment for each decision to avoid the ‘group think’ that had allowed the ‘bay of pigs’ decision. You can read the case study in Janis and Mann’s book 1977 ‘Decision Making’.
Myth No.3 Great Intelligence Improves your decision making. NASA and the Challenger disaster.
NASA is rightly recognised as the home to perhaps some of the greatest minds on the planet, yet even NASA falls prey to poor decision making.
The decision to launch the Space Shuttle Challenger in 1986 resulting in the deaths of all 7 astronauts is perhaps the most tragic example in NASA’s history. The resulting enquiry the “Rogers Commission” found that NASA’s organizational culture and decision-making processes had been key contributing factors to the accident. As in the ‘bay of pigs’ fiasco years earlier, it was the group decision making processes that were found to be problematic.
The saddest part of this is that seventeen years later the Columbia Accident Investigation Board (CAIB) concluded that NASA had failed to learn many of the lessons of Challenger. In particular, the agency had not set up a truly independent office for safety oversight; the CAIB decided that in this area, “NASA’s response to the Rogers Commission did not meet the Commission’s intent”. The CAIB believed that “the causes of the institutional failure responsible for Challenger have not been fixed”, saying that the same “flawed decision-making process” that had resulted in the Challenger accident was responsible for Columbia’s destruction.
As we’ve seen with these three commonly held beliefs decision making can be problematic for even the smartest, largest, and well resourced organizations. So what as a business owner can you do to improve your decision-making abilities? Here’s where I can help.
I’ve written extensively about how to create a decision-making process (click here to read one of my blogs on this) and have included decision making as part of my next level business coaching course (you can find out about that here). I consider decision making as a vital skill for business owners. The problem is that it is teachable but rarely taught.
One of the ways that you can start to work on your decision-making skills is to take my decision-making audit. It should only take you a few minutes to take and will send you a report once completed. (Click here to take the audit).
Of course one of the advantages of working with a good business mentor is that they should have the necessary processes in place to assist you with your decision making. Find out more about my mentoring service here.
Twelve intensive half-day meetings.
