Either of these extreme behaviors can lengthen the decision making process...
One of the advantages to treating decision making as a group process is that individual biases can be counteracted by the presence of multiple voices and perspectives.
But while groups offer different viewpoints, they need guidance to be productive. Your challenge is to manage the group decision-making process. Otherwise, you may find yourself confronted with one of the following extremes.
Excessive group harmony. Excessive group harmony occurs when individuals want to be accepted in a group or they lack inters tint he process. When people strive too hard to be accepted in the group, they may fall victim to groupthink. With groupthink, participants’ desire for agreement overrides their motivation to evaluate alternative options. In this situation, people tend to withhold their opinions, especially if their views differ from those of the group leader. They make little effort to obtain new information to support their initial preferences.. They may spend a lot of time inquiring about what others in the group want so that the solution they reach will make everyone happy.
Excessive group harmony can also stem from lack of interest: participants have not interest in the process or do not feel empowered. If the group feels that the leader has already made the decision, they may go along with it, refuse to participate entirely, or accept the first reasonable alternative that is proposed in an effort to end the process.
Excessive individualism. Excessive individualism is at the opposite end of the spectrum from excessive group harmony. In this situation, individuals engage in aggressive advocacy, placing stakes in the ground and relentlessly arguing their positions. They disregard the opinions of other group members and fail to consider the common good.
Either of these extreme behaviors can lengthen the decision making process and interfere with the team’s efforts to make good choices.
ACTION POINT: Your job as a manager is to keep your decision-making group on track so it does not head toward either of these extremes.
Friday, January 30, 2009
Thursday, January 29, 2009
Recognizing Obstacles
We tend to subconsciously decide what to do before figuring out why we want to do it.
Decision making is made difficult by common, often unconscious, obstacles that frequently inhibit a decision maker’s ability to determine the optimal choice. Such obstacles include cognitive biases and unproductive group dynamics. While it is almost impossible to eliminate these obstacles, recognizing them in yourself and in the members of your group will help you make more objective decisions.
COGNITIVE BIAS – A system of error introduced into sampling or testing by selecting or encouraging one outcome or answer over others.
Here are some common examples of cognitive biases—distortions or preconceived notions—that people encounter when making decisions.
Bias toward the familiar and toward past successes. We tend to base our decisions on events and information that are familiar to us. For example, Sam, a brand manager, remembers his launch of a new product in a territory three years ago; it was his first big marketing success. He also vaguely remembers that a similar launch strategy was unsuccessful in number of other territories. Because his memories of the successful launch are so vivid, he emphasizes this experience and discounts the evidences of the unsuccessful launches elsewhere. When Sam tries to extend a new brand into another market, his efforts fail. While the strategy used for the first launch may have been a good starting point, his reliance on prior success led to incorrect assumptions about other markets.
Bias toward accepting assumptions at face value. We are generally overconfident in our assumptions and therefore generate too few alternatives. For example Ben purchases a software package offered by the larges vendor without collecting competitive bids. He assumes that the because the package works for other users in the same industry, it will work for him. He fails to investigate other software packages that might better meet his needs.
Bias toward the status quo. We have a tendency to resist major deviations from the status quo. For example, managers at BigCo are familiar with how to use a particular computer program and resist using an alternative, event though their program is outdated. Their resistance is driven more by their reluctance to learn something new than by the quality of the system itself.
Bias toward confirming our opinion. Once we form an opinion, we typically seek out information that supports our viewpoint and ignore the facts that may challenge it. For example, Dinah searches the Internet to find data supporting her preference for focus groups in market research, but she does not stop to read information that supports other approaches.
COGNITIVE BIAS – A system of error introduced into sampling or testing by selecting or encouraging one outcome or answer over others.
How do you prevent these biases from adversely affecting your decision-making ability?
ACTION POINT: Recognize cognitive bias and ensure that contrarian, diverse voices get introduced into the discussion.
Decision making is made difficult by common, often unconscious, obstacles that frequently inhibit a decision maker’s ability to determine the optimal choice. Such obstacles include cognitive biases and unproductive group dynamics. While it is almost impossible to eliminate these obstacles, recognizing them in yourself and in the members of your group will help you make more objective decisions.
COGNITIVE BIAS – A system of error introduced into sampling or testing by selecting or encouraging one outcome or answer over others.
Here are some common examples of cognitive biases—distortions or preconceived notions—that people encounter when making decisions.
Bias toward the familiar and toward past successes. We tend to base our decisions on events and information that are familiar to us. For example, Sam, a brand manager, remembers his launch of a new product in a territory three years ago; it was his first big marketing success. He also vaguely remembers that a similar launch strategy was unsuccessful in number of other territories. Because his memories of the successful launch are so vivid, he emphasizes this experience and discounts the evidences of the unsuccessful launches elsewhere. When Sam tries to extend a new brand into another market, his efforts fail. While the strategy used for the first launch may have been a good starting point, his reliance on prior success led to incorrect assumptions about other markets.
Bias toward accepting assumptions at face value. We are generally overconfident in our assumptions and therefore generate too few alternatives. For example Ben purchases a software package offered by the larges vendor without collecting competitive bids. He assumes that the because the package works for other users in the same industry, it will work for him. He fails to investigate other software packages that might better meet his needs.
Bias toward the status quo. We have a tendency to resist major deviations from the status quo. For example, managers at BigCo are familiar with how to use a particular computer program and resist using an alternative, event though their program is outdated. Their resistance is driven more by their reluctance to learn something new than by the quality of the system itself.
Bias toward confirming our opinion. Once we form an opinion, we typically seek out information that supports our viewpoint and ignore the facts that may challenge it. For example, Dinah searches the Internet to find data supporting her preference for focus groups in market research, but she does not stop to read information that supports other approaches.
COGNITIVE BIAS – A system of error introduced into sampling or testing by selecting or encouraging one outcome or answer over others.
How do you prevent these biases from adversely affecting your decision-making ability?
ACTION POINT: Recognize cognitive bias and ensure that contrarian, diverse voices get introduced into the discussion.
Wednesday, January 28, 2009
Fostering the Right Climate II
A more realistic and effective technique for arriving at a decision is one that balances advocacy with inquiry.
In a perfect world, decisions would be made using an inquiry approach—an open process in which individuals ask probing questions, explore different points of view, and identify a wide range of options with the goal of reaching a decision that the group creates and owns collectively. In an inquiry mode, individuals set aside their personal opinions or preferences in order to arrive at a decision that is best for the group or organization.
The table “Approaches to decision making’ illustrates the advocacy approach versus the inquiry approach to decision making.
__________________________________________________________________
Approaches to decision making
Advocacy Inquiry
__________________________________________________________________
Concept of decision making A contest Collaborative problem
Solving
__________________________________________________________________
Purpose of discussion Persuasion and Testing and evaluation
Lobbying
__________________________________________________________________
Participants role Spokespeople Critical Thinkers
__________________________________________________________________
Patters of Behavior Strive to persuade Present balanced
arguments
Defend your Remains open to
Position alternatives
Downplay Accept constructive
weaknesses criticism
__________________________________________________________________
Minority views Discouraged or Cultivated and valued
dismissed
__________________________________________________________________
The outcome Winners and losers Collective ownership
While inquiry is an idea, it is seldom met in practice. It is extremely difficult for individuals to discuss ideas or issues without expressing their opinions. A more realistic and effective technique for arriving at a decision is one that balances advocacy with inquiry. Group members leave their personal agendas behind and enter the meeting with the intention of acting as unbiased participants. They may advocate for apposition they feel strongly about, but they also inquire into other viewpoints and consider alternatives. They7 understand that the goal is to find the best solution for the group as a whole, even if it means that some individuals in the group might be negatively affected by the decision. Generally, in sessions that balance advocacy with inquiry, people share information freely and consider multiple alternatives.
ACTION POINT: Balance advocacy and inquiry when making group decisions.
In a perfect world, decisions would be made using an inquiry approach—an open process in which individuals ask probing questions, explore different points of view, and identify a wide range of options with the goal of reaching a decision that the group creates and owns collectively. In an inquiry mode, individuals set aside their personal opinions or preferences in order to arrive at a decision that is best for the group or organization.
The table “Approaches to decision making’ illustrates the advocacy approach versus the inquiry approach to decision making.
__________________________________________________________________
Approaches to decision making
Advocacy Inquiry
__________________________________________________________________
Concept of decision making A contest Collaborative problem
Solving
__________________________________________________________________
Purpose of discussion Persuasion and Testing and evaluation
Lobbying
__________________________________________________________________
Participants role Spokespeople Critical Thinkers
__________________________________________________________________
Patters of Behavior Strive to persuade Present balanced
arguments
Defend your Remains open to
Position alternatives
Downplay Accept constructive
weaknesses criticism
__________________________________________________________________
Minority views Discouraged or Cultivated and valued
dismissed
__________________________________________________________________
The outcome Winners and losers Collective ownership
While inquiry is an idea, it is seldom met in practice. It is extremely difficult for individuals to discuss ideas or issues without expressing their opinions. A more realistic and effective technique for arriving at a decision is one that balances advocacy with inquiry. Group members leave their personal agendas behind and enter the meeting with the intention of acting as unbiased participants. They may advocate for apposition they feel strongly about, but they also inquire into other viewpoints and consider alternatives. They7 understand that the goal is to find the best solution for the group as a whole, even if it means that some individuals in the group might be negatively affected by the decision. Generally, in sessions that balance advocacy with inquiry, people share information freely and consider multiple alternatives.
ACTION POINT: Balance advocacy and inquiry when making group decisions.
Tuesday, January 27, 2009
Fostering the Right Climate
In advocacy situations, people tend to offer only the information that supports their case and omit details that might weaken it.
To help your group generate creative solutions to problems and evaluate them critically, choose diverse settings for your meetings. Such settings might include conference rooms that you don’t typically work in, off-site locations, or a familiar location with the furniture rearranged to facilitate face-to-face discussion. When people are removed from traditional settings they tend to speak more freely because they feel less constrained by office hierarchies.
Consider the following scenario: A manager at a software development company has been charged with assigning limited resources to the firm’s current projects. The manager calls a meeting with all of the project leaders to discuss how the resources will be allocated. The discussion quickly turns into an argument. Each project leader advocates for his or her project. The debate gets heated as the conversation goes around in circles, and each project manager decides to assign the limited resources to three projects. The project managers leave the meeting exhausted and frustrated.
What went wrong? The manager did not manage the decision making process effectively, and the meeting deteriorated into an advocacy mode. The project leaders viewed the meeting as a competition. They advocated for their positions without considering the needs of other departments or the company as a whole. In advocacy situations, people tend to offer only the information that supports their case and omit details that might weaken it. As a result, the discussion can quickly deteriorate into personal attacks, giving rise to negative emotions.
ACTION POINT: Create an open atmosphere of ideas for effective meetings.
To help your group generate creative solutions to problems and evaluate them critically, choose diverse settings for your meetings. Such settings might include conference rooms that you don’t typically work in, off-site locations, or a familiar location with the furniture rearranged to facilitate face-to-face discussion. When people are removed from traditional settings they tend to speak more freely because they feel less constrained by office hierarchies.
Consider the following scenario: A manager at a software development company has been charged with assigning limited resources to the firm’s current projects. The manager calls a meeting with all of the project leaders to discuss how the resources will be allocated. The discussion quickly turns into an argument. Each project leader advocates for his or her project. The debate gets heated as the conversation goes around in circles, and each project manager decides to assign the limited resources to three projects. The project managers leave the meeting exhausted and frustrated.
What went wrong? The manager did not manage the decision making process effectively, and the meeting deteriorated into an advocacy mode. The project leaders viewed the meeting as a competition. They advocated for their positions without considering the needs of other departments or the company as a whole. In advocacy situations, people tend to offer only the information that supports their case and omit details that might weaken it. As a result, the discussion can quickly deteriorate into personal attacks, giving rise to negative emotions.
ACTION POINT: Create an open atmosphere of ideas for effective meetings.
Monday, January 26, 2009
Selecting a Decision-Making Approach
The spectrum of group decision-making approaches includes four general types:
Once you’ve selected the participants, determine what decision-making approach you will take. The group you assemble needs to understand up front the process it will follow and how the final decision will be made. The spectrum of group decision-making approaches includes four general types:
Consensus. All team member meet together to discuss the proposal openly and strive to reach agreement, with everyone accepting the final decision.
Majority. The group votes and the majority rules. The team leader may elect to break a tie, if necessary.
Qualified consensus. The team tries to reach a collective agreement, but if it is unable to do so, the team agrees that the team leader makes the decision.
Directive leadership. The leader makes the decision and then informs the group of the decision that was made. A crisis or sudden unexpected emergency is a classic example of when this approach might be necessary.
These approaches, with the exception of directive leadership, vary in the extent that they empower the participants and create a sense of responsibility within the group. Be aware, however, that regardless of approach, when a group is trying to find areas agreement, it may avoid exploring minority viewpoints.
ACTION POINT: Encourage exploration of ideas, when faced with making a decision no matter what approach you will take to make the decision.
Once you’ve selected the participants, determine what decision-making approach you will take. The group you assemble needs to understand up front the process it will follow and how the final decision will be made. The spectrum of group decision-making approaches includes four general types:
Consensus. All team member meet together to discuss the proposal openly and strive to reach agreement, with everyone accepting the final decision.
Majority. The group votes and the majority rules. The team leader may elect to break a tie, if necessary.
Qualified consensus. The team tries to reach a collective agreement, but if it is unable to do so, the team agrees that the team leader makes the decision.
Directive leadership. The leader makes the decision and then informs the group of the decision that was made. A crisis or sudden unexpected emergency is a classic example of when this approach might be necessary.
These approaches, with the exception of directive leadership, vary in the extent that they empower the participants and create a sense of responsibility within the group. Be aware, however, that regardless of approach, when a group is trying to find areas agreement, it may avoid exploring minority viewpoints.
ACTION POINT: Encourage exploration of ideas, when faced with making a decision no matter what approach you will take to make the decision.
Friday, January 23, 2009
Setting the Stage
Setting the state for the decision-making process is critical to making successful choices.
Setting the stage consists of:
Selecting the right people to participate in the process
Choosing an approach for making the actual decision
Creating a climate that promotes healthy debate and allows for diverse viewpoints.
A group of people with diverse perspectives is more likely to generate a variety of thoughtful ideas about how to make a particular decision than a group of individuals with the same background. When you choose people for your decision-making group, look for individuals who are likely to express differing points of view and who represent different interests. Your group should include
Key stakeholders. These are the people who will be most directly affected by the decision or who have a stake in the decision. You need to their buy-in to put the decision into effect. Since they are the more likely to support a decision they helped make, include them early in the process to ensure an efficient implementation.
Experts. Experts can educate the group and provide information about the feasibility of various courses of action you are considering. Keep in mind that you many need more than one area of expertise represented in your group.
Opponents. If you are aware of individuals who may oppose the decision and block its implementation, invite them to one or more of your meetings. Involving potential opponents early on can eliminate obstacles down the road.
Ideally, your group should be small in size, preferable between and five and seven members. Depending on the complexity of the decision at hand, you may want to involve as many as ten or as few as two people in the decision-making process.
ACTION POINT: Use key stakeholders, experts and opponents to build an effective decision making group.
Setting the stage consists of:
Selecting the right people to participate in the process
Choosing an approach for making the actual decision
Creating a climate that promotes healthy debate and allows for diverse viewpoints.
A group of people with diverse perspectives is more likely to generate a variety of thoughtful ideas about how to make a particular decision than a group of individuals with the same background. When you choose people for your decision-making group, look for individuals who are likely to express differing points of view and who represent different interests. Your group should include
Key stakeholders. These are the people who will be most directly affected by the decision or who have a stake in the decision. You need to their buy-in to put the decision into effect. Since they are the more likely to support a decision they helped make, include them early in the process to ensure an efficient implementation.
Experts. Experts can educate the group and provide information about the feasibility of various courses of action you are considering. Keep in mind that you many need more than one area of expertise represented in your group.
Opponents. If you are aware of individuals who may oppose the decision and block its implementation, invite them to one or more of your meetings. Involving potential opponents early on can eliminate obstacles down the road.
Ideally, your group should be small in size, preferable between and five and seven members. Depending on the complexity of the decision at hand, you may want to involve as many as ten or as few as two people in the decision-making process.
ACTION POINT: Use key stakeholders, experts and opponents to build an effective decision making group.
Thursday, January 22, 2009
Making Decisions
We can think of the decision-making process as consisting of eight steps:
1. Setting the stage. You select participants and determine the approach you will take to reach a decision: will you aim for consensus or vote by majority? During the meetings, especially the earliest ones, you set the tone for the group by encouraging open dialogue and promoting healthy debate.
2. Recognize obstacles. Certain individual biases and group dynamics can be obstacles in the decision-making process. By predicting and recognizing these tendencies, you can take action to avoid them.
3. Framing the issue. A successful decision depends on a clear understanding of the issue at hand and its root cause(s).
4. Generating alternatives. After you’ve clarified the issue, you brainstorm and generate creative conflict to develop alternative courses of action and ways of proceeding.
5. Evaluate alternatives. Next, you assess the feasibility, risk, and ethical implications of each possible course of action.
6. Making a decision. You choose an alternative
7. Communicating the decision. You decide who should be notified of your decision, and communicate it effectively.
8. Implementing the decision. You determine what tasks will be required to put the decision into action, assign resources, and establish deadlines.
Throughout this eight-step process, you also continually assess your decision-making effectiveness and make changes as needed to improve it.
ACTION POINT: Use the eight step process to make effective decisions.
1. Setting the stage. You select participants and determine the approach you will take to reach a decision: will you aim for consensus or vote by majority? During the meetings, especially the earliest ones, you set the tone for the group by encouraging open dialogue and promoting healthy debate.
2. Recognize obstacles. Certain individual biases and group dynamics can be obstacles in the decision-making process. By predicting and recognizing these tendencies, you can take action to avoid them.
3. Framing the issue. A successful decision depends on a clear understanding of the issue at hand and its root cause(s).
4. Generating alternatives. After you’ve clarified the issue, you brainstorm and generate creative conflict to develop alternative courses of action and ways of proceeding.
5. Evaluate alternatives. Next, you assess the feasibility, risk, and ethical implications of each possible course of action.
6. Making a decision. You choose an alternative
7. Communicating the decision. You decide who should be notified of your decision, and communicate it effectively.
8. Implementing the decision. You determine what tasks will be required to put the decision into action, assign resources, and establish deadlines.
Throughout this eight-step process, you also continually assess your decision-making effectiveness and make changes as needed to improve it.
ACTION POINT: Use the eight step process to make effective decisions.
Wednesday, January 21, 2009
Decision Making As a Group Process
“Effective executives know that decision making has its own systemic process and its own clearly defined elements.” – Peter Drucker
Important decision, such as changing the strategic direction of a group or hiring a new manager, typically require time and input from many individuals and sources of information throughout an organization. Hence, decision making can more accurately be viewed as a group process.
Managers who recognize decision making as a group process increase their likelihood of making more effective decisions. Why? By taking time, they are able to identify and assess the issues associated with making the decision. By involving others, they weigh different perspectives and deepen the discussion. Perhaps most important, taking a process-driven approach is more likely to lead to broader acceptance of the decision—which in turn leads to more effective implementation.
ACTION POINT: Identify the group that can best help you make effective decisions.
Important decision, such as changing the strategic direction of a group or hiring a new manager, typically require time and input from many individuals and sources of information throughout an organization. Hence, decision making can more accurately be viewed as a group process.
Managers who recognize decision making as a group process increase their likelihood of making more effective decisions. Why? By taking time, they are able to identify and assess the issues associated with making the decision. By involving others, they weigh different perspectives and deepen the discussion. Perhaps most important, taking a process-driven approach is more likely to lead to broader acceptance of the decision—which in turn leads to more effective implementation.
ACTION POINT: Identify the group that can best help you make effective decisions.
Tuesday, January 20, 2009
Abraham Lincolns 2nd Inaugural Address
Weeks of wet weather preceding Lincoln's second inauguration had caused Pennsylvania Avenue to become a sea of mud and standing water. Thousands of spectators stood in thick mud at the Capitol grounds to hear the President. As he stood on the East Portico to take the executive oath, the completed Capitol dome over the President's head was a physical reminder of the resolve of his Administration throughout the years of civil war. Chief Justice Salmon Chase administered the oath of office. In little more than a month, the President would be assassinated.
Fellow-Countrymen:
At this second appearing to take the oath of the Presidential office there is less occasion for an extended address than there was at the first. Then a statement somewhat in detail of a course to be pursued seemed fitting and proper. Now, at the expiration of four years, during which public declarations have been constantly called forth on every point and phase of the great contest which still absorbs the attention and engrosses the energies of the nation, little that is new could be presented. The progress of our arms, upon which all else chiefly depends, is as well known to the public as to myself, and it is, I trust, reasonably satisfactory and encouraging to all. With high hope for the future, no prediction in regard to it is ventured.
On the occasion corresponding to this four years ago all thoughts were anxiously directed to an impending civil war. All dreaded it, all sought to avert it. While the inaugural address was being delivered from this place, devoted altogether to saving the Union without war, urgent agents were in the city seeking to destroy it without war—seeking to dissolve the Union and divide effects by negotiation. Both parties’ deprecated war, but one of them would make war rather than let the nation survive, and the other would accept war rather than let it perish, and the war came.
One-eighth of the whole population were colored slaves, not distributed generally over the Union, but localized in the southern part of it. These slaves constituted a peculiar and powerful interest. All knew that this interest was somehow the cause of the war. To strengthen, perpetuate, and extend this interest was the object for which the insurgents would rend the Union even by war, while the Government claimed no right to do more than to restrict the territorial enlargement of it. Neither party expected for the war the magnitude or the duration which it has already attained. Neither anticipated that the cause of the conflict might cease with or even before the conflict itself should cease. Each looked for an easier triumph and a result less fundamental and astounding. Both read the same Bible and pray to the same God, and each invokes His aid against the other. It may seem strange that any men should dare to ask a just God's assistance in wringing their bread from the sweat of other men's faces, but let us judge not, that we be not judged. The prayers of both could not be answered. That of neither has been answered fully. The Almighty has His own purposes. "Woe unto the world because of offenses; for it must needs be that offenses come, but woe to that man by whom the offense cometh." If we shall suppose that American slavery is one of those offenses which, in the providence of God, must needs come, but which, having continued through His appointed time, He now wills to remove, and that He gives to both North and South this terrible war as the woe due to those by whom the offense came, shall we discern therein any departure from those divine attributes which the believers in a living God always ascribe to Him? Fondly do we hope, fervently do we pray, that this mighty scourge of war may speedily pass away. Yet, if God wills that it continue until all the wealth piled by the bondsman's two hundred and fifty years of unrequited toil shall be sunk, and until every drop of blood drawn with the lash shall be paid by another drawn with the sword, as was said three thousand years ago, so still it must be said "the judgments of the Lord are true and righteous altogether."
ACTION POINT: With malice toward none, with charity for all, with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in, to bind up the nation's wounds, to care for him who shall have borne the battle and for his widow and his orphan, to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations.
Fellow-Countrymen:
At this second appearing to take the oath of the Presidential office there is less occasion for an extended address than there was at the first. Then a statement somewhat in detail of a course to be pursued seemed fitting and proper. Now, at the expiration of four years, during which public declarations have been constantly called forth on every point and phase of the great contest which still absorbs the attention and engrosses the energies of the nation, little that is new could be presented. The progress of our arms, upon which all else chiefly depends, is as well known to the public as to myself, and it is, I trust, reasonably satisfactory and encouraging to all. With high hope for the future, no prediction in regard to it is ventured.
On the occasion corresponding to this four years ago all thoughts were anxiously directed to an impending civil war. All dreaded it, all sought to avert it. While the inaugural address was being delivered from this place, devoted altogether to saving the Union without war, urgent agents were in the city seeking to destroy it without war—seeking to dissolve the Union and divide effects by negotiation. Both parties’ deprecated war, but one of them would make war rather than let the nation survive, and the other would accept war rather than let it perish, and the war came.
One-eighth of the whole population were colored slaves, not distributed generally over the Union, but localized in the southern part of it. These slaves constituted a peculiar and powerful interest. All knew that this interest was somehow the cause of the war. To strengthen, perpetuate, and extend this interest was the object for which the insurgents would rend the Union even by war, while the Government claimed no right to do more than to restrict the territorial enlargement of it. Neither party expected for the war the magnitude or the duration which it has already attained. Neither anticipated that the cause of the conflict might cease with or even before the conflict itself should cease. Each looked for an easier triumph and a result less fundamental and astounding. Both read the same Bible and pray to the same God, and each invokes His aid against the other. It may seem strange that any men should dare to ask a just God's assistance in wringing their bread from the sweat of other men's faces, but let us judge not, that we be not judged. The prayers of both could not be answered. That of neither has been answered fully. The Almighty has His own purposes. "Woe unto the world because of offenses; for it must needs be that offenses come, but woe to that man by whom the offense cometh." If we shall suppose that American slavery is one of those offenses which, in the providence of God, must needs come, but which, having continued through His appointed time, He now wills to remove, and that He gives to both North and South this terrible war as the woe due to those by whom the offense came, shall we discern therein any departure from those divine attributes which the believers in a living God always ascribe to Him? Fondly do we hope, fervently do we pray, that this mighty scourge of war may speedily pass away. Yet, if God wills that it continue until all the wealth piled by the bondsman's two hundred and fifty years of unrequited toil shall be sunk, and until every drop of blood drawn with the lash shall be paid by another drawn with the sword, as was said three thousand years ago, so still it must be said "the judgments of the Lord are true and righteous altogether."
ACTION POINT: With malice toward none, with charity for all, with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in, to bind up the nation's wounds, to care for him who shall have borne the battle and for his widow and his orphan, to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations.
Monday, January 19, 2009
The Business Value of Making Smart Decisions
…significant decisions are seldom made in the moment by one manger or in one meeting.
Think back on the last critical decision you faced at work. A lot was riding on your choice, yet the best alternative was probably not clear. There were trade-offs to be made. What’s more, you knew the path you chose would have a real impact on your company and its people. How did you feel when making that decision? And afterward? Was you choice a good one?
The higher the states in the business world, the more charged the decision-making process becomes. To make the smartest decisions, you need to take the mystery out of the process and make it more of a science. Understanding the eight steps to an effective decision can help. From setting the stage for a particular decisions and recognizing common obstacles, to generating and evaluating alternatives an communicating the final decision to stakeholders. Finding guidelines for assessing your overall decision-making approach will allow you to continually strengthen it as you gain experience making business decisions.
As a manager, you are faced with decisions every day. Some decisions are straightforward, such a deciding which team member to assign to a specific project. Others are more complex, such as selecting a new vendor or deciding to discontinue a product due to weak sales.
Many managers tend to view decision making as an event—a choice to be made at a single point in time. Usually by an individual or a small group. In reality, however, significant decisions are seldom made in the moment by one manger or in one meeting. Simply put decision making is a social or group process that unfolds over time.
ACTION POINT: Take the mystery out of decision making by recognizing it as more of science that is a social process that unfolds over time.
Think back on the last critical decision you faced at work. A lot was riding on your choice, yet the best alternative was probably not clear. There were trade-offs to be made. What’s more, you knew the path you chose would have a real impact on your company and its people. How did you feel when making that decision? And afterward? Was you choice a good one?
The higher the states in the business world, the more charged the decision-making process becomes. To make the smartest decisions, you need to take the mystery out of the process and make it more of a science. Understanding the eight steps to an effective decision can help. From setting the stage for a particular decisions and recognizing common obstacles, to generating and evaluating alternatives an communicating the final decision to stakeholders. Finding guidelines for assessing your overall decision-making approach will allow you to continually strengthen it as you gain experience making business decisions.
As a manager, you are faced with decisions every day. Some decisions are straightforward, such a deciding which team member to assign to a specific project. Others are more complex, such as selecting a new vendor or deciding to discontinue a product due to weak sales.
Many managers tend to view decision making as an event—a choice to be made at a single point in time. Usually by an individual or a small group. In reality, however, significant decisions are seldom made in the moment by one manger or in one meeting. Simply put decision making is a social or group process that unfolds over time.
ACTION POINT: Take the mystery out of decision making by recognizing it as more of science that is a social process that unfolds over time.
Friday, January 16, 2009
Satisfying Your Customers
A central purpose of business is to create profits through customer satisfaction
I've always thought that the fundamental purpose behind a business is to make profits by satisfying customers. If you explain to your workforce what you are trying to do, I think that's a wonderful starting point.
When I went to BAA I was quite clear that satisfying customers was an absolutely core thing to do. I started a process of customer satisfaction index, where we were constantly talking to passengers about every process they went through, to see what they were and weren't happy with. This then informed the management about what they were doing well and badly.
One of the things we were doing worst was shopping at the airport. People saw the airport as a rip-off; every summer, newspaper reporters went to our airports and bought things very expensively. The "rip-offs" at the airport made huge headlines. It was the worst and least satisfactory of the things that we did. We put together a retailing program to satisfy the customer, which turned out to be immensely profitable. You're probably now familiar with all the shopping malls that you see not only at BAA airports, but at airports all over the world. It all started from satisfying the customer.
I think a simple view of what you're trying to do in your business--to make profit by satisfying customers--is a message that can be understood by your workforce; they can join in helping you run the company. They know precisely what you're trying to do. Then your staff can help you in that fundamental mission. They understand what they're doing, and they understand why they're there. Once you get the quality right, you can then start to tackle productivity and improve that as well.
ACTION POINT: Develop an indisputable measure of quality that is then backed by processes to improve quality.
I've always thought that the fundamental purpose behind a business is to make profits by satisfying customers. If you explain to your workforce what you are trying to do, I think that's a wonderful starting point.
When I went to BAA I was quite clear that satisfying customers was an absolutely core thing to do. I started a process of customer satisfaction index, where we were constantly talking to passengers about every process they went through, to see what they were and weren't happy with. This then informed the management about what they were doing well and badly.
One of the things we were doing worst was shopping at the airport. People saw the airport as a rip-off; every summer, newspaper reporters went to our airports and bought things very expensively. The "rip-offs" at the airport made huge headlines. It was the worst and least satisfactory of the things that we did. We put together a retailing program to satisfy the customer, which turned out to be immensely profitable. You're probably now familiar with all the shopping malls that you see not only at BAA airports, but at airports all over the world. It all started from satisfying the customer.
I think a simple view of what you're trying to do in your business--to make profit by satisfying customers--is a message that can be understood by your workforce; they can join in helping you run the company. They know precisely what you're trying to do. Then your staff can help you in that fundamental mission. They understand what they're doing, and they understand why they're there. Once you get the quality right, you can then start to tackle productivity and improve that as well.
ACTION POINT: Develop an indisputable measure of quality that is then backed by processes to improve quality.
Thursday, January 15, 2009
Matching People to Strategy
What is the strategy we want to pursue
There should be a strong match in any company that wants to be successful between the human resources that are needed to achieve a certain goal and strategy. I’ll give you an example. I felt very strongly back in 1993 that to resurrect Gucci Group we needed to take more of a “fashion” course to make sure that the consumers understood what we were trying to do with Gucci—rejuvenating it, making it more exciting and repositioning the brand.
In deciding the strategy to follow, it was obviously very much in my mind that we had the right firepower to make the strategy work. The reality is that the real power is the brand. Obviously, having a strong person who drives the brand inspires the brand. Every time we acquire a new brand we always try to find out, “What is the strategy we want to pursue?” Once we’ve decided the strategy, it becomes very important to purse the appropriate people, to say, “Who do we need?” You want to hire the superstar, that is true, but by the same token you have to make sure that the superstars fit within the strategy of the brand.
ACTION POINT: For any company to be successful, a strong match must exist between the strategy and the human resources needed to achieve the goal.
There should be a strong match in any company that wants to be successful between the human resources that are needed to achieve a certain goal and strategy. I’ll give you an example. I felt very strongly back in 1993 that to resurrect Gucci Group we needed to take more of a “fashion” course to make sure that the consumers understood what we were trying to do with Gucci—rejuvenating it, making it more exciting and repositioning the brand.
In deciding the strategy to follow, it was obviously very much in my mind that we had the right firepower to make the strategy work. The reality is that the real power is the brand. Obviously, having a strong person who drives the brand inspires the brand. Every time we acquire a new brand we always try to find out, “What is the strategy we want to pursue?” Once we’ve decided the strategy, it becomes very important to purse the appropriate people, to say, “Who do we need?” You want to hire the superstar, that is true, but by the same token you have to make sure that the superstars fit within the strategy of the brand.
ACTION POINT: For any company to be successful, a strong match must exist between the strategy and the human resources needed to achieve the goal.
Wednesday, January 14, 2009
Aligning Strategy Across Multiple Business Units III
There are three takeaways in trying to achieve alignment across multiple business units.
A final key learning I would offer in terms of ensuring alignment is dong all we can to keep strategy and finance aligned. My experience is that when the finance organization and the strategy organization aren’t working closely together, the likelihood of getting a strategy implemented diminishes dramatically. Strategy and finance must work together closely. As part of our strategy dialogue process, the finance organization is very deeply involved they see, in the course of the strategy dialogue, what the likely investment requirements are going to be.
There are three takeaways in trying to achieve alignment across multiple business units. The first is not trying to assert too many metrics that are common across the businesses, because even in businesses that appear similar on the surface, there are typically some pretty fundamental differences. The second is to help the businesses by providing them some of the key external planning assumptions. And the final one is to ensure that the finance organization and strategy organization are working closely together
ACTION POINT: Multiple business organizations must integrate the strategy and business functions to prevent roadblocks after strategy decisions are made
A final key learning I would offer in terms of ensuring alignment is dong all we can to keep strategy and finance aligned. My experience is that when the finance organization and the strategy organization aren’t working closely together, the likelihood of getting a strategy implemented diminishes dramatically. Strategy and finance must work together closely. As part of our strategy dialogue process, the finance organization is very deeply involved they see, in the course of the strategy dialogue, what the likely investment requirements are going to be.
There are three takeaways in trying to achieve alignment across multiple business units. The first is not trying to assert too many metrics that are common across the businesses, because even in businesses that appear similar on the surface, there are typically some pretty fundamental differences. The second is to help the businesses by providing them some of the key external planning assumptions. And the final one is to ensure that the finance organization and strategy organization are working closely together
ACTION POINT: Multiple business organizations must integrate the strategy and business functions to prevent roadblocks after strategy decisions are made
Tuesday, January 13, 2009
Aligning Strategy Across Multiple Business Units II
…provide a common set of planning assumptions that the businesses ought to be using
Another place where we strive for alignment is simply on facts that we use within the businesses. For example, about three years ago, I was reviewing strategies with a couple of our businesses. One of our businesses was making the assumption that for the next three years steel prices would continue to rise, while another business unit was making the exact opposite assumption: that over the next three years steel prices would fall. Clearly, one of them had to be wrong. Even if both were wrong or both were right, at least we would be consistent in our views and could at least understand the impact of being wrong.
One of the things I’ve found very helpful for us to do at the center of the company is to at least provide a common set of planning assumptions that the businesses ought to be using. What’s likely to be happening with overall economic activity in the markets we operate in? What’s likely to happen to commodity prices? What’s likely to happen with respect to the risks in the various businesses we operate? I think it’s a valuable thing for the center of any company to do for its businesses. Get that off the table so that, A. the assumptions are consistent and, B. the business units get more time to focus on what it is that they do best, which is focusing on their customers and their products.
ACTION POINT: To align business units with strategy, companies must consider value creation when allocating resources and must base decisions on facts.
Another place where we strive for alignment is simply on facts that we use within the businesses. For example, about three years ago, I was reviewing strategies with a couple of our businesses. One of our businesses was making the assumption that for the next three years steel prices would continue to rise, while another business unit was making the exact opposite assumption: that over the next three years steel prices would fall. Clearly, one of them had to be wrong. Even if both were wrong or both were right, at least we would be consistent in our views and could at least understand the impact of being wrong.
One of the things I’ve found very helpful for us to do at the center of the company is to at least provide a common set of planning assumptions that the businesses ought to be using. What’s likely to be happening with overall economic activity in the markets we operate in? What’s likely to happen to commodity prices? What’s likely to happen with respect to the risks in the various businesses we operate? I think it’s a valuable thing for the center of any company to do for its businesses. Get that off the table so that, A. the assumptions are consistent and, B. the business units get more time to focus on what it is that they do best, which is focusing on their customers and their products.
ACTION POINT: To align business units with strategy, companies must consider value creation when allocating resources and must base decisions on facts.
Monday, January 12, 2009
Aligning Strategy Across Multiple Business Units
To do that we try to focus on a small number of high-level lenses that we look through.
Working strategy as an enterprise that has multiple business units is a pretty tricky thing, because we’re always trying to strike a balance between autonomy of the business units. At the end of the day, they’re the ones closer to their closer to their customers and know best what they ought to be doing, versus maintaining consistency across the businesses.
Here are a couple of examples. In a financial services company, where the products on the surface might seem similar, they can run into the trap of one size fits all and having more of a peanut-butter approach to measuring and strategizing within those companies. One company that was focused on lending expanded into insurance, as an insurance brokerage firm. They were trying to measure themselves in insurance brokerage by using the same metrics that they used for loans and trying to figure out how to measure charge-offs in an insurance business. Clearly it just didn’t make sense. That’s an obvious example of where trying to force a consistent approach doesn’t make sense.
At the same time, however, we are looking for some consistency, some balance across the businesses, because, at the center we are ultimately doing resource allocation between the businesses. To do that we try to focus on a small number of high-level lenses that we look through. One, in particular, relates to value creation. That’s something that is a universal lens that you can look through at any business and uses as a basis for allocating resources from capital to time across the businesses in the portfolio. That’s one element where we strive for alignment.
ACTION POINT: What activities create value across all of the business units? Focus on those by allocating capitol and time to them.
Working strategy as an enterprise that has multiple business units is a pretty tricky thing, because we’re always trying to strike a balance between autonomy of the business units. At the end of the day, they’re the ones closer to their closer to their customers and know best what they ought to be doing, versus maintaining consistency across the businesses.
Here are a couple of examples. In a financial services company, where the products on the surface might seem similar, they can run into the trap of one size fits all and having more of a peanut-butter approach to measuring and strategizing within those companies. One company that was focused on lending expanded into insurance, as an insurance brokerage firm. They were trying to measure themselves in insurance brokerage by using the same metrics that they used for loans and trying to figure out how to measure charge-offs in an insurance business. Clearly it just didn’t make sense. That’s an obvious example of where trying to force a consistent approach doesn’t make sense.
At the same time, however, we are looking for some consistency, some balance across the businesses, because, at the center we are ultimately doing resource allocation between the businesses. To do that we try to focus on a small number of high-level lenses that we look through. One, in particular, relates to value creation. That’s something that is a universal lens that you can look through at any business and uses as a basis for allocating resources from capital to time across the businesses in the portfolio. That’s one element where we strive for alignment.
ACTION POINT: What activities create value across all of the business units? Focus on those by allocating capitol and time to them.
Friday, January 9, 2009
Finding the Flowers Among the Weeds III
“How important do you think this is to the long-term success of this organization…"
I’ve engaged with organizations many times in blue sky thinking, but what I learned was that while having that many ideas was great, you had to find a way of synthesizing and filtering them down. The question is, how do you do that? I guess there are may ways, but the way that I learned to do it is by setting up a three-by-three grid. On one axis, I asked the executives, “How important do you think this is to the long-term success of this organization; very important, important, or not particularly important?” Then we went back to the same items, and I said, “Thinking about that item, where are you now? Are you already doing that, have you started doing it, or haven’t you even thought about it?”
What we got was this wonderful matrix. In the top right-hand corner were things that were very important for the long-term future but that people weren’t doing anything about right now. We called those the areas of risk, and I think that’s a great way of distilling from a large amount of data right down to things that are important. The reason they’re really important is that they are things that are important to you for the future, but they are things that you are not doing now.
ACTION POINT: Identify those ideas that are important to the organization for the future, but that you’re not working on now, as areas of risk.
I’ve engaged with organizations many times in blue sky thinking, but what I learned was that while having that many ideas was great, you had to find a way of synthesizing and filtering them down. The question is, how do you do that? I guess there are may ways, but the way that I learned to do it is by setting up a three-by-three grid. On one axis, I asked the executives, “How important do you think this is to the long-term success of this organization; very important, important, or not particularly important?” Then we went back to the same items, and I said, “Thinking about that item, where are you now? Are you already doing that, have you started doing it, or haven’t you even thought about it?”
What we got was this wonderful matrix. In the top right-hand corner were things that were very important for the long-term future but that people weren’t doing anything about right now. We called those the areas of risk, and I think that’s a great way of distilling from a large amount of data right down to things that are important. The reason they’re really important is that they are things that are important to you for the future, but they are things that you are not doing now.
ACTION POINT: Identify those ideas that are important to the organization for the future, but that you’re not working on now, as areas of risk.
Thursday, January 8, 2009
Finding the Flowers Among the Weeds II
But how do you do that?
Of all the things that you can do, which are the four things that will really make a difference to your organization? Thinking back on that, the lesson on for me was that you just have to focus. There are so many things you can do, so you have to just focus on the three or four things that will make a difference.
But how do you do that? Well, those three or four things have to be very tightly aligned to what it is you’re trying to do as an organization. They have to be aligned to your business strategy. They have to be big things—things that, when employees look at them, they say, “I feel really excited about that; I feel really engaged in that.” I guess for me, the capacity to know what a weed is and what a flower is, is really one of the most important things I ever learned.
ACTION POINT: Focus on a handful of ideas that align with the business strategy in a way that employees can become excited and engaged.
Of all the things that you can do, which are the four things that will really make a difference to your organization? Thinking back on that, the lesson on for me was that you just have to focus. There are so many things you can do, so you have to just focus on the three or four things that will make a difference.
But how do you do that? Well, those three or four things have to be very tightly aligned to what it is you’re trying to do as an organization. They have to be aligned to your business strategy. They have to be big things—things that, when employees look at them, they say, “I feel really excited about that; I feel really engaged in that.” I guess for me, the capacity to know what a weed is and what a flower is, is really one of the most important things I ever learned.
ACTION POINT: Focus on a handful of ideas that align with the business strategy in a way that employees can become excited and engaged.
Wednesday, January 7, 2009
Finding the Flowers Among the Weeds
This is an old story. I was working for one of the big consulting practices, and I remember we all went to Ireland to advise a company about their long-term strategy. Like any great consultants at that stage, what we did was to ask everybody to get into a room, and then we said to them, “Let’s think about what this organization could be like in ten year’s time.” Over the space of a day, we filled up about fifty flip charts with all the things that they could do for the future.
That was great; we were really energetic, and there were lots of ideas. Then, at the end of the day, we stood in the middle of the room and looked around. There must have been two hundred thins that we could do in the future. And it struck me so forcibly then—and actually it’s been a huge learning for me—that there just isn’t any reason to generate masses of ideas like that. What you have to do is to know, of all the things that you can really work on, what the one, two, or maybe three or four things are that are really going to make a difference.
I guess for me it’s a bit like saying that the garden is full of weeds and some of the weeds are actually flowers.
ACTION POINT: Identify one to three things that will make a difference in your organization this year and five years from now.
Tuesday, January 6, 2009
Teach Managers How to Think, Not What to Think
An engineer in the middle of Intel read an early academic paper that we’d written on the subject of disruption. She said that after she read it, she looked down at the bottom of the microprocessor market and there was Syrex coming at Intel. Syrex had already picked off the entry-level computer business—the processors in those entry-level computers—and they were coming up. Intel was fleeing up-market.
I knew nothing about the microprocessor business, but she arranged, through a series of events, ultimately to give me a meeting with Andy Grove, the [Intel] chairman, and his executive staff. That was a once-in-a-lifetime opportunity for a no-name professor like me.
Grove is a very down-to-earth business sort of guy. He said, “Just give me ten minutes and tell me what this means for Intel, and we’ll be on to other stuff.” I said, “Andy, I can’t do it in ten minutes; I need thirty. Let me describe this mode of disruption that’s emerged from my research, and then let’s talk about what it means for Intel.” He sat back impatiently. I said, I’d like to describe how this process of disruption worked its way through a very different industry than microprocessors, and then we’ll talk about Intel. So he sat back impatiently again.
I decided to tell him the story about how in the steel industry, steel minimills had picked off rebar at the bottom of the market and then had moved up-market, and the integrated steel companies had retreated to higher and higher margin products. I picked steel because it was very different from microprocessors, so Andy wouldn’t get confused at all, but in many ways it was a perfect analogy to what I thought was going to happen in microprocessors.
When I finished telling the story about steel, Andy said, I get it. So what it means for Intel is…” And he got it. I’ve thought since, if I had been suckered into telling Andy Grove what I thought he ought to do in the microprocessor business, I would have just been crucified. There’s no way I would have the knowledge to overpower his wisdom about that business. But instead of teaching him what to think, I taught him how to think, and he could reach his own conclusion. Once he reached his own conclusion, I didn’t have to convince him.
Rarely do successful companies get crippled because a company comes into their market with a better product. Instead, competitors come in with a simple, inexpensive product that caters to the least-demanding customers, and then they move up-market.
ACTION POINT: Don’t underestimate the down market competitor.
Monday, January 5, 2009
Teach Managers How to Think, Not What to Think
Clayton Christensen came back to academia as a forty-year-old doctoral student. He developed this model from his research that showed that what cripples successful companies is rarely that somebody comes into their own market with a better product but rather that somebody come in at the bottom of the market with an inexpensive, simple product that caters only to the needs of the least-demanding customers. And then they move up.
What we showed is that, over and over again, when a well-run company focuses on listening to its customers and investing where profit margins are most attractive, those paradigms of good management that they follow help the leaders move up market but paralyze them when somebody comes from down below. And they just can’t attack below.
Toyota attacked the American market, not by making Lexus’s, but with this crummy, little, rusty subcompact model called the Corona in the 1960’s Then they moved up market to Tercels, Corollas, Camry’s, Avalon’s, and Forerunners. And then they make Lexus’s.
Every once in a while, the leaders in the industry—GM and Ford—would look down at Toyota coming u at the and say, “We ought to go compete against those guys.”” And so they’d send down a Chevette or Pinto. But then they’d compare the profitability of a big Ford Explorer or A Cadillac Escalade, and it actually didn’t make economic sense. This is called Disruption.
ACTION POINT: Consider possible disrupters in your marketplace.
Friday, January 2, 2009
Integrity in Leadership
The proof of the sincerity and seriousness of a management is uncompromising emphasis on integrity of character. This, above all, has to be symbolized in management’s “people” decisions. For it is character through which leadership is exercised; it is character that sets the example and is imitated. Character is not something one can fool people about. The people with whom a person works, and especially subordinates, know in a few weeks whether he or she has integrity or not. They may forgive a person for a great deal: incompetence, ignorance, insecurity, or bad manners. But they will not forgive a lack of integrity in that person. Nor will they forgive higher management for choosing him.
This is particularly true of the people at the head of an enterprise. For the spirit of an organization is created from the top. If an organization is great in spirit, it is because the spirit of this top people is great. If it decays, it does so because the top rots; as the proverb has it, “Trees die from the top.” No one should ever be appointed to a senior position unless top management is willing to have his or her character serve as the model for subordinate.
ACTION POINT: Align yourself with people who have integrity.
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