Category Archives: Contracts

Time To Rethink Your Critical Decision Meeting Process?

ImageYou need to make a critical decision so you call a meeting. Why?  Organizational behavior expert Chris Argys wrote that, at its fundamental level, “the value of a group is to maximize individual contribution”.  Fair enough.  The meeting has an agenda but it then devolves into what is called “rational ritualism” where everyone does a data and interpretation dance.  Decisions are made using the critical thinking methodology of deductive and inductive arguments. Why? “Because that is the only way we know how to do it [or have done it]” is the usual answer. You still have big problems but you still meet the same way over and over again.  So what is the solution?

The well-known author and professor, Michael A. Roberto, in his Great Courses lecture series, presented a lecture entitled “Deciding How to Decide” on how to avoid making big mistakes by simply deciding first how to make a key decision.  He calls it simply “deciding how to decide”.  He used as a historical example what President John F. Kennedy learned from the failure of his Bay of Pigs disastrous decision to avoid it happening twice when he made his decision in the subsequent Cuban missile crisis. It worked. So how did the successful later decision making process work?  Professor Roberto’s research disclosed 4 key elements that he believes made the difference.  They are: [1] Composition: decide WHO should be involved in the decision-making process, [2] Context: decide WHAT type of environment in which to make the decision, [3] Communication: selecting the MEANS of dialogue amongst the participants, and [4] Control: deciding HOW to control the process.

The purpose of addressing the four points above is to avoid group-think which is the result of the failure to create “process-centric learning”. Too often leaders focus only on “content-centric learning” of gathering all the information available on the issue, but wholly fail to address creating a balanced approach to weighing the information.  The Bay of Pigs decision-making process was fatally flawed due to lack of candid debate, vested interests, and not inviting some key experts to the meetings.  This fiasco was avoided in the subsequent Cuban missile crisis decision-making process by President Kennedy by deciding first how to decide.

So why do leaders routinely not create a decision-making process first?  Too much time? Too much effort? Too old a habit? Whatever the reason, if you want to start making better decisions every day of the week, ask yourself, have I spent as much time on the process as I have on the content?  If not, the author recommends using the four tools above to create a better model to address critical decisions. To rephrase what Albert Einstein once said, “problems cannot be solved by the same level of thinking [and meetings] that created them”.

Are You a Problem Solver or a Problem Finder?

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In his book “Know What you Don’t Know”,  the author Michael Roberto quotes the noted psychiatrist Theodore Rubin who stated, “The problem is not that there are problems.  The problem is expecting otherwise and thinking that having problems is a problem”.  So what does he mean by this statement?  The answer is that successful business leaders don’t wait for the big problems to materialize – they actively seek out problems that others do not see or want to see.  They realize that if you wait for problems to find you then you have not managed your risk properly because you should have found the problem first. So here are 5 questions you need to ask yourself to get started.

“How” do you become a problem-finder?  The answer is simply that successful business leaders first recognize that what they do not know is the greatest area of risk that they need to focus on – so they spend a great deal of time learning what that is in their particular industry.

“Where” do you find these unknown problems?  Andy Grove of Intel, quoted by the author, uses the following metaphor to describe his model when he states: “Think of it this way: when spring rain comes, snow melts at the periphery, because that is where it is most exposed”.  Simply put, problem finding is about looking at the periphery of your company, where you will find the first signs of change, either positive or negative.

“Why” is it important to find problems first?  Solving problems is like being the first responder to an emergency situation.  As the old adage goes, “a firemen has basically two tools, an axe and a water hose”.  So what do you think your house will look like AFTER a big fire?  Easier and better to avoid the fire BEFORE it starts, and deploy many more tools to do so.  Business leaders need to be constantly searching at the periphery for problems that are not yet problems.

“When” do you start?  RIGHT NOW!  The answer, as many of us were taught in school, is often found right in the question.  Great questions beget great answers.  So start asking great questions.  Don’t be the person who says “if I had only seen it coming I could have avoided it”.  If you are, then YOU may be the biggest problem.

Do you know HOW your managers are doing?

The Commission on Corporate Governance [CCG] of the New York Stock Exchange just issued their Report on good corporate governance in response to the financial crisis in 2008 and 2009. It lists 10 key principles.  Principle #2 is very interesting.  It states that, although there has been an emphasis on the board – shareholder relationship in the recent years, the CCG finds that “the critical role of management in establishing proper corporate governance has not been sufficiently recognized”.  The CCG states that management must create a “culture of performance with integrity” and accountability systems. Healthy debate, which the CCG refers to as “constructive tension” is also needed between the board and management.  In the wake of many major corporate tragedies lately, the CCG is now shining the spotlight on execution and not just strategy.   So how is your board working with your managers?

The Great Debate: Data versus Decisions

The Economist Magazine recent article addressed the seminal problem of what risk will hurt you the most – either what you don’t know or what you know but don’t interpret properly and implement remedial action.  The article focus was on the shadow banking system [non-bank financial systems] and the recent recession. But the lesson learned [or not] was that the key economic risks were not buried in data but rather in “plain view” – inflated housing prices and some banks low capital level. But “plain view” facts are not literally in plain view if you do not see them.  Some refer to this as black swan risk management. Whatever you refer to it as, the circumstances of these past few years is a reminder that if you change the way you look at things, the things you look at change. If so, how are you changing the way you look at 2011?

A Scary Question!

How do you know that the answer to your current problem may just be very simple but, because you assumed it was too complex or expensive to resolve, you were afraid to ask for help?  Conversely, how do you know that an issue you have that seems simple may, in fact, be a whole lot more complicated – so you can’t afford not to solve it or it will get even worse?  How do you know unless you ask?  Here is one example. The saying goes that great companies are bought – not sold.  If so, ask yourself why anyone would want to buy your company? If so, why? If not, why not? How do you know unless you ask?

The “Find and Fix” Syndrome

The Story of the Rug Merchant

The simple story of the rug merchant is about a man who stepped on a bump in the rug in order to flatten it out only to see the bump reappear in another part of the rug. He repeated his actions again and again yet the bump reappeared again and again. Finally, in frustration he lifted the rug, and as he looked underneath, an angry snake slithered out.

This story is shared by the famous business consultant Peter Senge in his books as an example of a “find and fix” mentality in which companies try to solve dynamic problems with static or incorrect solutions. Frustration sets in, or worse, the company is lost before it knows what happened. It’s another example of your biggest risk which is “what you don’t know that you think you know.” Solution: learn about the problem first! Next, play what I call business BINGO which is the confluence of your Goals and Tasks and the people performing same. Of course in order to play you need to know your Vision and Mission. If you are unsuccessful in “find and fix” mode, over and over again, maybe it’s time to start learning another way to play the game of business?



    Are Your Meetings Baseball Caps or Thinking Machines?

    A typical Monday.  You need to make some important decisions so you call a meeting. Why?  Organizational behavior expert Chris Argys writes that “the value of a group is to maximize individual contribution”.  The meeting has an agenda. OK so far. Then it devolves into what is called “rational ritualism” where everyone does a data and interpretation dance. Decisions are made using critical thinking methodologies such as deductive and inductive arguments. Why? “It’s the only way we know how” is the usual answer. Yet your company still has problems but you still meet the same way.  So what is the solution? You need to get beyond critical thinking so that you can create a great thinking machine. How? It’s sometimes referred to as “metacognition”. There are many ways to think, thinking only one way is like a baseball cap – it’s “one size fits all”. Business is not simple so if you don’t explore metacognition you are leaving a valuable strategic resource untapped. Or as one of my professors once said ” there is always a simple solution to a complex problem, and it’s usually wrong”.

    Are You Making Decisions or Solving Problems?

    Are you spending most of your time “making decisions” or “solving problems” as Peter Drucker once phrased it? How do you tell the difference? Decisions are often about next year, solving problems is usually about this year. Decisions can be very few, problems are often many. Decision making is usually on the balcony. Solving problems is usually on the dance floor. Decisions are often the most productive use of your time. Solving problems is often the least productive use of your time. Decisions are usually about strategy. Solving problems is usually about tactics. Want a simple test? Ask yourself, how big is the impact of the time you spent on the last matter you worked on?  I’d like to hear from you.

    Who needs a Corporate Culture?

    The famous business consultant Edward de Bono once wrote: “Too much experience within a field may restrict creativity because you know so well how things should be done that you are unable to escape to come up with new ideas.” Creativity at the corporate structural level is not a non sequitur. Why? Because corporate culture starts with how you think. Do you know how you think? If you don’t, then as they say, perhaps you’re too close to the problem. If so, who is on your corporate culture team?  I’d like to hear from you.

    The Hippocratic Oath for Business Managers

    Peter Drucker once wrote, regarding managing your externalities, that business managers should take heed of the famous medical field directive “Primum non nocere” which translates to “above all do no harm”.  So what is the connection? Managers speak of profits but don’t explain the purpose. Drucker writes “[Managers] still define the goals of their business as profit maximization.  They do not stress the objective function of profit.  They do not talk of risks – or very rarely.  They do not stress the need for capital.”  So when a company fails to address in their contracts and other business relationships risk factors and the cost of capital, it harms the company by failing to protect its ability to remain in business.  Despite the popular myth of the lack of business acumen in the medical field, doctors have some sound advice that business managers should take heed of.