As a part of an engagement with a client – an insurer – I
walked the executive leadership team through a discussion of
company strengths and weaknesses as well as external
opportunities and threats. I stood at the white board posting
their answers as the discussion migrated to an assessment of
the independent insurance agencies that represented them.
The chief marketing officer – an effervescent, optimistic
guy – commented "our agents love us." When I asked if I should
add that to the list of internal strengths that had already
been enumerated, he energetically said "yes." Then, with a
somewhat bewildered look on my face, I asked if anyone had any
questions or comments to add to his point. Everyone in the
room shook his/her head "no," and we moved on to the next
issue.
For the next 15 minutes or so, I kept hoping that someone
would request a return to the "our agents love us" comment. No
one did. I became impatient, saw the opportunity to make a
point, and seized it:
Looking at the CEO, I asked, "Can we return to the comment
about the esteem in which you are held by your agents?" He
said "Certainly," but the look on his face implied,
"Certainly, but I’d rather not."
I began: "You all agreed with the point that your agents
love you. Correct?"
The team members shook their heads in agreement.
"Can I drill down a bit and ask you a few questions about
that assertion?" I continued.
The CEO responded tepidly, "Fine."
I took a deep breath, and then launched: "Do all of
your agents really love you? Do you really care if all
of your agents love you? If they don't all love you, which
ones do? The ones that actually do love you, are they
the ones making you money? Among those that don't, what are
you doing about it?"
I continued with a couple of more questions, but you get
the point.
This team had lapsed into two of the primary miscues that
undermine effective team decision-making: group-think
and rushing to judgement. During our ensuing
discussion, they acknowledged that facts not currently in
evidence were required before asserting "our agents love us."
The next week, the team members assembled some very specific
data that led them to a different, more quantified
conclusion.
The bottom line (this is the "why should you give a damn"
point): You may believe that you always make objective
decisions based solely upon facts, but you don't. The reason:
you are human! We always, always impose subjective assessments
on data when we convert it to useful information and from
there, to conclusions and decisions. If you do not acknowledge
that premise and then construct mechanisms to account for it,
you will be in trouble.
See if you recognize any of these additional causes of
ineffective decision-making:
• Hubris. We're the best. We're the smartest. We're
the Masters of the
Universe (but, of course, we're humble).
• Excessive Optimism. I do believe that optimism is
good. There is a difference between optimism and Polyannaism,
however.
I once knew a CFO I referred to as Dr. No. One time during
a meeting break, No pulled me aside and asked, "You wanna know
how I got so pessimistic … by financing optimists."
• Confirmation bias. That's when one screens out
data that doesn't support a business case or a preconception.
Anyone who’s ever done a sales presentation knows all about
this. I've seen it applied in other areas to more chilling
effect, however. To wit: I witnessed a group of scientists at
a pharma discount a number that didn't support a particular
conclusion.
I can only speculate on how often this happens when a
physician has an ego investment in a diagnosis (Read Dr.
Jerome Groopman’s book How Doctors Think for more on
this subject).
• Availability of data is another example. That's a
reliance on easily accessible information to prove a point or
make a decision.
• A natural, automatic, subconscious human assumption that
our world-views, beliefs, thinking and emotions, are facts. We
then subconsciously conclude that world-views, beliefs,
thinking and emotions that contradict our own are, by
definition, wrong.
In Malcolm Gladwell's book Blink, he details
instances when intuition either supplemented or replaced
analysis in successful decisions. While I believe that
intuition is valuable, I recommend using it to supplement a
quantified business case rather than alone or the other way
around. Regardless, too many "quant-jocks" view intuition as
guesswork; too many right-brainers view statistics with
suspicion.
It's really vital, as a business leader, that you
explicitly understand how you and your team make decisions and
that you not delude yourself by ascribing an unjustifiable
level of objectivity to a process that is totally human, and
therefore, imperfect. The frequency with which you revisit
assumptions and decisions ought to be proportional to the
magnitude of the risk, the risk of failure and the balance
between intuition and facts.
