Labyrinth- the Art of Decision-Making

by Pawel Motyl

  The most stressful time in mission control is the blackout, the period in which there is silence as the capsule passes through the upper layers of the atmosphere. In these minutes there is no contact between the astronauts and mission control, and no data from the onboard instruments get through. In this case, the blackout lasted three minutes. What it was like in the Mission Operations Control Room during that period is best expressed by Gene Kranz:

  Everything now was irreversible. [... ] The control room was absolutely silent. [... ] All eyes were on the clocks counting down to the end of blackout. Blackout was an eternity. [... ] Quietly, in hushed tones, I called Deiterich, my RETRO: “Chuck, were the clocks good?” In a whisper he responded, “They’re good, Flight.” We waited. The world waited. We were 1:28 past the expected acquisition time when a crackly report from a downrange aircraft broke the tension: “ARIA4 has acquisition.” I pounded the edge of the console; the room erupted [... ] Kerwin called again and a few seconds later we heard, “Okay Joe.” Just two words, but the intensity of the relief was overwhelming. In the control room, each controller has his moment of emotional climax. [... ] I was standing at the console crying. 10

  For his achievement, Gene Kranz received the Presidential Medal of Freedom, and in the months that followed, he and the other heroes of the rescue mission became celebrities and the story of Apollo 13 became a synonym for successful completion of a “mission impossible.”

  Kranz’s team’s working methods are still held up as a model application of the inquiry mode in practice. The Herculean engagement of all those involved in the operation and their unshakeable faith that it would succeed are also seen as a model for best practices in such circumstances.

  Gene Kranz worked for NASA until he retired in 1994. That same year, he took part in the documentary film Apollo 13: To the Edge and Back. When he began describing the mission’s final minutes, he was unable to hold back the tears, despite the dramatic events having unfolded over a quarter of a century before. The scene survived the cutting room and is part of the final film.

  Rule #6

  If you find yourself in a black swan situation, go into inquiry mode. Whatever your intuition or experience is telling you may be wrong.

  This is one of the most important, but hardest rules to apply. First, it requires you to realize that the situation you’re in is a black swan. Considering our natural tendency to categorize problems, automatically looking for analogies with past situations, it’s easy to tell yourself, “Ah, it’s nothing new, I know what to do.” Second, black swans frequently arise in situations requiring fast, decisive action to address the problem (e.g., Eurocontrol’s situation, where a lightning reaction was required to address the risk posed to flights). And here’s the rub—again, like Eurocontrol—we side with our initial assessment and then, instead of switching on inquiry mode, we start cherry-picking the data that confirm this initial assessment is right. I like to call this “decision narcissism.” Once our knowledge and experience tell us which decision to make, we will look far more positively at information confirming our intuition. After all, it’s screaming at us, “You were right!” By the same token, if the data starts showing that our initial assessment was wrong, we don’t feel good. Here is somebody demonstrating to us quite clearly that our intuition, be it general or business, is faulty. Research has demonstrated that in extreme situations, decision-makers take a very dim view of those who bring them information that doesn’t confirm their initial assumptions, often completely unrelated to the actual decision. “Johnson has brought me an analysis that suggests that my decision to reject the offer was wrong. I always thought Johnson was pretty average. Definitely not a star. He has family problems, too, I hear. Crashed his car a while back, as well. I reckon that report of his should probably be filed in the bin.”

  Sound familiar? Even if we avoid that pitfall ourselves, is someone out there treating you like poor old Johnson?

  The vast majority of the time, we are working in an environment where inquiry mode is unnatural, because it involves ongoing mental conflict—and its associated stress—and what’s worse, it demands a lot of time (and who has a lot of time these days?). In a highly conformist and hurried business world, lack of time is the fundamental enemy of applying inquiry mode, which further explains why black swans are so horribly effective at what they do.

  Rule #7

  Set up your own EXCOMM. Surround yourself with people who don’t think like you. Value those who disagree with you, and who aren’t afraid to say it.

  It’s therefore worth having your very own Executive Committee, a group of trusted people you can involve in decision-making processes. This isn’t so easy in business, not least because of the tendency of groups to aim for unanimity and the cloning trap, whereby we tend to employ people who share our view of the world. It’s a vicious cycle: the more uniform the group is, the more strongly those who think differently are rejected, even though they are the group’s scarcest and therefore most valuable resource. Those who openly question the group’s view are generally disliked, and in extreme cases, they may be ignored or even ostracized. It’s yet another paradox.

  So if you find yourself surrounded by competent, professional, experienced people but you find them awkward to talk to, don’t reject them. They may be your best bet when it comes to making decisions. If you face a problem together, looking at it from different, but complementary perspectives, you have a chance of going into inquiry mode, analyzing the problem thoroughly and making the right choice. I am always saying that when I was the CEO with ICAN Institute, Harvard Business Review Polska’s publishing house, my closest ally in making business decisions was someone with whom I almost never agreed. Not only that, he was really irritating and often drove me crazy, dragging the issue out when I thought it was done and dusted. And yet, despite that (or probably because of it), he was incredibly valuable and saved me several times from making serious mistakes that neither I nor anyone else around me had noticed I was in danger of making.

  To put it bluntly, I didn’t like the guy, but he was an absolute diamond when it came to making business decisions.

  The quality of discussion and analysis is closely correlated with the degree of psychological safety sensed by team members. A mentally secure team generates an environment in which its members aren’t afraid of taking risks and openly expressing their opinions. The higher the degree of mental security, the more energetic the discussions are and the more people engage in them, without fear of being ostracized or suffering other consequences as a result of articulating dissenting opinions. Of course, mental security doesn’t happen by itself; it becomes a feature of a group whose members have been given enough time to establish the right interrelations and have learned to trust one another. The impor-tant thing is shared goals—if a team really is all pulling in the same direction and everyone wants the same thing, open debate naturally ensues. We mustn’t forget about the authority trap, though, because it also influences the sense of mental security. The more uniform the status and rank of team members are, the easier it is for open discussion to take place. To put that in practical terms, it’s worth not only investing time and effort in improving internal communications but also promoting those who are introverted, but might disagree with the official line. If there’s a real star in your group, though, exclude them from the initial meetings, just like JFK excluded himself.

  Some of the companies I’ve worked with decided at some stage to take the bull by the horns. Realizing that black swans are unavoidable, even for the most competent decision-makers, they decided to prepare for the unexpected. The only certainty in a black swan situation is that reacting quickly—understanding the problem and responding nimbly to the new rules of the game—is crucial for survival. An organization that reacts faster than its competitors can not only not lose in a black swan situation, but may even gain. At the same time, truly unexpected situations typically create chaos in an organ
ization, and too much time passes before the key people recover from the shock and set in action the appropriate mechanisms. For this reason, more and more organizations are setting up rapid response teams (sometimes even calling them the black swan response team), made up of people from a number of departments, with varying competencies and a range of experiences, whose task is to shorten the time is takes to react to a crisis. These teams meet often and rehearse reacting to different types of black swans. They analyze how to respond to events on a global, sectoral, organizational, team, and individual level, looking for weak points in the company that require immediate action. They also force others to discuss new solutions and promote the inquiry mode.

  Rapid response teams have four highly effective weapons in their armory.

  The first one is positive paranoia. This somewhat surprising term means looking at reality not from the perspective of the most likely scenario, but from that of the most negative option. It requires assuming that if something can go wrong, then it probably will (also known, of course, as Murphy’s Law). Taking this approach enables us to test various systems in an organization in test crisis situations, and as a consequence, to find flaws in contingency plans that are not immediately obvious. Stress-tests, which banks were subjected to in 2010–11, are an example of this. A side effect of simulating black swans is that it takes people out of their comfort zones, away from the equilibrium and self-satisfaction that sets in when everything seems fine. An interesting form of this exercise is a technique the military uses—“accumulating experiences within experiences”—which I learned about from General Bernard B. Banks, Associate Dean for Leadership Development at Northwestern University’s Kellogg School of Management, in 2017. Every military exercise for the army is an opportunity to test the effectiveness of an individual, a team, or an organization by introducing unplanned (but controlled and safe) changes in a given operation. In terms of business, a possible scenario could be a sudden shortage of production line staff and the exercise would involve testing a range of possible solutions in this artificially created situation. This kind of activity not only teaches us to prepare for the unexpected, but also sparks the creativity of employees in addressing the challenges posed by a black swan.

  The second weapon is process audits, but interpreted in a less orthodox way. Process audits are nothing new in business—almost every organization carries them out regularly. They are used to identify the gap between planned parameters and the real world. So, in process audits, we look for mistakes and faults in order to eliminate them. Teams responding to a black swan, though, should regularly look at the results of these audits from another perspective: to look for those processes that work so well that the company has never had to correct them. Everyone assumes they are a strong point and cannot fail, thinking “it’s always worked perfectly, so it will keep working perfectly” (the turkey syndrome). The problem with this is that black swans don’t distinguish between weak and strong processes—they’re kind of versatile in that respect. The most painful shocks are felt when something that was a characteristic strong point suddenly fails. An extreme example of this is the story of Encyclopædia Britannica, whose fact-checking and accuracy were its strongest selling points. While the arrival of Wikipedia didn’t make this process worse, it did make it irrelevant.

  Rule #8

  When improving an organization, also pay attention to the best and most efficient processes.

  In a black swan situation, they can fail. Do you have a back-up plan?

  Rapid response teams also practice shooting down “Concordes”—that’s the third weapon, as it were, in the arsenal. Every organization hoards projects that are going nowhere fast, despite the effect on sunk costs and decision-making inertia. So, when you’re initiating a project, it’s worth identifying the KPIs that must be achieved at every phase for the project to move into the next stage. 11 Establishing measurable, objective indicators here is absolutely essential because it means that at a later stage, you can focus discussions on the facts, minimizing the emotional input of those involved in the project and thus avoiding an affective conflict. One of the tasks of response teams is to regularly review the portfolio of ongoing projects in a company, and to eliminate those that don’t meet the criteria established for them and have no chance of achieving success.

  The fourth weapon is to hunt for monkey habits—attitudes and behaviors that might once have been justified, but are now anachronistic and reduce an organization’s flexibility and efficiency. This is the most difficult of the four weapons to wield, as it requires you to take a step back and look at your organization with fresh eyes, being as critical and objective as you can. The longer you’ve been with a company, the harder it is to adopt such an attitude. So, it’s worth inviting some of those who’ve been with the company for the shortest time to get involved in the exercise, because they can still see the inefficiencies that others have become inured to, simply treating them as part of the game. A rapid response team should proactively include such people as members, as very few of them will express a critical opinion right off the bat. Most newly employed staff will adopt the stance of cautious observers in their first few weeks and months: “I want to see how it all works, and for now, I’ll keep my doubts to myself, so as not to be a laughingstock. Once I see how everything works, then I’ll ask questions.” Unfortunately, by then it’s too late—the new person has learned that it doesn’t pay to climb on the ladder.

  Rule #9

  Shoot down Concordes and hunt for monkey habits.

  Eliminating loss-making projects and ineffective practices frees up time for other things, increasing a company’s agility and flexibility.

  Just how ingrained such habits of many years’ standing are can be shown by the example of a European financial sector company whose board I advised for many years. In this seemingly very modern, well-managed organization, a “high potentials” group operated—forty-five middle managers who had been identified as talented and possessing real potential to advance rapidly through the company. In 2011, the board planned to include this group in the process of operational improvement and scheduled a day-long workshop, which I had the pleasure of facilitating. The aim of the workshop was simple: the managers, divided into groups, had to analyze the functioning of the organization in various fields and find as many minor inefficiencies, accrued over years of habit, as they could. They had to look for things they could eliminate quickly, cheaply, and without involving lots of people. At the end of the day, each group submitted their list of “monkeys” (the session was called “Monkey Hunting,” for which metaphor I extend my sincere apologies to any ecologists reading). We eventually identified a grand total of eighty-two inefficiencies that could easily be eliminated! It’s worth looking at one of them, as it was particularly eye-catching. On the 28th of each month, in each of the company’s dozens of branches, a designated employee printed out a report, several pages long, from the IT system, which they then sent to the head office—by Priority Mail! What was especially surprising was that the company had an integrated IT system, which meant all the data could be consolidated at head office with just a few clicks of a mouse. On closer analysis, the origin of this paper trail was identified: it was a procedure implemented by the CEO in 1995. At the time, it was an appropriate solution. Over the years, the responsibility for preparing and sending the report was delegated to people lower and lower down the hierarchy, so by 2011, the report was being submitted by a worker who had been programmed to remember that the report must be sent on the 28th. At head office, another low-ranking employee received the reports, put them in a file, and sat them on a shelf—because that’s how it had always been done. For fifteen years, nobody asked why they were printing and sending these reports. Strange but true. That’s how strong monkey habits can be in an organization.

  Rapid response teams act so that any eventual black swan attacks with less force. They relentlessly test an organization and its compo
nents from the point of view of the unexpected. They optimize processes, structures, resources, and working practices. They free up time and energy. An effect of their work is a kind of decisional Kaizen, constantly seeking minimal gains that make a firm more agile and thus better prepared for a surprise scenario.

  5

  改 善

  改善:That is how the Japanese write Kaizen—one of the most impor-tant and effective techniques of continuous improvement, and one of the fundamental principles of Total Quality Management (TQM). Although Kaizen originated in the manufacturing sector and is still predominantly identified with it, it has far wider applications and can be an excellent tool for improving decision-making processes. As a set of methods involving all employees in an organization, it is also an interesting tool for shaping an organization’s culture, creating an environment within which everyone is expected to constantly seek opportunities and make suggestions for improvements.

  At its simplest, Kaizen means the critical appraisal of tasks and of the processes associated with them, identifying things that aren’t right or that deviate from the norm, introducing changes, and increasing efficiency and quality. The process is a continuous one, so once we’ve introduced improvements, we go back to research and analysis, looking for further refinements. Often the sequence PDSA (Plan-Do-Study-Act), devised by William Edwards Deming, is used to describe it. The key point in the cycle, of course, is analysis (= Study), which makes it possible to discover things that are wrong. However, as more businesses began to adopt the PDSA approach, it soon became apparent that a problem commonly encountered in the world of medicine—focusing on the symptoms, instead of the underlying causes of the disease—was becoming equally common in the business world and, as a result, it was impossible to effectively and permanently solve problems. Thus, one of the crucial elements of Kaizen is the analysis of the source of the problems, or RCA (root cause analysis). RCA is ideal if your aim is to draw profound conclusions from events in which the actual decision-making process played a role. Understanding the root cause of a bad decision provides the opportunity to make corrections and avoid falling into the same trap in the future. You could say that thanks to RCA, we don’t get rid of only the pain, but also the cause of the pain.