Monday, January 30, 2012

Experience matters as a matter of FACT!

"I went to a man with a high reputation for wisdom -- I would rather not mention his name; he was one of the politicians -- and after some talk together it began to dawn on me that, wise as everyone thought him and wise as he thought himself, he was not really wise at all. I tried to point this out to him, but then he turned nasty, and so did others who were listening; so I went away, but with this reflection that anyhow I was wiser than this man; for, though in all probability neither of us knows anything, he thought he did when he did not, whereas I neither knew anything nor imagined I did." Socrates (as described by Plato)

Over my time in the corporate world I have seen time and time again decisions based on 'half truths and total nonsense'. This is driven out of two key areas, namely:
  1. A lack of facts
  2. Ignoring the value of experience combined with facts
It is important to distinguish long term career experience with evidence based management. I am a huge proponent of actual hands on career experience and not simply text book practice. I believe the intellectual property (IP) that is built over a person's career is incredibly valuable. Without facts or evidence these "experts" are called upon to provide their wisdom for a given decision. Although the IP is valuable the lack of facts can significantly impact the outcome of the decision.

It is also important to remember that not all facts are right. They are merely facts after all. It is the interpretation of the facts as part of a detailed evidence based management approach that creates the value in the facts. This is where leadership springs to the fore. I have found those people who exhibit genuine leadership skills are not only excellent listeners but more importantly are willing to embrace alternate points of view. When undertaking a fact based approach to decision making leaders will need to balance the IP of the "experts" with the accumulated facts. This is not easy as, as I previously stated, the IP can be in incredibly valuable, however it can become destructive particularly when the experts begin to ignore the facts. I am certain many of you will have come across management who have been described as "stubborn", "stuck in their ways", "road blocks". The greatest buggy whip maker of all time would have limited value if they had not transitioned their skills on the arrival of the automobile.

Likewise it is critical that the experts are not simply ignored because they are deem "past it". This is where generalist Management Consultants can be so dangerous. The corporate landscape is littered with detailed analysis gone wrong. Here consultants with no industry experience provide recommendations to a company based on the facts accumulated. However these facts often ignore the "voice of the expert". The value of the IP exits the building in the face of the smart guy paper. Again here is where true leadership is bought to the fore. In the book 'Hard Facts Half Truths and Total Nonsense' Pfeffer and Sutton state "Executives have fallen into the habit of relying on consultants to reduce complexity and to do much of their hard thinking...The essential tasks of leadership cannot, or at least should not, be subcontracted. Building an evidence-based perspective into how people think and operate is among the most crucial of these tasks."

To assist with this, it is important to remember that whether you are a small business operator or CEO of a larger corporate, it is critical to acknowledge that a fact based management approach is not only the domain for Senior Executives. Again, Pfeffer and Sutton put it best when they wrote, "The best organisations are places where everyone has permission, or better yet, the responsibility to gather and act on quantitative and qualitative data, and to help everyone else learn what they know."

So the next time you are part of a decision making process where interpretation of facts is critical, try to remember:
  1. Hope is not a strategy
  2. General statements are generally wrong
  3. Knowing a lot of facts is not the same as being smart.
..... and that is a fact!

Sunday, January 15, 2012

It's Time To Make A Decision! Now What?

A number of years ago I was working on a project looking at improving the profitability of an apparel business. At the time the inventory had increased dramatically over a fairly short period, causing a number of profit related issues. I will never forget the day we had a Senior Management meeting and I asked who was responsible for stock. "We all are" was the war-cry that followed. In trying to understand the reasons behind the excess stock I then asked who made the decision (ultimate responsibility) to purchase the stock... silence. Poor forecast, poor analysis, high Minimum Order Quantities (MOQ's), poor sell-through... excuses, excuses, excuses. But no ultimate decision maker.

I have seen this time and time again. Decision making is a critical process in any business and is essential in ensuring ruthless execution, whether it be as part of business as usual (BAU) or a complex change strategy.

A number of tools have been developed to help provide a framework in the decision making process.

My personal favourite is the Bain & Company RAPID Decision Model. RAPID (which is a register trademark of Bain & Company) was developed by Paul Rogers and Marcia Blenko (Bain Consultants) and published in the article: “Who has the D? How clear decision roles enhance organizational performance” which appeared in the January 2006 Harvard Business Review. RAPID is an acronym that stands for:
Recommend: These people will put together the proposal (data, facts, analysis etc) for a key decision. Additionally they may consult with the Input providers to incorporate their views as part of the proposal.
Agree: These people agree with the proposal from the Recommender, including negotiating any modifications to the proposal if the Agree'er has any concerns. Note: the more people assigned an Agree role the more time it can take to make the decision.
Perform: These people execute the decision once it is made.
Input: These people are responsible for providing relevant facts to the Recommender. 
Decide: These people are the decision maker. Typically it is one person / executive who commits the organisation to implementing a decision, however it can potentially be a collective group i.e. company Board of Directors.
Why do I like the RAPID model? Firstly, it is simple. You read it, you see it, you get it. Second, and most important of all, it is a great tool for clearly articulating who the actual decision maker is as well as providing clarity of the decision making process.  RAPID provides transparency to the decision making process and hence is can be invaluable in ensuring accountability. Individuals will know exactly what their role is, and what other employee roles are, within the given decision process. What once may have been grey will now be very black and white.

It must be acknowledge that RAPID has been criticized for slowing down decision making process, particularly in the early stages of embedding the process within an organisation. This will be compounded when there are to many A's or I's in the process. Additionally, it can also lead to tensions between employees particularly when you deal with ego's i.e. everyone wants to be important, and hence the people aspect of this needs to be managed with due consideration.

As I previously mentioned, there are a multitude of decision making tools available, of which RAPID is my preferred option. However the driver / outcome is a clearly defined decision making process with the appropriately assigned roles and responsibilities within the process. Ultimately though someone must be held accountable for a decision. Whether you use a tool like RAPID is neither here nor there. The key is ensuring the next time anyone asks, "Who made the decision?", stunned silence is not the appropriate answer.