Business Case Studies, Executive Interviews, George Wright on Decision Making

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Executive Interviews: Interview with George Wright on Decision Making
May 2008 - By Dr. Nagendra V Chowdary

George Wright
Professor of Management at Durham Business School, UK.

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  • Events in business never proceed exactly as planned. Such intangibles as friction, uncertainty, fluidity and disorder complicate decision-making. What is the cost of poor decisions? How to avoid strategic errors in decisions?
    This is where scenario thinking has a role to play. You can plan for the future but by that I don't mean a best-guess future but a range of plausible futures. The key is to have a disciplined view of what the future may hold and then reflect back on the current success formula of the organization what needs to change to make the organization robust against a range of plausible futures? What adjustments need to bemade to keep the airplane (i.e., the business success formula) in the air under a range of varied wind conditions (i.e., the scenarios)? To me, that is the essence of excellent, future-focussed, strategic thinking!

  • Brutal competition, ethical strife, unanticipated changes in marketplace, technological shifts, and a lingering recession, etc., can leave a company battle worn. Accordingly, many have advocated combat philosophy, also known as maneuver warfare, as it emphasizes action in the midst of uncertainty. What lessons, if any, should corporate leaders pick up from warfare as regards business decisions? For instance, the use of speed, surprise and concentrated force against an opponent's weakness to achieve maximum impact with a minimum resource commitment in the presence of strategic uncertainty and hostile intent, etc., are some of the critical elements in maneuver warfare. Should business decisionmakers adopt these elements?
    The key, to me, is to think ahead. The origins of scenario planning come from warfare. Von Clausewitz and von Moltke, two Prussian military strategists wrote on scenarios in the 19th century. In World War II, General Alan Brooke's actions have been described as a natural scenario planner. As Chief of the Imperial General Staff commanding all British and Empire forces, he was the mastermind behind the allied forces defeating Germany. Alan Brooke tried to get inside the minds of the enemy, to understand what actions they might be expected to take. Generally, his approach was directed towards setting policy rather than tactics. I agree with Alan Brooke to see into the distance, to anticipate how events may play out, that is the key to longterm success in warfare.

  • Decentralized decision-making is described as the delegation of significant decision-making authority down through the ranks. The aim is to give those closest to the action the latitude to take advantage of on-thespot information unavailable to their superiors. What according to you is the difference between decentralized decision-making and delegation of authority? When does decentralized decision-making make sense?
    The concept of delegation makes perfect sense but subordinate decision-making must also be aligned with the greater decisions. In the Shell organization, one way that has been used to create the alignment is for topmanagers to prepare a scenario book. The book is passed to all in the organization and each small-scale decision must be evaluated against the pen-pictures of the future that are encapsulated in the set of scenarios. Small-scale decision should stand up well against a range of scenario futures. In this way, alignment at the periphery can be achieved without day-to-day monitoring.

  • How important are counselors, advisors and mentors in making strategic decisions?
    Consultants are often used to facilitate strategy away-days when the top team assembles to consider strategy. Facilitation is important otherwise the CEO may speak of his planned way forward and then next no-one else is prepared to challenge this statement. In effect, strategy awaydays can become rituals without providing fresh insights to the assembled team. The key, from the facilitator's perspective, is to ensure challenge to strategy but without individual participants losing face. Emotions can rise and this, if handled correctly, can drive the insights in my experience!

  • Jim Collins, in an article in Fortune (June 27, 2005) distinguished between bad decisions and wrong decisions. What according to you is the distinction between bad decisions and wrong decisions?
    As I said earlier, a bad outcome to a decision is not necessarily a bad thing. By chance, bad outcomes happen in risky decisions. Very few decisions are completely risk-free. If they are, then the range of alternatives evaluated is probably too small and business-asusual thinking is the name of the game. But, in the long-run, businessas- usual thinking is a losing strategy. Nevertheless, inertia in strategy is commonplace. In my experience, many organizations fall into the inertia trap without realizing it!

  • There's enough literature on decision-making styles and traits of effective decision-makers. But, what according to you are the prerequisites for effective decision-making?
    The key to effective decision-making is a sound process intuition about the best course of action should be subjected to challenge. Many decision technologies can be used to provide this challenge decision analysis, scenario thinking, and more. Intuition, once challenged, often changes and this is where the value-added occurs. Leaders should not form early decisions and premature closure on a decision should be avoided otherwise others, lower down the organization, will not challenge the preformed decision. Remember, a decision, once made, is seldom reversed!

The Interview was conducted by Dr. Nagendra V Chowdary, Consulting Editor, Effective Executive and Dean, IBSCDC, Hyderabad.

This Interview was originally published in Effective Executive, IUP, May 2008.

Copyright © May 2008, IBSCDC No part of this publication may be copied, reproduced or distributed, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or medium electronic, mechanical, photocopying, recording, or otherwise without the permission of IBSCDC.

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