7: Effective Decisions
Executives who make effective decisions know that one does not start with facts. One starts with opinions. These are, of course, nothing but untested hypotheses and, as such, worthless unless tested against reality.
To get the facts first is impossible. There are no facts unless one has a criterion of relevance. Events by themselves are not facts.
The effective executive also knows that people do not start out with the search for facts. They start out with an opinion. There is nothing wrong with this. People experienced in an area should be expected to have an opinion. Not to have an opinion after having been exposed to an area for a good long time would argue an unobservant eye and a sluggish mind.
The good statistician knows this and distrusts all figures - he either knows the fellow who found them or he does not know him; in either case he is suspicious.
We know what to do with hypotheses - one does not argue them; one tests them.
The effective executive encourages opinions.
The effective executive, therefore, asks: "What do we have to know to test the validity of this hypothesis?" "What would the facts have to be to make this opinion tenable?" And he makes it a habit - in himself and in the people with whom he works - to think through and spell out what needs to be looked at, studied, and tested. He insists that people who voice an opinion also take responsibility for defining what factual findings can be expected and should be looked for.
Unless one has considered alternatives, one has a closed mind.
Sloan was anything but an "intuitive" decision - maker. He always emphasized the need to test opinions against facts and the need to make absolutely sure that one did not start out with the conclusion and then look for the facts that would support it.
There are three main reasons for the insistence on disagreement.
It is, first, the only safeguard against the decision - maker's becoming the prisoner of the organization.
Second, disagreement alone can provide alternatives to a decision.
Above all, disagreement is needed to stimulate the imagination.
The effective decision - maker does not start out with the assumption that one proposed course of action is right and that all others must be wrong. Nor does he start out with the assumption, "I am right and he is wrong." He starts out with the commitment to find out why people disagree.
One has to make a decision when a condition is likely to degenerate if nothing is done. This also applies with respect to opportunity. If the opportunity is important and is likely to vanish unless one acts with dispatch, one acts - and one makes a radical change.
"De minimis non curat praetor" [The magistrate does not consider trifles] said the Roman law almost two thousand years ago - but many decision - makers still need to learn it.
There is no formula for the right decision here. But the guidelines are so clear that decision in the concrete case is rarely difficult. They are:
- Act if on balance the benefits greatly outweigh cost and risk;
and
- Act or do not act; but do not "hedge" or compromise.
He will not give in to the cry, "Let's make another study." This is the coward's way - and all the coward achieves is to die a thousand deaths where the brave man dies but one.
Just because something is difficult, disagreeable, or frightening is no reason for not doing it if it is right.
Executives are not paid for doing things they like to do. They are paid for getting the right things done - most of all in their specific task, the making of effective decisions.
The ability to make effective decisions increasingly determines the ability of every knowledge worker, at least of those in responsible positions, to be effective altogether.
One of the basic weaknesses of large organization - the absence of any training and testing for the decision - making top positions.
-- From "The Effective Executive" (Peter Drucker)
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