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Deciding Factors

The author of “Winning Decisions” offers five strategies for moving forward during a period of unprecedented doubt and danger. Learn how to manage uncertainty by using metaknowledge, dissension, and open communication.

Has the United States ever launched a military operation in the face of so many unknown variables? Have we ever fought such a covert enemy? Who can predict the outcome of this war against terrorism? How will we know if we’ve won?

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Today, government officials face uncertainty when making decisions involving America’s military tactics, domestic policies, and economic problems. And beyond the beltway, business leaders encounter more questions than answers as they struggle to maintain or capture profitability in the midst of mounting unemployment, wavering consumer confidence, and volatile markets. In short, nothing is certain anymore.

“Gone are the days when you could eliminate uncertainty or wait to gather enough information to reduce uncertainty to negligible levels,” says J. Edward Russo, coauthor of the forthcoming Winning Decisions: Getting It Right the First Time (Doubleday/Currency, December 2001). “You wait, and someone will eat your lunch. Leaders today have got to respond adaptively as the world around them grows more complex and ambiguous.”

History provides little strategic guidance, because no nation has ever faced this complex set of circumstances before. The decisions facing the White House are colossal, and the stakes could not be higher. At home, how do you keep American citizens alert to terrorist hazards, yet avoid widespread anxiety? How do you retain popular support when reporting even the smallest military victory may jeopardize troops’ safety and success in Afghanistan? Abroad, how do you destroy Al Qaeda and its supporters while keeping innocent civilians safe? How do you unite an international coalition of allies without becoming entangled in long-standing political battles?

When the decision-making environment changes so too must the processes for investigation, evaluation, and action. That is why, during this period of unrelenting doubt and danger, leaders must rethink their decision-making techniques, says Russo, professor of marketing and behavior science at the Johnson Graduate School of Management at Cornell University. Here, he offers five strategies for making smart decisions in an age of unknown threats and uncertain results. The only thing he’s sure of: It won’t hurt to try.

Manage Uncertainty

More than 100 years ago, the esteemed Prussian general Helmuth von Moltke said, “No battle plan survives first contact with the enemy.” And he was right. Especially today, a leader’s primary job is to remain alert and to respond quickly to each new threat or circumstance, Russo says. Preparing is no longer enough. To manage uncertainty, you must be willing to scrap your carefully laid plans at a moment’s notice and start over again.

“For leaders today, uncertainty has grown because of smarter competitors, globalization, technology, and the rapidity of change,” says Russo, chief scientific advisor of a software and business intelligence company called WiseUncle. “So your strategy should not be to eliminate uncertainty, but to accept and manage it.”

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In Winning Decisions, Russo and coauthor Paul J.H. Schoemaker define four levels of uncertainty. In the first level, you work with mostly known variables. By level four, you’re swimming in obscurity. You’re asking questions for the first time like, How will the American public respond to a terrorist-launched epidemic of smallpox? And you’re receiving few credible answers. Level four is where we are today.

“If you don’t know what to do, your gut reaction is to lean toward the world you are prepared to deal with,” Russo says. “But a large airplane loaded with thousands of gallons of jet fuel has just hit your building. That’s not the same world you know. You can’t control it, but you can adapt to it.”

Right now, the best thing leaders can do is to gather information, he says. They need to acknowledge their limitations and to accumulate all available intelligence. That knowledge will help them react quickly and flexibly when — not if — the situation changes.

“It’s so difficult to predict the future that there’s almost no point,” Russo says. “You do more harm than good by believing that you can forecast anything today. So you need to probe constantly and test actively. Don’t wait for something to happen. Be as prepared as you can, and then respond rapidly and adaptively when it does.”

Know What You Don’t Know

“Most people presume that they know more than they do,” Russo says. “It’s a comforting, ego-supporting tendency that is true across culture, gender, age, and nationality. We’re not talking about just blowhard CEOs. That’s human nature.”

Today, false confidence is not only cocky but also dangerous, he says. If you think you know it all, how will you ever learn? How will you remain open-minded about gathering enough information to make an informed conclusion? How will you adapt to unknown circumstances?

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Ignorance, Russo says, is not a bad thing. As long as you recognize it and remain dedicated to combating it, ignorance can provide strength. Successful leaders know what they don’t know. Russo calls that “metaknowledge.” Philosophers call it the Paradox of Socratic Ignorance. The concepts are the same.

To recognize knowledge deficiencies, business leaders should escape the everyday environment of work, Russo says. They should retreat to a place where they can focus on learning and getting better, not on achieving company goals. Outside the office, leaders are more likely to tap into their metaknowledge by letting down their guard and admitting that they don’t know it all.

“There’s nothing wrong with being proud. Just don’t be satisfied,” he says.

Invite Dissension

Perhaps Arctic explorer Robert Swan expressed this principle best when he explained his criteria for selecting the “very powerful, awkward, different, difficult individuals” who accompanied him on treks to the North and South Poles. Swan said that he chose men totally unlike himself — and each other — because if everyone thought alike, they would die for sure.

“Good leaders select, tolerate, respect, and reward people with diverse opinions,” Russo agrees. “They thank people with different opinions even when they disagree. Strong leaders can accept that dissension. Weak leaders can’t. They need their egos boosted.”

Strong leaders, he says, encourage discussion, debate, and deliberation. They surround themselves with dissimilar teammates and then conduct what Russo calls “contrary analyses.” In short, they examine each decision from every conceivable perspective. And they do not allow the group to shrug off a dissenting opinion. Everyone is heard.

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“I hope [Director of Homeland Security] Tom Ridge is performing contrary analyses about the anthrax scare right now,” he says. “I hope he’s asking himself and his advisers, ‘What would it take to shut down the postal service? What level of threat? What kind of information?’ “

Broadcast the News

Six thousand teenagers begin smoking every two days. That’s more than all the people who’ve ever died in California earthquakes. So why are so many people terrified of tremblers yet blasé about lung cancer — the cause of nearly 160,000 American deaths each year?

It’s all about control, Russo says. When people feel powerless, their anxiety and sense of dread escalates. That powerlessness stems, in part, from doubt and distrust. If they don’t believe that their leaders are sharing all pertinent information, they will question everything. That is why open, truthful communication is so important during times of crisis — to build confidence and cohesion when it matters most.

“Straight talk pays off,” Russo says. “The best thing our government can do is to tell people, ‘Here’s what we know. Here’s what we don’t know. Here’s what we’re doing. Here’s what you need to do.’ If people have something to do that’s useful and productive, the national level of anxiety will drop.”

Welcome Feedback

The U.S. Army conducts a lessons-learned analysis called an After Action Review (AAR). This frank and thorough appraisal allows commanders and troops to assess what worked, what failed, and what they learned in completed military operations. Russo says that the AAR is an invaluable tool and deserves more attention inside and outside the military. For example, though it requires operational field managers to conduct AARs, the Pentagon does not perform any official lessons-learned analysis itself, he says. Why not? Couldn’t Secretary of Defense Donald Rumsfeld learn something by reviewing his past decision-making processes?

Russo suggests that some leaders avoid feedback and appraisals because they already recognize problems, but they aren’t willing to accept or acknowledge the necessary solutions. That, he says, is a big mistake.

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“In situations involving new threats, feedback can help leaders rapidly learn and deal in a new environment,” Russo says. “I think there is a great opportunity for American leaders to improve through continual lessons-learned analyses. And I hope the anthrax scare, the military activity in Afghanistan, and other post-September 11 government activities will raise the profile of decision making. It’s an incredibly important part of what leaders do that receives little respect as a field and even less as training.”

Anni Layne Rodgers (arodgers@fastcompany.com) is the Fast Company senior Web editor.

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