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Saturday, November 05, 2005
Batuhan: Decision Compulsion
By Allan S. B. Batuhan
Foreign Exchange
Of all the sound bites ever created in the business world, none is probably as descriptive of a true organizational disease as “analysis paralysis.”
Parodied in many management textbooks as the bureaucratization of management decision-making, it has been blamed for the downfall of many erstwhile successful commercial enterprises, and is likely to be the cause for the failure of many more.
The problem lies at the heart of most of today’s large corporations. With many operating decisions to make and execute on a day-to-day basis—and with the risks of making mistakes becoming more and more critical—business leaders have become increasingly averse to taking chances, to the extent that they will not make any decision without the benefit of reams and reams of paper-worth of information. And even after that, there is still no guarantee they will actually come to any practical conclusion.
Consequently, the business coasts along, surviving mostly from the fact that its similarly-flawed rivals are in the same situation of indecision.
However, while most cluster on the slow lane, there will be a few nimble and decisive enough to seize opportunities the others are too timid to grab, and eventually end up dominating the pack and forcing many of the slower ones out of the race.
Take the case of British Airways, whose management was described as being more imperial than the British Royal Family.
While its patrician board was too busy eating scones and tea cakes in meetings and probably made no decisions more significant than what coffee to serve on flights between Glasgow and Belfast, the Irish-owned low-cost carrier Ryanair was busy trying to understand the consumers’ value perception of air travel.
Ryanair ended up reinventing the industry to suit their needs. As a result, the low cost carrier is now a bigger company than British Airways, with the latter having to lay off thousands of employees from its bloated organization, just to be able to stay afloat.
Another good example of a decisive organization is Richard Branson’s Virgin empire. With business extensions around seemingly disconnected industries, Branson has tied his various companies together around the core values of value (no pun intended), excellent customer service and a lifestyle that is adventurous and non-conformist.
The man himself typifies the core values that his businesses hold steadfast to. He rides balloons to the ends of the earth, mingles with rock stars and celebrities, donates to good causes and always champions the consumer in all of his dealings.
Most importantly, he does not hesitate to take the big decision when it counts. And it is this last one that is the key to his success.
So what do all these mean? Is this the end of business analysis, as we know it? Should we now get rid of all our MBA analysts and CPA number crunchers, and just make business decisions from the seat of our pants?
Clearly not. A friend of mine who works for one of the large consumer businesses in the United Kingdom tells me how his company seems to be taking the mantra of “no analysis paralysis here” to the other extreme.
He says his boss is fond of asking him to do extensive work looking at an opportunity; and just when the conclusions are about to be presented, tells him to stop because he has made the decision to do something else.
More often than not, the alternative decision would be made without the rigorous analysis that the rejected alternative underwent.
Clearly, there has to be a lesson here as well. As bad as indecision is to an organization, a totally gut-feel approach to what should always be an informed decision-making process is also an invitation for disaster.
“Decision compulsion” is often as dangerous a sound bite as its indecisive alter ego.
(November 5, 2005 issue)
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