Decisions - Impact and Consequence

In making a decision, it is certainly important to know what we are changing from, what we are changing to, and why. The impact and consequences gives us information about the “why”. First, let’s define our terms because lots of people confuse “impact” and “consequence”, or fail to see a difference. In this discussion, we need to be able to distinguish them.

“Impact” will be the term we use to describe the direct effect of a problem. The direct effect of a bad design, for instance, could be a safety problem. A different direct effect could be reduced sales. Same cause, two different impacts. “Consequence” will be the term we use to describe the result of the Impact. The consequence of a safety issue could be a law suit OR a loss of reputation OR guilt from causing injury – OR all three. The consequence of reduced sales could be cash flow problems OR distributor defections OR unattractiveness to investors. So we have a cause (bad design) that impacts us in two ways and those impacts have a variety of consequences. We want to avoid some or all of the consequences, so we need to mitigate the impacts that bring those consequences about.

Determining the impact and potential consequences arising from a current situation helps us estimate the importance (or “size”) of the issue that we face. This estimate will guide us to a better understanding of the resources we are willing to commit to correcting it. By the same token, estimating the impact and consequences associated with any proposed solutions or changes to the current situation will help us determine the value of the proposal relative to the “size” of the current situation.

It is important to discuss the impact and consequences upfront. As we all know, crises seem to come in waves at times, and if we must keep the critical issues visible until they are contained, else we will find ourselves “swamped” with issues that all “Top Priority”!

One would like to be able to estimate and express the amount of impact and likely consequence and benefit from a problem scenario (“current state”) and a solution scenario (“proposed state” or “future state”) in order to assign the correct priority and resources.  A perfect decision making process would completely and correctly predict all possible consequences from all possible outcomes of a decision. This is seldom possible, so we try to get as close as is practical.

The first thing to do is to understand the universe of CONSEQUENCES that we face. If they are trivial, we may choose not to expend any resources at all in mitigating the impacts. If they are significant, then we will determine the impacts for them.

The next things I talk about are the impacts that carry the consequences we just discussed and NOT the potential solutions. I do this for several reasons, and here are two: first, it gives us an idea of the kind of work it will take to repair it. If we have the kinds of resources required already in-house, we can control when to begin working on a solution. Secondly, it makes the issue far more real to have a realistic discussion of how it harms us. Before anyone decides we aren’t going to do anything about it at this time, I like to remind them that we all said it carried a certain impact. Are we willing to live with it? Usually, if we have discussed it openly and fully (and I try to make sure we really explore impact), we look at things very carefully before moving on. Impact of not being sufficiently profitable, for instance, is that we don’t have money for training or internal research and development, or other important things.

I then move to a discussion about the “Ostrich Consequence”. This is the impact to us if we don’t do anything. For instance, if we don’t do anything about our profitability, and don’t train our people or do sufficient research and development, we will certainly become less competitive and will likely go out of business. I cover this so that everyone that is working on the problem has an explicit understanding of what we think will happen if we do nothing.

I like to let everyone that can do something about the problem participate in the “Impact and Consequences” discussion so that things can be very real. This has a strong emotional charge to it.

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Decisions - Emotions and Logic

So far, I have suggested that getting good results from our decisions is strongly correlated to employing an improved decision making process based on three things. I would like to start describing such a process right now. First let’s recap the three things that must be considered in our decision making process

·         Perspective

o   One would like to include all important perspectives in their consideration. A perfect decision making process would consider the points of view from anyone impacted or involved in the decision. This is seldom possible, so we try to get as close as practical.

·         Impact

o   One would like to be able to estimate and express the amount of impact and likely consequence and benefit from a problem scenario (“current state”) and a solution scenario (“proposed state” or “future state”) in order to assign the correct priority and resources.  A perfect decision making process would completely and correctly predict all possible consequences from all possible outcomes of a decision. This is seldom possible, so we try to get as close as is practical.

·         Basis for Decision

o   One must understand the strength and coherence of the facts being used to portray the problem and solution scenarios. A perfect decision making process would use only information that had been vetted and confirmed to be accurate, and we would have ALL of the information necessary to present a complete picture. This is seldom possible, so we try to get as close as is practical.

 

A good process evaluates all three of these elements constantly and “spirals into” a decision, meaning that the first iteration takes us from zero information on all three elements to our initial understanding. If there are gaps in our initial understanding, we iterate through again, and again.

If we imagine the theoretical PERFECT process I eluded to before, we would require just one iteration and it would be instantaneous. Your current process is probably near perfect for simple decisions (e.g. only one perspective matters and it is yours, the decision doesn’t carry very great consequences, and you don’t have to deal with a great deal of data or strong conflicting emotions). This is the kind of decision we often face when ordering lunch. For decisions in which there is more complexity in these elements (i.e. risk), our process needs to be more robust.

The first thing we concentrate on are the stakeholders, their identity, their input (and its basis), and the impact of the direction that their input implies. Note that we haven’t discussed who is going to make the final decision, whether it is a group decision or an individual decision; we are just gathering data.

Since the last 150 or so articles I have written have been about how to have these kinds of conversations with people, I am going to summarize that towards the end of the Decision Making series. For now, I am talking about the middle step –basis for decisions.

We have touched on the idea that there are emotional decisions and logical decisions, and that we would prefer to eliminate emotions from our decisions because they tend to distort reasoning. The fact is, almost all (greater than 95%) of decisions have an emotional content and, as long as it doesn’t distort reasoning there is no reason to exclude an option because it is emotionally based (“Logically, I know I need to wear a tie to dinner. Emotionally, I am going to pick the red tie because I like it more”). If, however, you know that the person you are trying to impress tends to distrust people with red ties, then you shouldn’t allow your emotion (liking it) distort your reason (my purpose is to impress this person).

Since we are talking about business decisions, the following emotional components are likely NOT useful and should be scrutinized carefully if they are the primary reason you are making a business decision:

·         Indifference (Whatever – I don’t care – it’s not MY company)

·         Addiction (We should hire more people because I WANT a bigger department)

·         Faith (We are too big to fail; I just know that customer would never drop us)

·         Emotion (We should acquire that little company that makes cellphone applications because EVERYONE is buying cellphone app companies these days and I don’t want to look out of touch)

·         Intuition (I have a feeling that that this is going to be a great quarter…I can feel it in my bones)

I am not saying that you can’t think or feel these things, or that if you do something is going to go wrong. I am saying that if your process recognizes these as adequate support for business decisions, then your process is going to disappoint you more often than if you DON’T rely on them.

In fact, emotion adds certain aspects to decision making that are valuable:

·         Improve Speed (fear increases speed of decisions)

·         Provide Information (a potential course of action that may bring regret or disappointment will promote greater discussion and reflection about alternatives)

·         Assessing relevance (we consider the likelihood of getting a result that will make us feel regret or disappointment and assess the associated factors relevant and worthy of consideration)  

Here are some bases that tend to produce better results than the above. These bases are viewed as “reasoned” or “logical” and are arranged in order from lowest to highest likelihood of success:

·         Pressure (The boss says we should do it this way. He wouldn’t be in his position if he didn’t know something about this)

·         Policy (The law directs a particular way in which we deal with customer issues. Or, could be our policy or regulatory requirements)

·         Experts (the reasoned conclusion of someone with experience in the issue at hand)

·         Facts (use of decision analysis tools such as criteria ranking, prioritization and weighting, or compliance tables. The Kepner Tregoe decision making model is such a tool)

·         Probability (requires modeling to determine certainty and uncertainty and to determine specific values of various outcomes)

It is important to note that I am NOT saying that unless you have a probability based process, your decisions will be wrong. Can experts be wrong? Sure. Can intuition be right? Yes. I am saying that if your process recognizes that decisions that are decided solely on emotion are more risky than decisions that include logical elements, then you are likely to arrive at better results that if it doesn’t.

Also, I am saying that your process must recognize that almost all decisions contain some emotional content and it doesn’t hurt so long as that content isn’t the entire basis for the entire decision AND it doesn’t distort the reasoning that is present in the decision.

Next time we will talk a little more on this, and then move on to Assessing Impact and Consequences.

Insist on great business results! Go to Pathfinder Communication

Decisions, Decisions #2 - How do you make them now?

Last time we learned that judging the soundness of our decisions based on the PROCESS we use to make them is a better strategy than basing that judgment on the RESULTS we achieve. This approach is rests on three ideas:

1)      By developing a decision-making process that rigorously considers a standard set of attributes and criteria, we can arrive at better results IF the parameters and criteria we use are USUALLY important factors.

2)      By revisiting our decision making process after achieving our results, we can adjust our attributes and criteria based on lessons learned and improve the probability of making a good decision next time.

3)      If we accept that the result of the decision is the only way to judge its soundness, it inhibits our addressing the process of making a decision.

Clearly, these attributes and criteria must be important. Fortunately, people have been developing them for thousands of years, continually refining them.  To begin with, I will put them in 3 different categories for general discussion and then go through them in detail:

Category 1 – Perspective

There is generally more than one (meaning more than just YOUR perspective). This means you need to understand the various other perspectives and account for them in the decision.

Category 2 – Impact

Decisions that can result in serious and / or permanent results deserve different scrutiny than those that make little difference. One of my early mentors put it this way “The size of a problem can be measured by the difficulty to recover from it.” I think that is pretty sound advice.

Category 3 –Basis for Decision

We have all heard decisions characterized as “an emotional decision” or “a fact-based decision”.  However, few of us are trained such that we really know what these terms mean, or if there are other bases for decisions (which of course there are), and how to IMPROVE our basis. If you understand the basis for a decision and you understand the differences between the various bases, you can improve your likelihood of making a good decision. Would you rather make a decision based on intuition, or on the results of an expert study? Which do you think would have the greater likelihood of being correct?

The above are the things in which we will develop expertise over the next few articles. For now, I want you to consider the following questions. Feel free to write me (gregg@PFComm.com) or post your thoughts here on the blog. I want you to think about how you CURRENTLY do these things – define your current process……

Perspective Questions –

·         How do I assure that I know which viewpoints are important in a decision?

·         How do I make sure I understand what decision should be made in the eyes of the people that hold those viewpoints?

·         How do I make sure that competing viewpoints are resolved such that the people involved can be depended on to carry out the decision and work towards achieving the desired result?

 

 Impact Questions -

·         How do I determine best, worst, and likely-case results for my decisions?

·         How do I define critical vs. non-critical with respect to outcomes? By the way the outcome affects me personally? My boss? My customers? Other stakeholders?

·         How do I determine the consequences of the outcomes?

·         What if it the likely outcome is good for some and bad for others?

 

Basis Questions –

·         Everyone says that using emotion as the basis for decisions is a bad idea, but I seem to do it a lot (I bought my car cause it looks hot, I picked my favorite basketball team because all my friends liked them and were mean to people that didn’t like the same team, I chose to get a dog “just because”). What would be a better way?

·         How do I make decisions when I know that my boss disagrees? My spouse? My supplier?

·         How do I make decisions when I am short on time? Short on data? I don’t really care about the outcome?

 

Think about how you use these three areas to make decisions now, and we will talk about how I recommend you view them over the next few articles. I look forward to hearing from you.

Insist on great business results! Go to Pathfinder Communication

Decision Making (#1 of a short series)

I’ve spent the last few years writing this newsletter about communication. I started doing that because I saw (as many of us see) that we and our co-workers often make decisions that turn out badly, and those disappointing results can usually be traced back to two elements: lack of necessary information and a lack of objective understanding of the facts. Because these are the biggest shortcomings in our decision making, I write and speak about them the most (how do we get better information and develop a better understanding). However,  they aren’t the ONLY problems with our decision making so today I will start a multi-article series about how to improve our decision making with ideas NOT centered on face-to-face communication.

When we talk about “problems with decision quality” we have to start with a definition of a good decision as our reference. If I ask 10 people “how can you tell if a business decision was a good one?”, I will almost always hear “I don’t know”, which is a little troubling. After some discussion I will generally hear “you can say that a business decision is good if you got a good result”. That is, if we:

·         wanted to enter a new market

·         decided that certain design changes would be important to that market

·         made the design changes

·         began competing in that market

then our decisions were good, because we got a good result.

Really? So you can’t tell if a decision is good until you get a result? Decision experts tell us that that is a bad way to look at things BECAUSE it gives us an excuse to relax the rigor of our decision making and rush through the process of making them. I mean, if you can’t tell if the decision is good until you get a result, then you don’t need to bother with being rigorous; you need to get the result and then adjust.

This lack of understanding regarding decision making cripples countless business efforts and reduces our willingness to hold accountable our decision making process. Of course we want our decisions to yield good results, and by identifying and considering the important factors involved and methods used in making decisions, we can improve our decisions markedly. Let’s start with a new definition for a good decision:

A good business decision is one that has been made in a way that assures:

·         that rigor has been applied in the objective identification and consideration of the expected impact of the outcome terms of:

o   benefit and consequence

o   permanence

o   strength to bind the stakeholders to the outcome

·         that rigor has been applied in the objective identification and analysis of the information upon which the decision will be based

·         that the rigor applied is proportional to the impact of the decision, and therefore efficient in the use of the resources required to make it

Over the next few weeks I will describe how such a decision making method is implemented and how all of the elements of a good decision are defined and determined. 

Insist on great business results! Go to Pathfinder Communication

Listening (part 5 of 5)

Happy August, everyone! I had to excuse myself from the Pathfinder Newsletter in order to take care of a few situations that required my immediate and full time attention, but now am back and am closing on the article about listening.

In this installment on the subject, I will cover the four things that a skilled communicator needs to know in order to keep a difficult conversation on track. They are:

1) Reduce the likelihood of our counterpart “shifting away” from constructive to defensive conversation.

2) Remedy things if they DO shift away.

3) Reduce the likelihood of shifting away from our counterpart ourselves.

4) Re-center ourselves if we have inadvertently shifted away from our counterpart.

Your counterpart can shift into a defensive mindset for a lot of reasons, and there are some over which you have influence. By using the skills described in THE SCORE, you will be able to exert the most influence in keeping them engaged in a constructive conversation. More on this subject is here.

 In order to keep our counterpart from shifting into a defensive mode, we use the knowledge that the feeling we experience are not so much about what we see or hear, but what we tell ourselves about what we see or hear. In some of my presentations, I tell a story that leads the listeners into reacting based on a generalization (sharks are dangerous, for instance) and then reveal some specifics that, had they known them, their reaction would have been different and more rational.

 Applying this well-known mechanism to an exchange with a counterpart requires us to detect their defensiveness. Defensiveness is not always expressed with anger or silence. Sometimes it is expressed with:

·         Sarcasm (“oh, that’s a GREAT idea” doesn’t always mean that your counterpart thinks you are a genius!)

·         Control (“were you going to wear THAT tonight?”)

·         Withdrawal for the conversation (“whatever”, silence)

 and other responses that aren’t clear communications – they are ways people indicate what they would LIKE to say, but won’t say because they don’t feel safe in saying it. Your primary job as a communicator is to ensure that the other person feels safe in talking to you. The techniques we cover in these newsletters are used by professionals like hostage negotiators and crisis managers for that very reason – to make people feel comfortable to talk even in highly charged situations. More information is available here.

 When we find ourselves shifting into a defensive mode, the first opportunity is when we feel as if the other party has made an attack on our dignity or that we are not being heard. This usually happens when our counterpart says something to us and we feel angry about it. Do you recognize this as just a case of us telling ourselves a story about what the other person meant and being angry over our story? If so, you are well on your way to understanding how to correct the situation. A good method for this is to first recognize that you are responsible for your stories and its best to get clarification by asking your counterpart “ what do you mean by that” or “that’s interesting – tell me more about that” or “can you say that a different way? I need to understand just what you mean”. The purpose of this is to give yoru counterpart the benefit of the doubt and ask for more words so that you can come to understand what was meant.

Next time, we’re going to talk about the elements that go into making good decisions.


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Evidence

Last time, we covered how to analyze the two main things we talk about at work (the way things are, and the way they should be) and I gave the methods for analyzing those questions that were written down by Aristotle 2500 years ago. I promised that this time we would talk about how to resolve the two “subtype” claims – those of quality and those of definition. Let’s do it.

Claims of quality (also called claims of value) are, not surprisingly, claims that attempt to attribute a quality or a value to something. When we refer to things as being “good”, “best”, “healthy”, “kinky”, “large”, “difficult”, “worst”, “regrettable”, and so on,  we are attributing a quality that has either a) a non-specific or relative meaning, or b) a meaning that is not easily definable on its own. When we refer to a car as “large”, for instance, what do we mean? How big is a large car? A test that I use for this kind of thing is a test of universality. That is, if I hear a claim and think that in the context it was made that anybody would get more or less the same picture in their mind, then I don’t make much of an analysis. On the other hand, if the claim is subjective and I think it is important for all the parties to have a clear understanding of exactly what is meant, I begin to ask clarifying questions.

The first question is – “Which value should be used to evaluate the subject?”

A claim of value might state that “Quality is more important than on-time delivery”. The phrase “more important” is the “value” phrase here. It could be “more difficult” or “more profitable”. The point is that it is a phrase that has a clear meaning to me, but maybe not the SAME meaning to everyone. So we need to question what is meant by “more important”. Is it more important to the customer? To us? And HOW is it more important - in what way? To the customer’s desire to do business with us? To their ability to be profitable? To our need to meet certain contract requirements? We would hopefully be able to come up with a statement like “Quality is critical to our customer because they don’t have equipment to do rework. It would be better to be late and of good quality than on-time and need to be returned"

This statement still has a problem; it says “it would be better…” which is another claim of value. We would like to have a standard to which we can measure that value. Therefore…

The second question is – “What standards are used to measure competing values?” Are we comparing this to customer needs? Industry norms? Military Standards? Our own business restrictions?

We may ask the customer for a guideline in our case statement. Let’s say that we tell them that we need a guideline to help us with these decisions if we are faced with a minor quality discrepancy, how much time would you be willing to risk? Let’s say they answer “Five days. It would be better for a shipment to be five or fewer days late and be of good quality than for us to have to find a local supplier to do the rework for us”. Now we have a customer supplied guideline. We could revise the statement to say “Quality is critical to our customer because they don’t have equipment to do rework. We may ship up to five days late if it means they receive quality goods”.

After the second question, we have transformed our claim of value into a claim of fact. We can therefore test it the same way – now that we have a standard, we ask if that standard was met. Therefore…

The third question is – “Have those standards been met?” Whatever standards we settled on at the second question must be measurable to the degree that we can settle the question. In our test case, we ask if we meet the five day window or not.  

A claim of definition is one in which a word is associated to a definition. You think this is not complex, but it is at the center of argumentation. Developing definitions is CENTRAL to controlling the flow of a discussion and much time is spent in developing evidence to support them.

To resolve a claim of definition, we follow the same strategy (convert it to a claim of fact) but with different questions.

The first question we ask about a claim of definition is “Is it relevant if the term is defined?” If it doesn’t matter, then let it pass. If we need to know what it means, then this is a CRITICALLY important question. If we say “Capital Punishment is murder”, then we are saying that capital punishments is illegal (‘murder’ indicates a life taken unlawfully). If we say “Capital Punishment is killing, and killing is wrong”, then we are offering a moral rather than legal definition but we have to then support attacks on our position like “is it wrong for a soldier to kill? Or in self defense? Because if it is alright to kill in those cases, then not ALL killing is wrong. And isn’t capital punishment more like societal self-defense?” as I said, definition (and learning how to RE-define things in an argument) are critical when it comes to persuasion.

The second question we ask is “Is the definition fair?” That is, does it represent a biased point of view or not? Sometimes we might not like the definition, but if it is unbiased we need to consider it. For instance, in the case of “the product is ready to launch”, we may be listening to an engineer who means that “the design is complete” or a marketing manager describing that “the campaign is designed”. Both of these could be true, but the bias may lead us to believe that more has been done than truly has been.

The third question we ask is “How do we choose between competing definitions?” You say the product is ready to launch, and I say it’s not. How do we choose? We may suggest that we defer to an authoritative source like a Systems Engineering definition, or a Project Management definition, or just a dictionary if it applies. We may agree that we need some criteria that define what “product launch” means to us. We may defer to the definition that the company president uses. Maybe we’ll ask our customers what would constitute readiness, like “is the training ready yet?” Whatever method we use to make the choice, the choice needs to be made.

Again, we are converting the claim of definition to a claim of fact by asking these questions, and testing it by asking for evidence.

Oh, yeah – evidence. This week, all I want you to ponder about evidence is that there are only kinds of evidence. Ever.

1 – Credibility: The person making the statement is credible, and because they are, we accept what they tell us.

2 – Objective Evidence: This is something we can examine or review like something tangible or testimony.

3 – Social Consensus – This is something we all agree to. If we don’t agree to it, then we have to find one of the other two kinds of evidence to support it. Think about a statement like “Democracy is better than Tyranny”. We accept it at face value because we all agree with it.

Since there are just three kinds of evidence, I will get through them all next time AND be able to describe how you rate the strength of a specific piece of evidence.

Insist on great business results! Go to Pathfinder Communication

Listen (4 of 5)

We’ve been talking about the fine art of listening for the last few newsletters because of its critical importance to being a good communicator, and we have progressed to talking about how to sense problems in our communication. It is important to be keenly aware of when a problem in a given communication starts, because they seldom get better with more talking. In fact,they can often escalate very quickly.

As you talk to your counterpart, you pretty much stay on the subject. If, for instance, you are talking about a project at work, then the discussion stays on a factual exchange about things related to the project – due date, deliverables, requirements, budget, resources – things like that. That is the kind of discussion we are hoping for, and many times we get it. But sometimes we hear things that don’t fit exactly when, say, we are proposing an idea ….like these:

1.       Our counterpart responds sarcastically, saying “Oh SURE, why don’t I just do that TOO?”

2.       Our counterpart starts avoiding giving direct responses, instead favoring language that doesn’t help us make decisions. They are RESPONDING, but not ANSWERING.

3.       Our counterpart starts “building suggestions” into questions, like saying “Well, you aren’t going to let them get away with that, are you?” In other words, telling you but NOT telling you.

4.       Our counterpart makes a statement and we become annoyed or uncomfortable and no longer feel safe to answer as we would like, so we stay silent.

As I teach in my classes, these changes are due to the meaning that the LISTENER attaches to whatever the SPEAKER has said. The LISTENER interprets the SPEAKER’S words and reacts. The LISTENER, then, has the power to determine if they will continue to move towards the desired outcome, or divert the conversation.  In the first three examples above, our counterpart is reacting to us in an unexpected way and we can see that they have “shifted away” the mutually beneficial, fact-based discussion we had been enjoying and towards a more guarded or cautious mode. In the fourth example, WE are the ones doing the shifting.

It is important to be observant for these kinds of shifts as we talk. In the next newsletter, we will talk about THE SCORE, which is a method to reduce the likelihood of our counterpart shifting away from us. When we see our counterpart shifting away from “responsible adult communication” it is important to try to remedy the situation. We will learn to re-engage them by asking some specific questions about their reaction. This is an activity called “Name the Game” and we will talk about it in the next newsletter. It is easy, non-confrontational, and has a good success rate for putting things back on course.

When we feel ourselves shifting, however, it is critical that we address ourselves right away. Our counterpart is not skilled in trying to prevent our shifting, and may unwittingly press our hot buttons. When they hit one and feel ourselves moving out of the “safe zone” and into either fear or anger, we need to be able to re-center ourselves quickly. So we have certain stories we will tell ourselves about what the counterpart just said in order to allow us to change the way we feel about it.

Next time will talk about the following four things to close on the topic of listening for now:

1)      How to reduce the likelihood of our counterpart “shifting away” by knowing THE SCORE.

2)      How to remedy things if they DO shift away.

3)      How to reduce the likelihood of shifting away from our counterpart by using active inquiry.

4)      How to re-center ourselves after we have inadvertently shifted away from our counterpart.

Insist on great business results! Go to Pathfinder Communication