The Decision Before the Decision: Before we start the process of making a major decision, there’s something we do, whether implicitly or explicitly: Make a decision about how to make the decision. At its most fundamental, this decision decision means choosing between winging it and using a structured decision making procedure. If we opt for the latter, we will then face the second decision decision: Precisely how should we structure the decision making process – both to avoid disasters and to discover winning choices?

 

You and your fellow senior executives are smart people. Surely you don’t need to follow a plan for your deliberations? Why, that’s a cheat sheet, a crutch. Perhaps you might grant the wisdom of structure when considering a multi-billion dollar corporate investment? Or before committing to a major merger or acquisition? Or to a pronounced shift in strategic direction? Even if you would consider structuring your executive discussions for such matters, if you’re like most businesspeople, you will improvise when it comes to settling on a new hiring policy, selecting an advertising agency, shaping a compensation policy, or even entering a new market.

 

Most companies apparently don’t structure even the biggest of their decisions. Companies with long histories, sophisticated structures, and seasoned leaders can still wander into disaster. Royal Dutch/Shell’s recent misadventure with its estimates of oil reserves illustrates that. Merck’s (and the FDA’s) relatively slow recognition of problems with Vioxx compares unfavorably with Kaiser Permanente’s early detection of problems. The difference? Kaiser used adverse reaction epidemiology, whereas the other two organizations lacked a structured early warning process.

 

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