Kudos to OMB and Federal agencies for completing the ratings of 100% of their major IT investments, which by the way was no small undertaking .  So we now have a complete and well presented view via the Federal IT Dashboard (http://it.usaspending.gov/) of how well our “major” Federal IT investments are adhering to cost, schedule and various risk (via the Evaluation Factors) metrics.  Assuming the data is and remains accurate and current (and sure, why not , we have a pretty good picture of the Investment side of the ROI equation.  

As OMB seeks to continually improve reporting via the IT Dashboard and facilitate effective management of our Federal IT systems, I’m hopeful that OMB’s next step will be to focus on the Return side of the equation.  After all, we don’t create and manage projects simply to have them completed on time and budget.  While some investments are still under initial development and thus have not yet had the opportunity to produce a return, many of the “majors” are in the Operations and Maintenance phase where they should be delivering value (return) to their end users.    

Measuring return, especially in the Federal government where not all benefits can be monetized, can be difficult, but there are ways that this can be achieved.  For starters, a simple measure of customer satisfaction might be an informative addition to the Federal IT Dashboard.  

The Financial Redress

Three score and four years ago our fathers brought forth upon this earthen sphere, a new order conceived in economic liberty, and dedicated to the proposition that all trade is created equal.

Now we are engaged in a great idea war, testing whether trade, or any human interaction so conceived and so dedicated, can long endure. We are met on a great trading floor of that war. We have come to dedicate a portion of our future income, as a resting place for those banks who here gave their shares that financial markets might live. It is altogether fitting and proper that we should do this.

But in a larger sense, we cannot dedicate – we cannot consecrate – we cannot hallow – liberal trade. The brave institutions, past and present, who traded here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us, the remaining, rather to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced.

It is rather for us to be here dedicated to the great task remaining before us, that from these failed institutions we take increased devotion to that cause for which they gave the last full measure of devotion; that we here highly resolve that these liberal efforts shall not have died in vain; that this world under God, shall have a new birth of freedom, and that this world order of the people, by the people, and for the people shall not perish from this earth.

Management is a form of herding.  Sometimes shepherding, sometimes cat-herding, but most of the time it’s much more complicated — like guiding a distrusting group of friends, who’ve grown apart, to regain the vaguely shared glory of some imagined past.  Envision herding a group of lions and lambs, foxes and hens, insects and birds to a meadow where the herder is paid based on how many people mistake this motley crew for a circus.

Leadership is different: leaders are to groups what cowbells are to cows — they provide a signal that others can follow.  A successful leader polishes the bell, tunes it to the sound of success, and convinces all it is the purest note ever struck.  But a false leader cannot sustain the true tone for long.  The inherent challenge of leadership is then to stay true in times of trouble, to appear — and to be — an honest broker among competing interests.  There are not many leadership tools available, other than experience, intellect, and integrity.  Not the type of things they stock at your local Home Depot. 

One constant I have observed in great leaders is that they allow — demand really — that each person they interact with become better than that person really thought they could be.   There is complexity in this.  A great leader in times of war — Churchill comes to mind — may not be so great in times of tranquility, and of course the other way around as well. 

So, are great leaders born?  Yes, of course.  They are just not born great leaders. 

When the going get’s tough, the tough have some choices to make.  There are some schools of thought here.  The first is that this is a golden opportunity for most companies to lay off the unproductive bottom 10% of their staff.  A second is to reduce future revenue generating efforts (such as new product development projects).  A third is to ask for an across the board reduction in exempt staff salaries.  A fourth is to reduce bonuses to an absolute minimum (especially since most staff will not quit their jobs with the economy as it is).  A fifth is to shift support staff to sales efforts (hence reducing the non-productive time of sales people).  A sixth is to ask for graduated reductions in pay (those with highest salaries receiving a greater share of the cuts).  A seventh is to slash prices on all items that don’t move, while reducing prices on hot sellers less.  An eight idea I heard was to offer all customers an iPhone with their purchases, since that seems to be the only thing that’s still selling like hot-cakes.

But whatever you choose to do, how will you make the decision?  Alone with a bottle of Jack?  With Jack, and a bottle of Perrier?  Or with Jack and Pierre and Otto and Lakysha and Anil and Sergey and Wang?   Today’s companies operate in 24 time zones (or 24 home offices in one city), have wastly different local customs, regulations, and success levels.  What’s perfect for New York may not work in Tokyo, and what’s right in Berlin can seem foolish in Cape Town.

Here’s an outline of process we are using to help our customers:

Part I – And the problem is…
You have to define the problem before you plan a solution.  Too many companies attempt to make changes to their plans without defining what has changed and how the new plan should address this.

Part II — …we need a process…
You can go without a process… you just won’t be very successful.  Circles are nice for doodling.  But don’t get caught going in circles when times are tough.  Without a process, you are walking with one leg a foot shorter — and will tend to circle the room.

Part III — …that we can buy into…
So you have a process.  Great.  Does anyone buy into it?  If your process is opague and non-inclusive, no one will buy into the results.  Open it up to the relevant people and set expectations for how their input will be used.  Just because people participate, the have to know that companies are not democracies — but why not let them bring good ideas into the mix?

Part IV – … and communicate to the organization
Once the leaders decide on what to do, they have to find a way to have the followers follow.  You have your carrots and your sticks, of course.  But usually there are not a lot of carrots in a recession, so that leaves sticks…  Not a good way to have people follow leadership.  So find new carrots that don’t cost money.  Communicate, provide non-financial benefits, give stock in lieu of cash bonuses.  But whatever you do — just make sure you communicate your sincere intent (unless of course your intent it’s insincere, in which case you are unlikely to be reading this.)

So, that’s the process.  Now get going.

By the way, I make software that helps with this.  www.expertchoice.com.

Good outcomes are the result of three factors: Quality of the decision, quality of the execution, and chance.    Quality of a decision comes down to a correct assessment of the ability to execute and the element of chance (which includes risk).  Quality of execution similarly is strongly related to chance, as executing without regard to risk is foolish.

Over the past decade or two the world’s business leaders have been obsessed with execution.  Here is a typical list from Amazon that shows a strong focus on execution as strategy. A similar list of books on risk is telling.  The focus here is more tactical and technical.  Risk apparently is the domain of geeks, not general managers.

And who was focusing on decision making?  Again a simplistic list from an Amazon search is revealing: almost all the books are on the psychology of individual decision making.  Few titles on collaborative decision making, or improving businesses to make better decisions. Put simply: why has there been so little focus on decision making that marries execution and chance for better business outcomes.

The current economic crisis is immensely complex and flip summaries will not resolve it.  However, it is clear that decision making in business, government oversight, and personal behavior has been found wanting.

- A finely tuned system that executes well, when all is well, will not do in dire times — our banking system is Exhibit A.
- Risk models that model economic times when there was little risk, will not tell us about the dangers the future inevitably holds– our housing and mortgage industries are Exhibit B.
- Business leaders whose rewards are reaped in the short term, will not make good decisions for shareholders and households that plan to reap their rewards in the long-term– our current stock markets are Exhibit C.
- Government that aims to regulate the interest of all market participants while clearly sitting in the pocket of some stakeholders earns the trust of no one– our crisis of confidence now is Exhibit D.
- People who have become only consumers, and whose life-style is borrowed with abandon, one day will have to return to the values of that People–we are almost all, unfortunately, Exhibit E.

Decisions.  We all face decisions.  Hopefully next time they will be better–decisions that acknowledge the importance of risk, and decisions that take into account our ability to execute.

Choosing the president has little to do with qualifications.  The vast majority of the electorate (informed or uninformed, intelligent or dumb, educated or not, rich or poor) has little sense of what the president does, let alone what would make one person more qualified for that job than some other person.   Instead it’s all about which candidate can set the more favorable context and who can frame the decision voters face.

I have my own personal biases as to what I think the president ought to do, but I can’t be sure.  Watching West Wing and living in DC doesn’t make me qualified to judge.  Now there are certain well documented decisions the president makes that have long-term consequences.  These include selecting the senior leadership of government agencies, nominating judges, negotiating agreements with other countries, and acting as the commander in chief.  But few of us know much about any of this. 

Electioneering then is only marginally related to the candidates qualifications.  Instead it’s an old fashioned war of cognitive biases.  The first one is simple: choose your battlefield — frame the decision.  The candidate who can define the issues of the election to his/her advantage has an enormous advantage.  This is where money comes in.  The money allows a candidate to build a machine of influencers in two ways:  you engage the influencers in the media (talking heads, journalists, show hosts) by sending out messages that are easy to digest and it allows you to engage a community of supporters that are out there angling for money every which way.  A person who pays money to a campaign not only helps keep the machine going, but is also much more likely to try to engage someone else to vote for the candidate.

The second cognitive bias is the mere recognition bias.  We like what we know, even when we don’t know what we like.  So a candidate that is recognized by the electorate — even if that recognition is only vaguely positive – is more likely to be elected.   So getting out early and establishing a positive context with the candidates name and image is critical in national races. 

Now as any old election hand knows, national races are not won only by appealing to the base of one’s own party.  They are won just as much by depressing the turnout of the opposing candidates own party, and by appealing to the uncommitted and non-partisan voters.  This brings the money back into the picture: creating a negative context around the opponent.   As the election draws nearer and more undecided voters start to pay attention, the opportunity to influence the candidate’s context is the greatest.  At this point races will usually turn to absolute mud.

Given the preceding analysis, it is obvious why John McCain’s ill received Paris Hilton/Britney Spears ad was sheer election influencing genius.  At this early point in the race the facts are irrelevant.  Prior to Barack Obama’s world tour the bar had been set low by his handlers and he easily cleared it.  To deflate the positive press and throw up sufficient doubt, the McCain camp simply needed to puncture the positive with sustained negative talk.  The point wasn’t to strike out and make a serious point about Obama being on par with Mlles Hilton and Spears — it was only to establish a counterweighing negative conversation around Obama.  And the ads, repeated a million times over and ridiculed by most, didn’t reflect nearly as negatively on McCain (except for some political junkies) as they effectively halted the victory lap of Obama.  Changing the frame of the conversation, and establishing a negative context was the mission — accomplished.

Tolstoy begins Anna Karenina with a flawless blog-entry:  “Happy families are all alike; every unhappy family is unhappy in its own way.” Admittedly he loses his blogging style a little as he goes on for about 700 pages explaining his point.

But there’s more to this epanalepsis than witless wit.   Could it be that our choices and decisions fall into a similar logical structure?  Put differently, is it true that “All good decisions are alike; each bad decision bad in it’s own way.”

In the most simplistic sense this is true.  All decisions that help us achieve our goals are good in that they achieve their end — decision that fail, fail for any of a number of reasons, with luck and execution often playing a prominent role.  It seems very dissatisfying, however, to qualify decisions based on their outcomes.  We all have made a good decision, one that we felt was the right one, only to never see the wished for result .  This is because for all non-trivial decisions there is some uncertainty about the outcome.

The true question is if we can describe a universal optimal decision making procedure that would apply for all decisions where the outcome is uncertain.  Ironically, the quality of a decisions cannot be measured by the outcome at all.  Since we do not know the outcome at the point we make a decision, it is outside of the scope of the analysis.  What we rely on instead is the much less concrete notion of ‘expected outcome.’  The sad secret is that people are rather poorer judges of what will actually happen, than they think.  In short, we are overconfident about our ability to predict the future.

So, what is the universal decision making procedure?  I’ll leave that answer for a non-blog dissertation, but instead offer some observations.  Before you make a non-trivial decision you need to know some things.  Below are some of the things that I look at — I don’t always look at them in a particular order, and some I may look at more than once:

• * When is the earliest/last moment I can make this decision? 
• * What would be true of the outcome that I desire?
• * What are the factors that are relevant in that outcome and how important are they?
• * When examining alternative solutions, how will I select among them?
• * What information do I not have that is important to have — who could help me get it?
• * What evidence disconfirms where I’m leaning?
• * Can I reverse this decision once made?
• * What assumptions about the future am I making in my deliberations?
• * Should someone else (e.g., boss or a direct report) be making this decision?
• * Does how I make this decision matter in getting the results that I seek (i.e., do I need to involve other’s to get their buy-in, understanding, assistance)?
• * Is there a legal, ethical, or moral dimension to this decision that I should consider?

This may seem like a lot of steps, but for a small decision I can cycle through them in a few minutes, or even seconds.  For an important decision it may take longer.  These questions are never superfluous, however.  If the decision is important, making explicit (even if only to yourself) your choice, instead of keeping entirely intuitive is valuable.  If you need input from others it is critical.  If you are making a decision outside of your experience/expertise it is the only way you can really properly make the decision.

Cooperation and collaboration may rival computers and communications technology as the most improved aspects of business in the past 50 years.   Optimists hope that management by fiat, grunts, and growls will sometime soon be fully replaced by a conscious attempt to arrive at the best solution, regardless of its source.  This, I’m afraid is folly.  Two major problems remain to be solved before we herald in the era of kumbayaesque business practices:

1. The transaction cost of keeping everyone happy, and
2. The elimination of poutology as a career strategy.

Let’s treat them in turn. 

Transaction costs is a technical term from economics.  In it’s simplest form this can be thought of as just what it costs to exchange things in a market place.  More generally, transaction costs can be seen as the direct and indirect costs of obtaining a certain outcome.  So, in a business decision environment we can view transaction costs as the price of paying off the foot-draggers, saboteurs, whiners, and single-focus freaks.   In a highly collaborative environment where consensus and collaboration are valued as an end in themselves (because they are believed to bring about better decision options and execution actions) this cost is not negligible.  Who hasn’t seen a decision delayed, implementation altered, or lowest-common-denominator choices prevail, because someone appeared to object.  This is especially prevalent in hiring decisions, where a single ‘uhmm’ can be seen as the prelude to a veto war. 

Poutological behavior is more pernicious.  While more common among friends and family, pouting is often employed effectively as means to an end in business.   This refers to the act of pouting to gain leverage later.  In a sense, this is a particular type of anchoring bias.  If I pout about a decision today, but then acquiesce ‘because I’m a team-player’ then next time people will, whether they realize it or not, take into account my “magnanimous” gesture.  The net effect is that the pouter has greater leverage coming into the next round of collaborative decision making.   A pouter who is perceived as being invaluable has double leverage since the implicit threat of abrupt departure hangs over the team like Damocles’s sword.

Tomorrows collaboration tools and team training in business school have to do more than just help us collaborate and achieve consensus.  Managing the process of collaborating, disarming the poutologists, and reducing transaction costs are very important to help us avoid the politics of teams, and the dreaded ‘groupthink’ which poorly configured teams often sink to.  Such tools will allow us to prioritise tasks, and maintain a goal-oriented focus, thereby making politically motivated pouting as transparent as a child’s crossed arms and foot-stomping. 

The function that is the title of this post represents the possibility of a wicked infinite regression in American politics: Bush I was in the White House for 12 years (8 as VP). Clinton for 8 years. Bush II has a year left in his 8. Now the cards may well hold a Clinton vs. Bush election. With Mrs. Clinton as a candidate vs. Governor Jeb Bush of Florida as a popular hypothetical choice for vice presidential candidate for the GOP.

So, after 28 years of a Bush or a Clinton in the White House, we may well be in store for an election that will guarantee that number to move to 32. To put that into perspective, think that no one entering the workforce since 1998 (when people born in 1980 turned 18) has ever experienced IN THEIR LIFE a White House without a Clinton or Bush — and that this may be true until 2012 — a span of 14 years.

Ignoring the particular people involved, it seems intuitively obvious that during this time there were other people equally or better qualified in the USA to fill these jobs, whose names were not Clinton or Bush. So how did it happen that the collective judgment of 300 million people resulted in these choices?

In addition to the tragically poor process for selecting the candidates in the first place (see: How not to Choose A Presidential Candidate), there are some psychological biases that helped America along. The first is the mere exposure effect. Basically, it has been shown that we are more likely to like job candidates that we have had prior exposure to — even if that exposure had nothing to do with the person’s fitness for the job.

A second bias is the anchoring effect. Basically, by suggesting a particular answer we can influence all subsequent answers to cluster around this initial anchor — having a last name that simply is the same as a name we hear often in the media can thus make someone more likely to win — absolutely regardless of the merits.

There are a number of other biases that can be seen to enhance the likelihood of candidates getting elected whose primary claim to fame is a last name. A more complete list can be found at: List of cognitive biases.

So the question looms large: is the choice of the American president stuck in a wicked infinite regression — will young people today live and die in a country where there is always a president/vice president who is a Bush or a Clinton?

I remember reading ”The Country of the Blind” by H.G. Wells when I was a teenager.  The story is basically built around the maxim that “In the country of the blind the one-eyed man is king.”  Except the inhabitants of the country of the blind find the antagonist’s obsession with this incomprehensible ’sight’ thing crazy and eventually he is convinced to have surgery to remove his eyes.  Among many other things, this story is about context — and especially the context of decision making. 

Thus, data in context is information.  Information in context is knowledge.  Knowledge in context is wisdom. 

For example:  The number 93 is data.  It’s more than 92 and less than 94 (this btw. is the implicit context of our counting system), but without any further context this data is useless.  If we provide context for this number: “The percent of satisfied customers is 93″ we arrive at some form of information.  This information is more useful than the data we had before, but without further context this information is not very valuable.  Is 93 percent satisfaction good or bad?  I guess that could depend on what type of customers and what kind of service or product we are delivering.  

Now if we add more context: Our percent of satisfied customers is 93, our competitors’ customers are 95 percent satisfied. OK.  Better, I now have some knowledge that may be helpful.  But still, this is not entirely satisfying.  Is this 2 percentage point difference meaningful?  If it’s statistically so, is it financially so?  Again, we need context to our knowledge: we need wisdom.  Without the wisdom that tells us if the 2 points make a difference or not, we lack the ability to make a wise decision.

Of course context can also vary from one person to another, from one place to another.  What is important in one country may not be important in the next.  What is important today, may not be so tomorrow.  It’s a shifty thing context.  One of the key things I do when I make decisions with other people, is ask them to tell me how important different things are to them — that gives me the ability to discuss the context of their goals/objectives — and it also helps me challenge my own assumptions about the decision.