“In any moment of decision the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.”  Theodore Roosevelt

An action is usually preceded by a decision to execute that action. These can be simple decisions, such as the choice to act to prevent a thrown ball from hitting you in the face. Or these can be much more complex decisions, such as the choice to initiate a series of actions, for example the decision to bring a therapeutic to market. While each activity is fraught with differing levels of uncertainty, the point of choosing how to deal with that uncertainty occurs prior to the action, and consequently this point can become the source of much angst. President Roosevelt’s observation offers a convenient framework for exploring the decision point.

“…the worst thing you can do is nothing.”  Wise words, but this is sometimes what happens. Neglect during the decision making process can occur through different mechanisms; active ignorance or hyper analysis. Active ignorance can result for many reasons, including making the issue a low priority, or simply not agreeing that the decision needs to be made and letting it fade. Hyper analysis occurs when so much effort is placed in analyzing the decision that the gears of action are never engaged. We call this analysis paralysis. Just as having a boat rudder snap in a storm, either scenario negates your ability to navigate in your environment. It is common for people that have been frustrated by such a scenario to naturally trend towards the next type of decision making.

“…the next best thing is the wrong thing…”  It seems obvious that we would want to avoid doing the wrong thing, but to say that we are always right would be an abject failure to embrace our humanity. Certainly there is an element of execution and chance that can contribute to the eventual failure of a course of action, but sometimes the decision-making process lacks the appropriate degree of rigor necessary to identify and mitigate these risks. At one extreme is the ready-fire-aim scenario, where the decision is made on previous experience or a quick read of the current decision-making environment. If there is little in the way of risk (i.e. financial or strategic implications) then the choice to make a decision without much analysis may be the right one, however there are examples of project failures where the stakes were high and quick decisions were made with unfortunate consequences.

“…the best thing you can do is the right thing…”  As John Lennon said, “Life is what happens when you are busy making plans.” While there is clearly a value in moving quickly, Maxiom Group champions that the pace and rigor of decision making should be governed by a risk-based approach. This is of particular value in the Biopharmaceutical industry where capital expenditures are large, and many decisions must be made far in advance. Business is the art of making decisions under uncertainty. To that end the key variables should be explored, such as the nature and likelihood of various outcomes and the magnitude of the impact (i.e. cost, opportunity, resources, and strategic positioning). This assessment will determine how thorough a decision making process needs to be, or how well the uncertainty needs to be understood. It is only after understanding this parameter at a high level that we can begin to rationally assess the degree of analysis appropriate for a particular decision. When it can be deemed that the business risk is minimal, that the decision is very easily reversible, or that the cost of inaction is fairly high, then there is value in acting expeditiously. If the business risk and cost are high or the decision is reversible only with difficulty, then the rigor of the assessment should be greater. A quick assessment of the decision parameters can save time, money, and more.

As with many things, there is a balance between extremes that yields an optimal (or better) outcome – how do you/does your company strike the balance in decision making rigor?

Andrew Putney

Tags: Business Strategy

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