• The problems are not posed in a form amenable to classical decision theory.
  

  Decision theory requires the decision-maker to know what are his or her action-options, what are the consequences of these, what are the uncertain events which may influence these consequences, and what are the probabilities of these uncertain events (and to know all these matters in advance of the decision). Yet, for many real-world decisions, this knowledge is either absent, or may only be known in some vague, intuitive, way. The drug thalidomide, for example, was tested thoroughly before it was sold commercially – on male and female human subjects, adults and children. The only group not to be tested were pregnant women, which were, unfortunately, the main group for which the drug had serious side effects. These side effects were consequences which had not been imagined before the decision to launch was made. Decision theory does not tell us how to identify the possible consequences of some decision, so what use is it in real decision-making?

• There are fundamental domain uncertainties.
  

  None of us knows the future. Even with considerable investment in market research, future demand for new products may not be known because potential customers themselves do not know with any certainty what their future demand will be. Moreover, in many cases, we don’t know the past either. I have had many experiences where participants in a business venture have disagreed profoundly about the causes of failure, or even success, and so have taken very different lessons from the experience.

• Decisions may be unique (non-repeated).
  

  It is hard to draw on past experience when something is being done for the first time. This does not stop people trying, and so decision-making by metaphor or by anecdote is an important feature of real-world decision-making, even though mostly ignored by decision theorists.

• There may be multiple stakeholders and participants to the decision.
  

  In developing a business plan for a global satellite network, for example, a decision-maker would need to take account of the views of a handful of competitors, tens of major investors, scores of minor investors, approximately two hundred national and international telecommunications regulators, a similar number of national company law authorities, scores of upstream suppliers (eg equipment manufacturers), hundreds of employees, hundreds of downstream service wholesalers, thousands of downstream retailers, thousands or millions of shareholders (if listed publicly), and millions of potential customers. To ignore or oppose the views of any of these stakeholders could doom the business to failure. As it happens, Game Theory isn’t much use with this number and complexity of participants. Moreover, despite the view commonly held in academia, most large Western corporations operate with a form of democracy. (If opinions of intelligent, capable staff are regularly over-ridden, these staff will simply leave, so competition ensures democracy. In addition, good managers know that decisions unsupported by their staff will often be executed poorly, so success of a decision may depend on the extent to which staff believe it has been reached fairly.) Accordingly, all major decisions are decided by groups or teams, not at the sole discretion of an individual. Decision theorists, it seems to me, have paid insufficient attention to group decisions: We hear lots about Bayesian decision theory, but where, for example, is the Bayesian theory of combining subjective probability assessments?

• Domain knowledge may be incomplete and distributed across these stakeholders.
• Beliefs, goals and preferences of the stakeholders may be diverse and conflicting.
• Beliefs, goals and preferences of stakeholders, the probabilities of events and the consequences of decisions, may be determined endogenously, as part of the decision process itself.
  

  For instance, economists use the term network goods to refer to a good where one person’s utility depends on the utility of others. A fax machine is an example, since being the sole owner of fax is of little value to a consumer. Thus, a rational consumer would determine his or her preferences for such a good only AFTER learning the preferences of others. In other words, rational preferences are determined only in the course of the decision process, not beforehand.Having considerable experience in marketing, I contend that ALL goods and services have a network-good component. Even so-called commodities, such as natural resources or telecommunications bandwidth, have demand which is subject to fashion and peer pressure. You can’t get fired for buying IBM, was the old saying. And an important function of advertising is to allow potential consumers to infer the likely preferences of other consumers, so that they can then determine their own preferences. If the advertisement appeals to people like me, or people to whom I aspire to be like, then I can infer that those others are likely to prefer the product being advertized, and thus I can determine my own preferences for it. Similarly, if the advertisement appeals to people I don’t aspire to be like, then I can infer that I won’t be subject to peer pressure or fashion trends, and can determine my preferences accordingly.

  This is commonsense to marketers, even if heretical to many economists.

• The decision-maker may not fully understand what actions are possible until he or she begins to execute.
• Some actions may change the decision-making landscape, particularly in domains where there are many interacting participants.
  

  A bold announcement by a company to launch a new product, for example, may induce competitors to follow and so increase (or decrease) the chances of success. For many goods, an ecosystem of critical size may be required for success, and bold initiatives may act to create (or destroy) such ecosystems.

• Measures of success may be absent, conflicting or vague.
• The consequences of actions, including their success or failure, may depend on the quality of execution, which in turn may depend on attitudes and actions of people not making the decision.
  

  Most business strategies are executed by people other than those who developed or decided the strategy. If the people undertaking the execution are not fully committed to the strategy, they generally have many ways to undermine or subvert it. In military domains, the so-called Powell Doctrine, named after former US Secretary of State Colin Powell, says that foreign military actions undertaken by a democracy may only be successful if these actions have majority public support. (I have written on this topic before.)

• As a corollary of the previous feature, success of an action may require extensive and continuing dialog with relevant stakeholders, before, during and after its execution.
  

  This is not news to anyone in business.

• Success may require pre-commitments before a decision is finally taken.
  

  In the 1990s, many telecommunications companies bid for national telecoms licences in foreign countries. Often, an important criterion used by the Governments awarding these licences was how quickly each potential operator could launch commercial service. To ensure that they could launch service quickly, some bidders resorted to making purchase commitments with suppliers and even installing equipment ahead of knowing the outcome of a bid, and even ahead, in at least one case I know, of deciding whether or not to bid.

• The consequences of decisions may be slow to realize.
  

  Satellite mobile communications networks have typically taken ten years from serious inception to launch of service.  The oil industry usually works on 50+ year cycles for major investment projects.  BP is currently suffering the consequence in the Gulf of Mexico of what appears to be a decades-long culture which de-emphasized safety and adequate contingency planning.

• Decision-makers may influence the consequences of decisions and/or the measures of success.
• Intelligent participants may model each other in reaching a decision, what I term reflexivity.
  

  As a consequence, participants are not only reacting to events in their environment, they are anticipating events and the reactions and anticipations of other participants, and acting proactively to these anticipated events and reactions. Traditional decision theory ignores this. Following Nash, traditional game theory has modeled the outcomes of one such reasoning process, but not the processes themselves. Evolutionary game theory may prove useful for modeling these reasoning processes, although assuming a sequence of identical, repeated interactions does not strike me as an immediate way to model a process of reflexivity. This problem still awaits its Nash.

In my experience, classical decision theory and game theory do not handle these features very well; in some cases, indeed, not at all.  I contend that a new theory of complex decisions is necessary to cope with decision domains having these features.

Technorati Tags: game theory, decision theory, network goods, reflexivity

I spent the rest of my K-C career in advanced product development or new business identification, usually as a team leader, and sometimes as what Gifford Pinchot called an “Intrapreneur” – a corporate entrepreneur, driving new products from discovery to basis-for-interest to commercialization.  It’s the nature of many companies to prematurely dismiss ideas that represent what the world might want/need 5, 10 years out and beyond in favor of near-term opportunities – the intrapreneur stays under the radar, using passion, brains, intuition, stealth, any and every other human and material resource available to keep things moving.  It helps to have had some managers that often looked the other way.

. . .

As a senior product developer, and in the role of “intrapreneur” on Little Swimmers, I wore all the hats, technical and consumer, including hand-making many of the prototypes, making test product in machiladoras in July, performing materials testing, as well as the concept and positioning development work, consumer evaluations, whatever it took, taking the product through quantitative and volumetric concept-and-use testing and Basis For Interest.  When it came time for evaluations, the senior technical people who were my peers (PhD “Fellows”) did not regard the work as technically sophisticated enough for recognition or promotion in those ranks.  Since I was working for a senior business manager on the project, I didn’t have a technical champion for support.  I was caught in the middle.

There was simply no career path for the very senior level, creative, prolifically successful entrepreneurial product developer with a broad consumer-culture view. Business and Technical management were inappropriate (too right brained for me and actually took one out of the product development role), nor was the Fellow path appropriate (more for the highly technical).  I didn’t fit either path (this was true for other senior level product developers).  If my unique – and successful – methodologies and insights had been met with a broader willingness to understand, that might have offered some sense of fulfillment.”

Technorati Tags: Paula Rosch, Kimberly-Clark, product development

Let me start by repeating firmly what I said before (here abbreviated), as preface:

• Owners of companies (including the present British Government) have the legal and moral right to establish any legal payment policies they so wish. 
• People who fail should not be rewarded for that failure.

Then let me repeat this para:

Finally, in all the nonsense spoken about a “bonus culture” in banks, I have nowhere seen any discussion as to WHY bonus payments are common in the financial world.   The first reason is that financial markets are capricious:  despite all the boastful talk about skills and experience, and despite the multi-terabytes of computer memory, the massively-high bandwidths of connection, and the arrays of rocket scientists deployed, the taking of positions in markets is still a matter of taking views on the future, and betting these views against other views.   The future is uncertain, so bets can lose, as well as win,  and these two outcomes may happen regardless of the skills or expertise or resources applied to the taking of a view.  People may be just lucky or unlucky – even clever, experienced, well-resourced, cautious, nice people.    The second reason is that when bets win, they may win big.    If  a company makes hundreds of millions of dollars profit from a one or a handful of trades, it can seem most unfair to those deciding what trades to do that all of this capricious, windfall gain should accrue just to the shareholders.  Those doing the trading therefore ask, quite reasonably in my opinion, for a share of this windfall gain.   Most companies have then a choice:  give a few percent of these capricious windfalls to the staff doing the work as bonus payments, or risk losing the staff to the competitor down the street who will.   No rational, long-term manager would choose the latter option, and no rational, long-term shareholder would force him or her to.

There is another aspect to the business of the financial sector that I overlooked in this description.  For most of us working in companies, our actions have impacts on the revenues, costs and profits of the company only indirectly.  Typically, the larger the organization the more indirect the effects.  A product manager for one of the thousands of consumer products at, say, Proctor and Gamble, for instance may have great ideas for innovative product development, ideas which, when implemented, lead to massive increases in corporate revenues.  But she would not be able to develop these ideas, create the necessary support infrastructures (which may include product redesigns, or new manufacturing facilities, or new marketing campaigns) and then execute them, without help and support from a very large number of people; perhaps as many as tens of thousands of people would be involved for the most complex of products, from research scientists through to traveling salespeople in equatorial Africa.   Success in such environments requires real – and all too rare – skills at group-working, information sharing, socialization, co-ordination, complex project planning, and managing of others (in all directions, below, above and laterally), both inside one’s own company and in partner companies.  These abilities are required in addition to whatever linguistic and/or mathematical intelligence required (which can be considerable for any high-tech product and even for ordinary consumer durables) and so-called emotional intelligence.   This is a getting-things-done intelligence, a skill-set that otherwise very intelligent and successful people may lack, for example, academics, writers, medical professionals.

Strangely enough, few bankers, in my experience, need these getting-things-done abilities either, and few have them.  The large sums in finance, which generate the large bonuses, usually accrue (as I said above) to successful bets on the future.  To make such bets you need: (a) to take a view on the future (a view which may arise from sophisticated, complex and expensive computer modeling) and (b) money to bet with.  You don’t normally need a large team behind you, although computer modeling may require rare and specialised – and hence, expensive – skills. You don’t need much equipment, just a laptop and access to processing power (now rentable by the minute); you certainly don’t need a factory, or a global distribution network, or a boffin-filled R&D lab, as the product managers for P&G do.  Apart from the money used to bet with, you don’t need much money either.   You may need, as sociologist Donald MacKenzie has shown in his detailed fieldwork studies of financial institutions, a good network of contacts, both in your own organization and outside it, of people whom you trust you and who trust you; you need this network in order to be able to accurately predict financial market movements, and to predict how market participants would be likely to react to new information, in other words, to help you to take a view on the future.

So, suppose you work for a large financial institution in the City of London, betting on (say) US Dollar-to-Japanese Yen exchange rates.  You come into work, you read the newsfeeds, you look at the numbers, you talk with your network, you (or your team) do your computer simulations, you take a view of the future, and you place your bet.  (You may do this with any frequency, from every few weeks to every few minutes, depending on the market you are in and the strategies you running.)   The money you use to bet with belongs to your employer.  Perhaps you bet the value of the USD will rise in comparison to the Yen, as a result of the recent Japanese election.   Or perhaps you bet that most other exchange traders will bet that it will rise for this reason, and so you would profit from betting against them.  For whatever reason – good judgment, intuition, experience, clever algorithms, computer processing power, speed of reaction, personal network connectedness, luck, clever accounting, inside information, mojo, guidance from the beyond - your bets are successful, and thus you (and perhaps your small team) generate large revenues for your employer.   Unlike our friend at P&G, no one can say these revenues depended on the supportive and co-ordinated activities of hundreds or thousands of people working over months or years.  No one can say that your employer would have got the revenues anyway, even without you.  And given the few required inputs listed in the previous paragraph, no one can stop you walking out of your office one afternoon and offering your successful judgment (your view-taking ability) to some other employer with money to bet.  As the saying goes, the bank’s key assets walk out the front door each evening.

In other words, large bonuses exist in the financial world because large revenue streams exist which are directly traceable to the actions of a small number of people, and because not paying good bonuses to these people risks the employer losing the revenue streams.   None of this is evidence of malice, or evil, or some malcontent recalcitrance on the part of bankers, failing to reform despite the bailout.  It is the very nature of business under capitalism.  Employees are acting rationally and ethically in asking for such bonuses, and employers in giving them.  Large bonuses would exist in other industries if the conditions were right; indeed, they do, for senior managers in IPOs and acquisitions, or for Hollywood stars, able to guarantee large audiences for the opening weekends of films.  In both these cases, as with finance, large money streams can be traced directly to the actions of a small number of people.   If you were to make it illegal for banks to pay bonuses, then for consistency’s sake, you’d have to also tell JK Rowling to give up her millions.  Arguing that bonuses should not exist will be about as successful as arguing that water should not run downhill, and is, in my opinion, about as rational.

Reference:

Iain Hardie and Donald MacKenzie [2007]: Assembling an economic actor: the agencement of a Hedge Fund. The Sociological Review, 55 (1): 57-80.

But the primary purpose of most workplace interactions is not information transfer, or this is so only incidentally.  Rather, workplace interactions are about the co-ordination of actions – identifying and assessing alternatives for future action, planning and co-ordinating future actions, and reporting on past actions undertaken or current actions being executed.    To engage in such interactions about action of course involves requests for and transfers of information.    To the extent that this is the case, such interactions can be and indeed are undertaken with participants separated in space and time.   But co-ordination of actions requires very different speech acts to those (relatively simple) locutions seeking and providing information:     speech acts such as proposals, promises, requests, entreaties, and commands.  These speech acts have two distinct features – they usually require uptake (the intended hearer must agree to the action before the action is undertaken), and the person with the power of retraction or revocation is not necessarily the initial speaker.   An accepted promise can only be revoked by the person to whom the promise is made, for instance, not by the person who made the promise. So, by their very nature these locutions are dialogical acts, not monolectical.   You can’t meaningfully give commands to yourself, for example, and what value is a promise made in a forest?

In addition, inherent in speech acts over actions is the notion of intentionality.    If I promise to you to do action X, then I am expressing an intention to do X.  If your goals requires that action X be commenced or done, then you need to assess how sincere and how feasible my promise is.  Part of your assessment may be based on your past experience with me, and/or the word of others you trust about me (my reputation).   Thus it is perfectly possible for you to assess my capability and my sincerity without ever meeting me.  International transactions across all sorts of industries have taken place for centuries between parties who never met; the need to assess sincerity and capability is surely a key reason for the dominance of families (eg, the Rothschilds in the 18th and 19th centuries) and close-knit ethnic groups (eg, the Chinese diaspora) in international trade networks.  But, if you don’t know me already, it is generally much easier and more reliable for you to assess my sincerity and capability by looking me in the eye as I make my promise to you. 

Bloggers and writers and professors, who rarely need to co-ordinate actions with anyone to achieve their work goals, seem not to understand these issues very well.  But these are issues are known to anyone who actually does anything in the world, whether in politics, in public administration or in business.   One defining feature of modern North American corporate culture, in my experience, is that most people find it preferable to make promises of actions even when they do not yet have, and when they know that they do not yet have, the capabilities or resources required to undertake the actions promised.  They do this rather than not make the promise or rather than making the promise conditional on obtaining the necessary resources, in order to appear “positive” to their bosses.   This is the famous “Can Do” attitude at work, and I have discussed it tangentially before in connection with the failure of the Bay of Pigs;  its contribution to the failures of modern American business needs a separate post.

Technorati Tags: information, co-ordination of actions, speech acts, locutions

The TV series led me, however,  to read another book about this platoon, written by its commanding officer Lt. Nathaniel Fick (played in the series by actor Stark Sands).    The book is superb!    Fick writes extremely well, intelligently and evocatively, of his training and his battle experiences.  His prose style is direct and uncluttered, without being a parody of itself (as is, say, Hemingway’s).  His writing is remarkably smooth, gliding along, and this aspect reminded me of Doris Lessing, on one of her good days.   Fick clearly has a firm moral centre (perhaps an outcome of his Jesuit high school education), evident from his initial decision to apply to the military while still an undergraduate classics major at Dartmouth.     Having felt a similarly-strong desire as an undergraduate to experience life at the hot gates, I empathized immensely with his description of himself at that time.   Fick’s moral grounding is shown throughout the book, not only in the decisions he takes in battle, and his reflections on these decisions, but also in the way he refrains from naming those of his commanding officers whom he does not respect.    He also shows enormous loyalty to the men he commanded.

And Fick’s experiences demonstrate again that no organization, not even military forces,  can succeed for very long when commands are only obeyed mindlessly.   Successfully execution of commands requires intelligent dialogue between commanders and recipients, in a process of argumentation, to ensure that uttered commands are actionable, appropriate, feasible, effective, consistent, ethical and advisable.  Consequently, the most interesting features of the book for me were the descriptions of decision-making, descriptions often implicit.   Officers and non-officers, it seems, are drilled, through hours of rote learning, in the checklists and guiding principles necessary for low-level, tactical decision-making, so that these decisions can be automatic.  Only after these mindless drills are second nature are trainee officers led to reflect on the wider (strategic and ethical) aspects of decisions,  of decision-making and of actions.   I wonder to what extent such an approach would work in business, where most decision-making, even the most ordinary and tactical, is acquired through direct experience and not usually taught as drills.  Mainly this is because we lack codification of low-level decision-making, although fmcg companies such as Mars or Unilever come closest to this approach.

Fick’s frequent frustrations with the commands issued to him seem to arise because these commands often ignore basic tactical constraints (such as the area of impact of weapons or the direction of firing of weapons), and because they often seem to be driven by a concern for appearances over substantive outcomes.   In contrast to this frustration, one of Fick’s commanding heroes is Major Richard Whitmer, whose unorthodox managerial style and keen intelligence is well described.  A military force able to accommodate such a style is to be admired, so I hope it is not a reflection on the USMC that Whitmer appears to have spent the years since the Iraq invasion running a marine recruitment office.  Next time that I’m CEO of a Fortune 500 company, I’ll actively try to recruit Whitmer and Fick, since they are both clearly superb managers.  

I was also struck by how little the troops on the ground in Iraq knew of the larger, strategic picture.  Fick’s team relied on broadcasts from the BBC World Service on a personal, non-military-issue transister radio to learn what was happening as they invaded Iraq.   We who were not involved in the war also relied on the BBC, particularly Mark Urban’s fascinating daily strategic analyses on BBC TV’s Newsnight.  Were we remote viewers better informed than those in the ground in Iraq?  Quite possibly.

Nathaniel Fick now works for a defence think tank, the Center for a New American Security.  A 2006 speech he gave at the Pritzer Military Library in Chicago can be seen here.   A seminar talk to Johns Hopkins University’s series on Rethinking the Future Nature of Competition and Conflict can be found here (scroll down to 2006-01-25).  And here is Fick’s take on recent war poetry.

References:

K. Atkinson et al. [2008]: Command dialogues. In: I. Rahwan and P. Moraitis (Editors): Proceedings of the Fifth International Workshop on Argumentation in Multi-Agent Systems (ArgMAS 2008), AAMAS 2008, Lisbon, Portugal.

Nathaniel Fick [2005]:  One Bullet Away:  The Making of a Marine Officer.  London, UK:  Phoenix.

Evan Wright [2004]:  Generation Kill. Putnam.

Technorati Tags: Iraq, Stark Sands, decision-making, Richard Whitmer, Nathaniel Fick

• Start with a national competition for suggestions for new infrastructure projects.  People and businesses in regional communities have loads of ideas for projects – should anyone in Westminster bother to listen.   Perhaps allow 1 month for this, so Month 1 is spent soliciting proposals.  Creating a press release to announce the competition and a web-site to receive suggestions could be done within a day.
• In the meantime (also during Month 1), create a temporary government agency like Australia’s national infrastructure agency, to receive these proposals and do a preliminary filtering in terms of (say): employment impact, wider business impact, social impact, cost, and long term potential for follow-on benefits.   A leading management consulting firm or two could be used to detail the criteria, assess all the proposals against the criteria (tedious but necessary work), and produce this long listing, winnowing down from (say) hundreds of proposals to (say) 5o.   Month 2 could be devoted to this effort.  
• Then, have an appointed national committee, comprising politicians from all three major national parties, people from business and industry, the trades unions, people and politicians from the regions (say about 20 people) assess the 50 long-listed proposals and winnow them down to (say) 10.   This should be done in closed session in one, dedicated, all-day-and-all-night effort, over (say) 7 days.   We want the committee to bond, because we want their conclusions to be unanimous.
• Then, prepare detailed technical and financial plans for each project on the shortlist.   This could be achieved within (say) 21 days.    As with the earlier stages, this work could be undertaken with the assistance of consulting and/or engineering firms, major corporations or banks  – there are currently lots of bankers at a loose end, I hear.  Hell, I’d even volunteer for this myself, because of the fun it would be and the importance of the work.
• Then, fund the final 10 projects immediately and start digging ground (or spinning fibre, or whatever).  These projects should be give short, sharp names (eg, Fibre-up; Fast-Track) and short descriptors, so that every person over 16 can identify with them, and support them.  Insist that each team’s management produce detailed progress reports online each month, with (say) quarterly public hearings.   We want this work done, done well and done properly. 

Total time, from start of campaign to shoveling: 3 months. 

Of course, I realize getting major projects to shovel-ready normally takes longer than 3 months.  THIS FACT SHOULD NOT STOP ALL THESE PROJECTS STARTING SOMETHING WITHIN 3 MONTHS.  A key task will be creating semi-permanent, quasi-independent parastatal bodies (quangos) to run each project, to acquire land, employ people, etc.   That can all be done after the projects start, since the first main purpose of these projects is to boost aggregate demand and employment in the short run.    Our models here should be the  USA’s Tennessee Valley Authority and Australia’s Snowy Mountains Scheme, updated for the Internet age.

Not all infrastructure projects need to involve alteration to the earth’s physical landscape. My own proposal would be to create a major national organization – part-research lab, part-investment bank – to identify, to prototype, to seed, and to invest-in business ideas for future-generation Internet applications, starting from about Web 6.0 (whatever that will be) and upwards – a Xerox Parc for 21st-century e-services, with an investment budget of (say) USD 5 billion or so to start.  I would start this with public funding, with the aim of privatizing it once it becomes successful.

And (added 2009-02-12), if 3 months is too long (and it is), here are three potential major national infrastructure projects suggested by journalist Andrew Rawnsley: 

1. A national high-speed rail network (I would call this Fast-Track, or similar)
2. A national, super-fast broadband fibre optic network (Fibre-Up), and
3. A large-scale renewable energy production program, connected to the National Electricity Grid (Green-Power-to-go!).

There would be nothing stopping the Government spending (say) GBP 1 million on each of these to prepare outline feasibility and financial plans, with the aim of launching one of them within a month. 

Building a national fibre broadband network without thinking also about what would run on it would not be sensible, which is why I propose the Web6.0 idea above.  But a little creativity could generate lots of proposals for non-physical infrastructure, which would create UK employment here and now, train people, stimulate demand, and leave something behind for future generations, for example:

• Digitizing the contents of ALL Britain’s art galleries and museums, something which could employ artists, photographers, and lots of those unemployed media studies and IT graduates.
• Digitizing the contents of the British Library, the main University Libraries and the national archives.
• Digitizing ALL past census records.
• Recording the life story of every citizen over 65.
• Recording a performance at every live music venue in the country, including pubs and churches.
• Producing online visitor guides to every locality in the country, annotated by people resident in the locality.
• Producing a digital record (films, interviews, oral histories, photos, etc) of every factory facing downsizing or closure, with a record of the skills and networks being lost.

It should not need saying that all this digitized information, if paid for from the public purse, should be made freely accessible online.  These projects could be our generation’s equivalent of the Works Progress Administration.   I am sure there are many more ideas, both sensible and wacky, than these.

Well, Mr Brown?  What are you waiting for?  How about some vision?  If not these projects, then what?  If not now, then when?

Technorati Tags: infrastructure, quangos, Andrew Rawnsley

Anyone who has worked for a US multi-national will be familiar with this problem – bosses flying in, making profound, last-minute changes to detailed plans without proper analysis and apparently on whim, and then leaving middle management to fix everything.  Middle management are also assigned the role of taking the blame.  This has happened so often in my experience, I have come to see it as a specific trope of contemporary American culture — the supermanager, able to change detailed plans at moment’s notice!     It is to JFK’s credit that he took the public blame for the Bay of Pigs fiasco (although he also ensured that senior CIA people resigned for it), since so much of the real blame rests squarely with him and his White House national security staff. 

The Bay of Pigs action had another, more existential, problem.  CIA wished to scare the junta running Cuba into resigning from office, by making them think the island was being invaded by a vastly superior force.  It was essential to the success of the venture that the Cuban government therefore think that the force was backed by the USA, the only regional power with such a capability and intent.  It was also essential to the USA’s international reputation that the USA could plausibly deny that they were in any way involved in the action, in order for the venture not to escalate (via the Cold War with the USSR) into a larger military conflict.   Thus, Kennedy ruled out the use of USAF planes to provide cover to the invading troops, and he continually insisted that the plans minimize “the noise level” of the invasion.   These two objectives were essentially contradictory, since reducing the noise level decreased the likelihood of the invasion scaring Castro from office.  

The Bay of Pigs fiasco provides many lessons for management, both to US Presidents and to corporate executives.   One of these, seemingly forgotten in Vietnam and again in Iraq, is that plans do matter.   Success is rarely something reached by accident, or by a series of on-the-fly, ad hoc, decisions, each undertaken without careful analysis, reflection and independent assessment.

Technorati Tags: Bay of Pigs, Dick Bissell

For those who know his name, Richard Bissell probably has a mostly negative reputation, as the chief planner of the failed attempted invasion of Cuba at the “Bay of Pigs” in April 1961.  Put aside the fact that last-minute changes to the invasion plans (including a change of location) were forced on Bissell and CIA by the Kennedy Administration; after all, as Bissell himself argued in his memoirs, he and CIA could have and should have done more to resist these changes.  (There is another post to be written on the lessons of this episode for the making of complex decisions, a topic on which suprisingly little seems to have been published.)  Bissell ended his career as VP for Marketing and Economic Planning at United Aircraft Corporation, a post he held for a decade, although he found it unfulfilling after the excitement of his Government service.

Earlier in his career, Bissell was several times an administrative and organizational hero, a man who got things done.  During World War II, Bissell, working for the US Government’s Shipping Adjustment Board, established a comprehensive card index of every ship in the US merchant marine to the point where he could predict, within an error of 5 percent, which ships would be at which ports unloading their cargoes when, and thus available for reloading.  He did this well before multi-agent systems or even Microsoft Excel. After WW II, he was the person who successfully implemented the Marshall Plan for the Economic Recovery of Europe.  And then, after joining CIA in 1954, he successfully created and led the project to design, build, equip and deploy a high-altitude spy-plane to observe America’s enemies, the U-2 spy plane.   

Whatever one thinks of the overall mission of CIA before 1989 (and I think there is a fairly compelling argument that CIA and KGB successfully kept the cold war from becoming a hot one), one can only but admire Bissell’s managerial competence, his ability to inspire others, his courage, and his verve.  Not only was this a completely new plane (designed and built by a team led by Kelly Johnson of Lockheed, using engines from Pratt & Whitney), flying at altitudes above any ever flown before, and using a new type of fuel (developed by Shell), but the plane also had to be equipped with sophisticated camera equipment, also newly invented and manufactured (by a team led by Edwin Land of Polaroid), producing developed film in industrial quantities.  All of these components, and the pilot, needed to operate under extreme conditions (eg, high-altitudes, long-duration flights, very sensitive flying parameters, vulnerability to enemy attack).  And the overall process, from weather prediction, through deployment of the plane and pilot to their launch site, all the way to the human analyses of the resulting acres of film, had to be designed, organized, integrated and managed.  

All this was done in great secrecy and very rapidly, with multiple public-sector and private-sector stakeholders involved.   Bissell achieved all this while retaining the utmost loyalty and respect from those who worked for him and with him.  I can only respond with enormous admiration for the project management and expectations management abilities, and the political, negotiation, socialization, and consensus-forging skills, that Dick Bissell must have had.

References:

Richard M. Bissell [1996]:  Reflections of a Cold Warrior:  From Yalta to the Bay of Pigs.  New Haven, CT, USA:  Yale University Press.

Norman Polnar [2001]:  Spyplane:  The U-2 History Declassified.  Osceola, WI, USA: MBI Publishing.

Evan Thomas [1995]:  The Very Best Men.  Four Who Dared:  The Early Years of the CIA.  New York City, NY, USA:  Touchstone.

Technorati Tags: Richard Bissell, CIA, U-2, Kelly Johnson, Edwin Land

Before Governments around the world realized what enormous sums of money they could make from auctioning telecoms licences, they typically ran what was called a “beauty contest” to decide the winner.     In these contests, bidders needed to prepare an application document to persuade the Government that they (the bidder) were the best company to be awarded the licence.  What counted as compelling arguments differed from one country to another, and from one licence application to another.   The most common assessment criteria used by Governments were:  corporate reputation and size, technical preparedness and innovation, quality of business plans, market size and market growth, and the prospects for local employment and economic development.  

As I’m sure you see immediately, these criteria are multi-disciplinary.  Licence applications were (and still are, even when conducted as auctions) always a multi-disciplinary effort, with folks from marketing, finance, engineering, operations, legal and regulatory, folks from different consortium partners, and people from different nationalities, all assigned to the one project team.  In the largest application we managed, the team comprised an average of about 100 people at any one time (people came and went all the time), and it ran for some 8 months.   In that case, the Government tender documents required us to prepare about 7,000 original pages of text in response (including detailed business plans and blue-prints of each mobile base station), multiplied by some 20 copies.    You don’t win these licences handing in coffee-stained photocopies or roneoed sheets.  Each of the 20 volumes was printed on glossy paper, hard-bound, and the lot assembled in a carved tea chest.

Work on these team projects was extremely challenging, not least because of the stakes involved.  If you miss the application submission deadline even by 5 minutes, you were out of the running.    That would mean throwing away the $10-20 million you spent preparing the application and upsetting your consortium partners more than somewhat.   If you submit on time, and you win the licence, you might see your company’s share-market value rise by several hundred million dollars overnight, simply on the news that you had a won a major overseas mobile licence.  $300 million sharevalue gain less $20 million preparation costs leaves a lot of gain.   In one case, our client’s share-market value even rose dramatically on news that they had LOST the licence!  We never discovered if this was because the shareholders were pleased that the company (not previously in telecoms) had lost and was sticking to its knitting, or were pleased that the company had tried to move into a hi-tech arena.

With high stakes, an unmovable deadline, and with different disciplines and companies involved, tempers were often loose.   One of the major differences between our experiences and those described in the Katzenbach and Smith book is that we never got to choose the team members.  In almost all cases, Governments required consortia to comprise a mix of local and international companies, so each consortium partner would choose its own representatives in the team.  Sometimes, the people assigned knew about the telecoms business and had experience in doing licence applications; more frequently, they knew little and had no relevant experience.  In addition, within each consortium partner company, internally powerful people in the different disciplines would select which folks to send.   One could sometimes gauge the opinion of the senior managers of our chances by the calibre of the people they chose to allocate to the team. 

So — our teams comprised people having different languages, national cultures and corporate cultures, from different disciplines and having different skillsets and levels of ability, and sent to us sometimes for very different purposes. (Not everyone, even within the same company, wanted to win each licence application.)  Did I mention we normally had no line authority over anyone since they worked for different divisions of different companies?  Our task was to organize the planning work of these folks in a systematic and coherent way to produce a document that looked like it was written by a single mind, with a single, coherent narrative thread and compelling pitch to the Government evaluators.     

Let us see how these characteristics stack up against the guidelines of Katzenbach and Smith, which Eric summarized:

Despite not matching these guidelines, some of the licence application teams were very successful, both in undertaking effective high-quality collaborative work and in winning licences.  I therefore came away from reading “The Wisdom of Teams” 15 years ago with the feeling that the authors had missed something essential about team projects because they had not described my experiences in licence applications.  (I even wrote to the authors at the time a long letter about my experiences, but they did not deign to reply.)   I still feel that the book misses much.