Robert Rubin may not be the world’s most popular man at the moment, but I still admire his decision-making philosophies as outlined in his terrific memoir In an Uncertain World: Tough Choices from Wall Street to Washington. VentureHacks recently quoted from Rubin’s commencement speeches:
“Decisions tend to be judged solely on the results they produce. But I believe the right test should focus heavily on the quality of the decision-making itself…
“Individual decisions can be badly thought through, and yet be successful, or exceedingly well thought through, but be unsuccessful, because the recognized possibility of failure in fact occurs. But over time, more thoughtful decision-making will lead to better overall results, and more thoughtful decision-making can be encouraged by evaluating decisions on how well they were made rather than on outcome…
“It’s not that results don’t matter. They do. But judging solely on results is a serious deterrent to taking the risks that may be necessary to making the right decision. Simply put, the way decisions are evaluated affects the way decisions are made.”
In other words: you can make a good decision and still suffer a bad outcome (roll the dice again) or you can make a bad decision and enjoy the good fortune of a positive outcome (don’t get cocky – improve the process).
When you make a decision after due process and still the outcome is bad, you know you only will have to roll the dice again. That comes naturally since you strive for excellence, as a matter of self discipline.
But if a bad decision meets with a terrific outcome (by fluke), you often don’t get a chance to go back and correct. The world is quick to judge and reward outcomes and does not bother so much about *ways and means*. In a world that gladly makes do with mediocrity and is quite generous to shortcuts, the recognition is only for the deliverer and not the causator.
Yet like those few naive ones, I do it all the time even as it costs me dearly. So in principle and as a measure of self-discipline and good practice, I am all for it.
I agree with Rubin, but unfortunately, people do not look at the process. They look at the results. Both are important. The question is, aren’t results the derivitive of the decision making process? He should know that results are king in corporate America after the Citigroup situation. I would recommend the book “Judgement” by Noel Tichy and Warren Bennis which addresses the decision making process and what goes into making great decisions.
Totally agree.
Warren Buffet had said that his worst investment decisions were those investments he didn’t make. The press and public won’t talk about those missed opportunities, but one should keep an inner score card.
There is also the role of intuition in making decisions- it’s been shown to be very important, but wouldn’t show up if you were only looking for rationality and thoughtfulness.
The reason people look at outcome is that often there is no clear standard for the process…the process will differ from situation-to-situation, and the “right” process is always unclear and can just be redefined based on the decision. I understand the idea of process when the steps that one takes to reach a decision are very clear (i.e. what is 2+2? guess 4, but understand the calculations), but when we are evaluating process, it is incredibly hard (near impossible, I say) to have a standard against which to judge.
I’m a great admirer of Rubin, in spite of Citicorp. What he argues is that in spite of the fact that you don’t achieve the desired results in a given situation, over the long term a great process will do the most for your success. What Rubin understands so well is that the systems in today’s world are so profound and so extensive, that the old ways of making decisions won’t work. And also that predictability is far more difficult.
This goes against conventional wisdom, but given an exaggerated choice of talented people versus talented process, your better bet is to take the talented process opportunity. Why? The talented process will eventually develop talented people. Sure, McKinsey and GE have great people, but I can assure you that without great processes, their success rate would be far lower.
Furthermore, take heart. The better firms are taking process far more seriously than ever before. Ideo’s magnificent work on innovation is a classic example. Conventional wisdom says you must have highly talented people in order to innovate. Nope–says Ideo. A great creative process is the most needful guarantee of success.