Sunday, July 4, 2010

How managers make good decisions...


What is termed a “good” decision?

Some of these elements go into a good decision:

Make sure you’re solving the right problem in the first place. It is important we understand the problem and not make any premature assumption. Jumping into conclusion will lead to failure in making what is right or wrong. Be clear about what you are looking at. For example, are you trying to maximize profit margin or just trying to stay alive and minimize loss? Gathering the right information, including information about uncertainty, which is essential if you want to choose the best option.  Reasoning out the right choice and includes what you know and what you don’t.  A commitment to make it happen, since a decision is no stronger than its weakest link.

Where do leaders fall down when making decisions?

They fall down on all these elements. In some organizations, managers don’t get the information they need to make a decision, so they end up having to make decisions based on experience and intuition or wrong feedback from subordinates. Sometimes distorted information were passed on to the management level thus leading to wrong decision made.

Does personality type determine decision making?

Yes, people become aware of their natural biases and habits, it becomes easier to avoid them. People may tend to procrastinate or focus on the big picture and the creative part. Your habits will get you in trouble if you don’t watch out and most people drag a problem into their comfort zone instead of solving it.

How do you evaluate the success of your framework?

Here’s how we figure out if it made a difference: We take a decision and try to document what people would have done otherwise, which is called the momentum strategy. Then we compare the best choice they make with us to the momentum strategy they would have used. We can now say pretty clearly that our approach avoids lots of downside errors. It avoids value destruction and creates a lot of value. Most people leave a lot of value on the table when they make intuitive decisions.

Managers basically make these types of decisions:

Strategic decisions- Managers have weeks or months to make these decisions, which have life-shaping effects on a organizational or management level. Strategic decisions are very important, involve significant uncertainty and complexity, and are hard to think through. Such decisions are costly and it may require various levels of brainstorming before the final "say" is made.

Typical decisions- These decisions often come from team meetings that last a few hours. They can have a big impact, but they are frequently tactical in nature and arrived at through a collaborative process. Usually these are made day-to-day so that the project or work process are not held up by delay in decision making.

In-the-moment decisions- For decisions made on the fly, managers use a different part of the brain that emphasizes rapid pattern recognition. Beginning with limited or incomplete information, they habitually look for similarities to experiences they’ve had in the past.

Facing Risk of Cyber War !

New technologies have revolutionised warfare, sometimes abruptly, sometimes only gradually: think of the gunpowder, aircraft, radar and nuclear fission and some have been working alongside computer information technology. The internet have transformed economies and given Western armies great advantages, such as the ability to send remotely piloted aircraft across the world to gather intelligence and attack targets within accuracy of a few meters range after travelled few thousand kilometers. However the spread of digital technology comes at a cost and it exposes armies and societies to “digital- 010010110” attack.

The threat is complex and potentially very dangerous and modern societies are ever more reliant on computer systems linked to the internet, giving enemies more avenues of attack. If power stations, refineries, banks and air-traffic-control systems were brought down, people would lose their lives. Yet there are few, if any, rules in cyberspace of the kind that govern behaviour, even warfare, in other domains. As with nuclear- and conventional-arms control, big countries should start talking about how to reduce the threat from cyberwar, the aim being to restrict attacks before it is too late.

Cyberspace has become one of the domains of warfare, after land, sea, air and space. Imagine the failure of the systems that keep the modern world turning and as computer networks collapse, factories and chemical plants explode, satellites spin out of control and the financial and power grids all come to a halt. That seems most threatening to all, yet most agree that infiltrating networks is pretty easy for those who have the will, means and the time to spare. Experts know this because they are such enthusiastic hackers themselves. Spies frequently break into computer systems to steal information by the warehouse load, whether it is from Google or defence contractors. The cyber-attacks on Estonia in 2007 and on Georgia in 2008 (the latter strangely happened to coincide with the advance of Russian troops across the Caucasus) are widely assumed to have been directed by the Kremlin, but they could be traced only to Russian cyber-criminals. Many of the computers used in the attack belonged to innocent Americans whose PCs had been hijacked. Companies suspect China of organising mini-raids to ransack Western know-how: but it could just have easily been Western criminals, computer-hackers showing off or disillusioned former employees. One reason why Western governments have until recently been reticent about cyber-espionage is surely because they are dab hands at it, too.

As with nuclear bombs, the existence of cyber-weapons does not in itself mean they are about to be used. Moreover, an attacker cannot be sure what effect an assault will have on another country, making their deployment highly risky. That is a drawback for sophisticated military machines, but not necessarily for terrorists or the armies of rogue states. And it leaves the dangers of online crime and espionage.

All this makes for dangerous instability. Cyber-weapons are being developed secretly, without discussion of how and when they might be used. Nobody knows their true power, so countries must prepare for the worst. Anonymity adds to the risk that mistakes, misattribution and miscalculation will lead to military escalation—with conventional weapons or cyberarms. The speed with which electronic attacks could be launched gives little time for cool-headed reflection and favours early, even pre-emptive, attack. Even as computerised weapons systems and wired infantry have blown away some of the fog of war from the battlefield, they have covered cyberspace in a thick, menacing blanket of uncertainty.

One response to this growing threat has been military. Iran claims to have the world’s second-largest cyber-army. Russia, Israel and North Korea boast efforts of their own. America has set up its new Cyber Command both to defend its networks and devise attacks on its enemies. NATO is debating the extent to which it should count cyberwar as a form of “armed attack” that would oblige its members to come to the aid of an ally.

But the world needs cyberarms-control as well as cyber- deterrence. America has until recently resisted weapons treaties for cyberspace for fear that they could lead to rigid global regulation of the internet, undermining the dominance of American internet companies, stifling innovation and restricting the openness that underpins the net. Perhaps America also fears that its own cyberwar effort has the most to lose if its well-regarded cyberspies and cyber-warriors are reined in.

Such thinking at last shows signs of changing, and a good thing too. America, as the country most reliant on computers, is probably most vulnerable to cyber-attack. Its conventional military power means that foes will look for asymmetric lines of attack. And the wholesale loss of secrets through espionage risks eroding its economic and military lead.
Maybe the economic crisis and oil spill saga are the least to worry for now, let's start looking at our IT infrastructure, our network lines, our fast speed cable, etc.........  and who knows, the North and South Koreans may not be looking at "solid" weapons launching but "soft-launch" attack through the cyberspace.

Recently early July2010, DBS Bank's computer system broke down with a technology glitch and has disrupted business and raised some customers' hackles.  But it is a timely reminder that systems can - and do - go down and such incidence could be linked to "cyber attack" or either techno fault and till the investigation result is out, it is either a good guess.

A quick scan of news headlines reveals the downside of the technological workhorses that businesses, governments and the general public have become so dependent on. 'Asia stock plunge raises alarm on trading'; 'Nikkei slump caused by bank system fault'; 'Computer glitch slows air travel'; 'FAA computer glitch delays flights across region'; 'Million users hit by Yahoo/Google/Baidu shutdown'; and on and on.
Computer failure has caused city-wide power outages, aborted rocket launches, forced large-scale vehicle recalls, and triggered airplane and train malfunctions and crashes. Seen in that context, the loss of access to bank ATMs and online banking facilities might not seem as critical.  What if all these are triggered by someone out there who has hacked into the system vault and managed to carry out an attack on the software system ?

And what if, despite all reasonable effort, a system glitch occurs? The principle remains the same: a contract has been broken, trust has been breached, and immediate steps should be taken to redeem the contract and restore that trust. Restoring the system in the shortest possible time is an essential first step; but equally important is keeping the customer in the know - not in the dark - right from the beginning. An immediate announcement that the system is down, accompanied by an apology - it's not so difficult, really.

And going forward, the post-mortem, the search for the reasons for the breakdown, should be transparent. What were the exact factors that caused the crash? What could the organisation, and the technology provider, have done better? The customer deserves to know. Of course, prevention is better than cure. So, hopefully, the recent bank system breakdown will provide fresh impetus to other organisations to review their own networks and processes. Not just dollars would be saved - possibly lives too if the extent of hacking into the vault is tantamount beyond ones imagination.