No Crystal Ball - Decision Making in e-Time

Thank you, Milt. As Milt mentioned, I've been active with AFCEA here in Washington for many years, so being up here to speak as part of the TechNet 2000 program is a real honor. I also feel like I'm "turning tables" a bit after spending so many years arranging for, and introducing the speakers and being nervous about no-shows and other meeting-related crises.

So, Becky Nolan is really the one on the hot-seat today since she invited me. I wanted to help her out by, first, showing up (on time, even) and second, by choosing a topic people would find relevant.

I asked around, and these are the topics people wanted to hear about—in order of popularity:

• "Where technology is going"
• "Where e-business and dot-coms are going"
• "Where the NASDAQ is going"

(If I had done my market research a bit closer to this event, I'm sure another hot topic would be: "Will the Supreme Court side with Microsoft or the Justice Department?")

Even without the Microsoft question, I was a bit taken aback by what people were hoping to hear about. So, I figured I could either:

• Loan you my crystal ball or
• Talk about something that I, and my firm, have direct experience with, that would be relevant—perhaps even helpful—to your job.

Each of us in this room—whether we work in the government or industry, or serve in the military— have something in common: We're all decision-makers.

And, this—the beginning of the 21^st century, is a particularly hard time for decision-makers. So, I'm going to talk about "Decision-making in e-Time."

I believe it's a subject that relates to all of our jobs, as well as to the themes of this TechNet conference.

The pressures of today's world complicate—and can even pre-empt—decision-making.

First, there's the pressure of e-Time (as in e-Business, e-Government --, I know, a lot of us have had e-Nough).

But, time is of the essence today in a way that it's never been before. The premium on speed is tremendous. And this places great pressure on us as decision-makers.

We also have the promise and peril of being deluged by information and trying to keep up with continual advancements in technology.

And, leadership models are changing—the time-tested concept of command and control has come into question—which can make it harder to carry out decisions today.

With all of these complications—how do we, as decision-makers, make good decisions? How do we maintain a bias for action and stay centered on the right things in the face of 21^st century pressures and distractions?

In talking to leaders in corporations, in government and the military, I've found some common themes in decision-making today. They are:

• RISK
• CONTROL
• COLLABORATION and
• LEVERAGE POINTS

I'll talk about each of these in a bit more detail.

First, RISK.

In the corporate world today, decision-makers need to have a higher tolerance and comfort-level for risk. Time was, when faced with a decision—for example, to exit a business, place a bet on a new product, or merge with another company—the CEO and Board of Directors could set up a task force to go off—for a matter of months.

Today, failure to decide and act quickly can pre-empt options altogether.

At my firm, Booz?Allen & Hamilton, we've seen the duration of a typical management consulting assignment cut dramatically. Michael Wolf, who heads our global media and entertainment practice, says, "A lot of what we do as consultants today is help clients make decisions faster and with imperfect data. It used to be that a client came to us and said, "I want a new strategy and you have 6 months." (and that was for the recommendations.) Now they say, "I need a strategy and you have 4 weeks." (and they expect it implemented by then.) The same is true in our technology assignments. When clients call with an information assurance problem, they need a solution now.

We're seeing the concept of managing risk at a "portfolio level" — something financial services companies have been doing for decades — taking hold in other industries. If one product line or venture doesn't pan out, it's ok as long as the sum of business decisions yields success at the "portfolio" level.

In military terms, we'd describe it as winning the war, rather than each individual battle.

Clearly the concept of risk has greater implications for the military decision-maker, who deals not just in capital assets, but in lives and national credibility. "Bet-the-company" decisions like those being made every day now in the internet industry would be totally inappropriate on the battlefield. But, the broader principle of risk-taking as an essential element of decision-making still applies.

Colin Powell warns that procrastination in the hope of reducing risk actually increases risk. He recommends a "40-70" formula and advises, "Don't take action if you have only enough information to give you less than a 40 percent chance of being right. But, don't wait until you have enough facts to be 100 percent sure, because by then, it is almost always too late. Once the information is in the 40 to 70 range, go with your gut."

As leaders, we need to heed this advice, and become comfortable making decisions with imperfect data. We need to step up and make—not shirk from—important decisions.

At the same time, we need to be sure we create a "fault-tolerant culture" for those below us in the organization so they can take appropriate risks and make courageous decisions with less fear-of-failure.

The second key element affecting decision making today is CONTROL.

While we need to be comfortable dealing with a higher degree of risk, we also need to be willing to have less personal control. The complexity of issues, operations, and situations today makes it impossible for one person to have a handle on all the relevant facts.

So, we have to become more comfortable "not knowing it all" and being able to carry out our decisions through participative leadership, rather than through strict command and control. This does not mean losing control over the situation nor giving up responsibility for our decisions.

So how can we, as decision-makers, stay in control while sharing control?

Delegating and empowering others is essential—but what, how, and to whom we delegate makes all the difference. We need to give up control of doing it "our way" in terms of process— and focus instead on setting the vision and driving the desired outcome.

Mark Herman, one of our partners who specializes in wargaming and has supported such simulations as the Quadrennial Review, Army After Next, and Navy Global, explains it this way. "The Commander has to maintain "top sight"—to set the vision, watch that the mission is being met, but not focus on the tactical details about which fighter is going after which target. "There isn't time for vertical command and control. There isn't time to direct operations at that level of detail. And, the fact is, pilots and navigators are usually in a better position to make those decisions."

Corporate decision-makers need to rely on soldiers in their organization in a similar way.

The best leaders empower and listen to their people—but they take full responsibility for making decisions and for the consequences of those decisions.

Max DePree, the former CEO of Herman Miller Company who wrote the book, "Leadership is an Art," explains it this way:

"Participative management guarantees that decisions will not be arbitrary, will not be secret, or closed to questioning. But, participative management is not "democratic." Having a say differs from having a vote."

I interpret it this way—while good leaders empower and listen to their people, they don't put decisions up for popular vote. That, in my mind, is not sharing control, it is abdicating responsibility.

I'm sure all of you can relate to the premise that decisions to expand are easy, and decisions to contract are hard.

It doesn't matter whether we're talking about staffing, or product lines, or military bases—getting the support to add them always seems to be a piece of cake. [It shouldn't be— and we often end up in a difficult place because expansion is so popular].

But, contraction—reducing staff, cutting out a product line, or closing a military base—is always hard.

Even when it's clear that it's the right thing to do, "cut-back-type" decisions are notoriously unpopular. So, to me, they provide a good example of the paradox of sharing control over the tactics, but staying in control of the strategy and taking full responsibility for hard decisions.

Back in January, I had a tough decision to make about our business in Asia. Over the past decade, Booz Allen had opened more than a dozen offices across the Asian continent. There were convincing reasons for opening most of these offices. But, the reality was that a lot of these offices were sub-scale. Doing our own business case analysis, we found, for example, that our consulting business in China could be managed just as well—and more profitably—from a hub operation in Hong Kong than from small offices in Shanghai and Beijing.

Despite the mounting losses from too many sub-scale offices in Asia and the clear imperative that something needed to be done, re-drawing our geographic "footprint" was a difficult situation to assess, and an even more difficult—and unpopular—decision to make.

I needed to share control and rely upon trusted leaders on the ground, on my Chief Financial Officer and Chief Personnel Officer, and on the head of our commercial business, Dan Lewis. They could provide objective and thorough analysis and advice about the Asia situation. But, then it was up to Dan and me to make the hard call that we needed to close some offices and restructure into a hub network to serve our Asia clients.

Clearly, these kinds of decisions are hard because they dislocate people and can be misunderstood by employees, clients and others. So far, at least—the decision looks right. Our Asia business is strong, with new work at Nissan, Exxon-Mobil, Cathay Pacific and Singapore Airlines. Our firm's financial picture in the region is much brighter and we retained most of our people—75% of our employees who were based in the office we closed in Mumbai, India, chose to stay with us and relocate to other Booz Allen offices.

I'll treat the third and fourth elements of Decision-Making in e-Time, COLLABORATION and LEVERAGE POINTS, more quickly—but they're important considerations that deserve some discussion.

We are truly living in the "Age of Collaboration." To see that, you need only compare the AFCEA Corporate Membership list today with the list from 1990—Martin Marietta, McDonnell Douglas, Grumman, MCI, BDM.

Beyond formal mergers, we're seeing global alliances, teaming arrangements, and supplier networks on a scale that would have been unheard of a decade ago.

Many of these alliances are "e-enabled" such as the consortiums announced this year by four aerospace competitors and more recently by the big automakers to improve their buying power with suppliers.

The term "co-opetition" has been used to describe these arrangements in which competitors collaborate for mutual advantage.

In the military arena, the theme of this conference —"Coalition Operations in the New Millennium"—shows the importance of collaboration. Coalition warfare has significant implications for strategy, decision-making, and command and control.

At an operational level, we're wrestling with the question of how Coalition forces can inter-operate after the U.S. moves forward with advanced C3 systems that are a generation or more ahead of its NATO partners.

The lesson for us as decision-makers is that "going it alone"—whether in commerce, government, or in conflict—is unlikely to be successful today.

Organizations like AFCEA provide us with an excellent opportunity for collaboration. The relationships I built through AFCEA with people like Earle Williams, the former CEO of BDM, and Al Nashman and Milt Cooper from CSC, have been a great benefit over the years—to me personally, to our respective firms, and to our industry. So, for a 10-second commercial message—if you're not involved in this great association, I encourage you to get involved—and start collaborating.

The last principle of Decision-making in e-Time that I want to cover is the importance of "leverage points."

There's no question that our challenge as decision-makers, and the span of responsibility that many of us have, can be daunting. The good news is that help is at hand.

I believe the top-three leverage points today are the "three T's"—technology, touch, and talent.

Technology can help us manage risk, collaborate better, and communicate with those with whom we need to share control. (The flip side, as we know all to well, is that enemies can utilize technology to try to disrupt our decision-making ability—that's why information security is a key theme of this conference).

Staying in touch with people, staying close to the action, is crucial. We need to listen to our troops at the front line and out in the market. We need to talk directly to our people, our customers, and our competitors.

E-mail is great for this. And, Yes, CEO's do read and reply to their own e-mails. So do generals and department heads.

The last, but most certainly not the least, of our leverage points is talent—human talent.

People make it happen. People you can delegate to, brainstorm with, confide in, and learn from people you can trust to tell you the straight scoop, and carry out your decisions.

Now, to recap these principles for Decision-making in e-Time:

• Take risks— smart risks
• Share control—but take full responsibility
• Collaborate—with friends and even converted foes

• Leverage technology, keep in touch, and nurture talented people.

If you do all this, will your decisions be easy and your answers revealed? Unfortunately, no—I can't promise you that any more than I can guarantee the accuracy of my crystal ball.

I believe the value of these principles is that they help adjust for the complications of e-Time.

After we do that, decision-making is pretty old-fashioned. It comes down to us—to our inner convictions, to our gut.

Colin Powell said, "command is lonely." I'd like to paraphrase that to say "decision-making is lonely."

After we've shared, listened, and collaborated with others, it's time to go it alone. If we've done everything reasonable to be informed, and if we choose a course we feel is right, then, I believe that, by definition, we've made a good decision.

If it subsequently turns out to have unintended consequences, or if a different path looks better down the road—and we acknowledge it—people will respect that.

But, I've found that people don't respect—and won't follow—someone who hesitates to make a decision in the first place, or who won't admit a mistake in the second place.

I've quoted several times from Colin Powell because I find his lessons to be so insightful.

He also said, in a leadership primer that I recently saw, "Good leadership involves responsibility to the welfare of the group—which means that some people will get angry at your actions and decisions."

To me, the hardest decisions we have to make are the decisions that anger people or, even harder, the decisions that hurt people—their careers, their self-esteem or, for those of you in the military—even their lives.

When I think back on decisions I've made that hurt people—even when I know with years of hindsight and reinforcement from others that the decisions were right—they still bother me. A lot.

I'm convinced this comes with the territory. And, I'm convinced that if these kinds of decisions didn't hang in our hearts, and our minds, and our gut, we wouldn't be worthy of the trust that people place in us.

I'm also convinced there are no "perfect" decisions. If all the factors lined up perfectly and pointed to the right answers, then a computer—or certainly a wizard with a crystal ball—could be a decision-maker.

Because there are no perfect decisions, it takes imperfect people—people like us—to make important decisions. Not because we have all the answers: We don't. But, because we strive to do the right thing, and care deeply about the outcome.

That, to me, is what makes a good decision-maker, not just in e-Time, but in any time.

Thank you.