Discussion: View Thread

Dear John

How about the air-engine contract signed by Rolls Royce in the late
60s early 70s? The final product was second to none but the
contract, with penalty clauses, put them into potential bankruptcy.
I seem to remember that they lost that part of the company as a
result.

Another might be the decision to develop Sinclair's C5 'car' in the
late 70's. Whoever thought that this car would actually be perceived
as safe for the drivers?

Regards
Dave Stewardson
ISRU {Industrial Statistics Research Unit}
MMME {Department of Mechanical, Materials and Manufacturing Engineering}
Stephenson Building
University of Newcastle upon Tyne
Tyne & Wear
England
GB - NE1 7RU
TEL 00 44 191 222 6244
FAX 00 44 191 222 7365

John Naylor said, "By bad decision, I meant one that could be identified at
the time it
was made."

Let me get you to clarify the context of analysis here. Are we talking about a
single decision-maker or a group/organization decision? And are the criteria
(values) for "bad" those of the decision makers or outside observers? I think
these two questions can make a big difference in your search for bad
decisions.

When there is more than one person involved, there can be different views on
the same decision. A board or committee meets and some feel that a course of
action is "bad" and the majority feel otherwise, are blinded by greed or ego,
etc. Or do you mean a decision that can be identified by as "bad" by academics
or other outside observers (non-participants)?

Another example: In some elections, there are quite a few who feel that
electing Candidate A would be a "bad" decision and there are many editorials
to that effect. However the majority vote for A and the "bad" decision results
in the feared bad outcome (or worse). Examples can be found throughout
history, in many countries and political parties.

--
Prof. John Naman Katz Graduate School of Business, University of Pittsburgh

On Sun 12 Dec 1999, John Naylor asked:
> Three weeks ago I asked if anyone could suggest examples of bad business
> decisions, reporting that I had become used to using the Bay of Pigs while
> students had become younger and less interested in US history!

This is an interesting challenge as I have witnessed a similar problem. I
usually refer to the Bay of Pigs in a seminar on "Group Decision Making" and
obviously highlight "group think". I spice it up by calling it "Meetings
that Kill, Maim and Destroy". You've already been referred to the Bay of
Pigs (Kill) and the Challenger Disaster (Destroy), both of which the meeting
transcripts clearly indicate that "group think" was in operation. The other
example that I use is the Thalidomide Fiasco (Maim). I was born in those
years and went to school with children who were affected from this "bad
decision" so have seen the outcomes first hand. Once again, the transcripts
clearly indicate that "group think" was evident.

A "newer" example that comes to mind is the Norton motorcycle company that
manufactured the Wankel rotary engine under licence. Their "bad decision"
was to still hang onto the romantic notion that they were manufacturing
motor-cycles when in fact that part of their business was long gone. So ...
they continued doing this and went broke (around the mid-1990's). If they'd
focussed on the rotary engine and the SRV's (small remote-controlled
vehicles) for Army/Navy surveillance work using the rotary engines, then
they would probably still be trading today. This case study is in a series
produced by the BBC featuring Sir John Harvey-Jones, past CEO of ICI. He
goes into companies and asks the "hard-hitting" questions. I've used the
Norton video in class a couple of times, and stopped it 5 minutes from the
end - the bit when when we find out what happened. I then challenge the
class to come up with some solutions for Norton, and then we find out what
really happened. The class is usually very innovative with their
suggestions.

As for another modern example, someone mentioned Mars 1 and the calculation
of the landing trajectory being in the wrong measurements (metric versus
imperial). On a ligher note, my wife reckons that it was abducted by
Martians !!!

-------------------------------------------------------
Alan Wilson - Facilitated Solutions
Speaker/Trainer to the Meetings Industry

John Naman's comment, that I should 'clarify the context of the decision'
was stimulating. Coupled with a recommendation that I should read Derek
Parfit's 'Reasons and Persons'(1984, Oxford, Clarendon) this underlines the
fact that answers depend on the way you frame the questions.

Naman brings out the differences between individuals and groups. I was
trying to get down to the situation where we could assume the group had a
common, unitary perspective, at least officially. This we can imagine a
coherent management team pursuing organisational goals etc. After all, once
we get into pluralism we see Billy Clinton's election as a bad decision made
by 49% of the electorate (Jack Ring's example). (In the UK, with more
parties, the government wins with about 40% by the way.)

Yet I worry that, if the frame is defined so narrowly, it may enclose
nothing.

Among other themes at the start of Reasons and Persons, Parfit challenges
the notion of rationality. If I read it correctly, he shows a situation
where it is better to be irrational. Yet how can one decide this rationally?

So, to build on Naman, it's important to define both 'bad' and 'decision'.
For the latter, I wonder if it's false to talk of 'a' decision. After all,
if a Glaxo decided all those years ago to back Zantac it did not do it once
and for all. The product passed through lots of approval stages, tests and
trials. The decision to proceed is made very day. Decisions are streams.

In the Challenger disaster, or the Bay of Pigs, the decision conditions had
been set so that it became more and more difficult to reverse. Pressure for
the daily, or hourly, confirmation was intense. Napoleon and Columbus knew
the same.

Marks and Spencer, currently the subject of much takeover talk, expanded
into Canada many years ago. As far as I know, the operation has never been
successful. But to get out would be worse than to stay.

John Naylor
Liverpool Business School

Au contraire - M and S decided some time ago to pull out of Canada - but
what does that prove ?

>Marks and Spencer, currently the subject of much takeover talk, expanded
>into Canada many years ago. As far as I know, the operation has never been
>successful. But to get out would be worse than to stay.


John Williams
Sheffield Hallam University
Leadership and Management Unit (LAMU)
Centre for Continuing Profesional Developmen t (CCPD)
School of Education
College House
36 Collegiate Crescent
Sheffield
S10 2BP
J.N.Williams@shu.ac.uk
International tel: 00 44 114 225 2306
International fax: 00 44 114 2252323

You also have to be concerned about the time factor. When
we
look back at a program or project, we may see something that
appears to be a bad decision on its face, but in making such
judgments we sometimes see time compressed. Some bad
decisions
sometimes occur as a series of small, and at the time
seemingly
insignificant, decisions which, collectively lead to or
become
a bad decision.
How do we recognize these as they are occurring?
Case in point (true story):
Colonel is managing 17 different small projects. He has one
which
is a small business set-aside. Six people do it, literally,
in
a garage. They turn one person's garage into an office, and
they
sit together to do the job. It is to build a prototype of a
spreadsheet to be used for tracking foreign sales. It is
only
about 40,000 lines of code and it is done well. It is also
an
experiment to use a new fourth genration language known as
FOCUS.
Then the follow-on contract comes up and the small company
gets
the follow-on basd on their past performance. It is the
only
contract this company has, so the Colonel has no real club
to use
to counter non-performance.
The new contract is abut 400,000 lines of code and they have
to
rent office space, hire people, and act like a real company.
The contractor CEO comes to the Colonel and says, "You know
all
those standards the government has on these types of
contracts?
They only apply to third generation languages, so how about
we don't
use them on this contract?" Colonel, trusting the integrity
of
the CEO, says, 'Sure. Why not."
Then, later, CEO says, "You know that stuff called
documentation?
How about we do it once, at the end, so it will exactly
match the
code and you will save all the money on document revisions
as we
go along." Colonel says, "Ok. Just do the job."
One thing leads to another, and a year later the contract is
dead
in the water. Performance problems all over the place.
Consultant
comes in and does a complexity analysis and finds that the
software
modules are so complex that a third of the modues have a
complexity
over 100,and some are over 800. Testability and
maintainability and
documentability are out the window.
Then, after things really go south, Colonel tries to
negotiate a
warranty clause. CEO says no, but then, out of the kindness
of his
heart he reconsiders and agrees, for a 5 percent increase.
Colonel
calls me to let me know hre has a warranty. I remind him
that he
has nothing because he has no documentation, and wthout a
requirements
document there is nothing defined for erformance they have
to meet,
and that he just gave away 5 percent more money for nothing.
Things get really bad, and, trying to get what he can, wants
to have
the history of the project documented. CEO is the only one
who has
it, and he dies of brain cancer and the history goes down 6
feet with
him. Colonel is asked to retire. Contract is cancelled.
Company
goes away. End of story.

Jim Dobbins

"John L. Naman" wrote:
>
> John Naylor said, "By bad decision, I meant one that could be identified at
> the time it
> was made."
>
> Let me get you to clarify the context of analysis here. Are we talking about a
> single decision-maker or a group/organization decision? And are the criteria
> (values) for "bad" those of the decision makers or outside observers? I think
> these two questions can make a big difference in your search for bad
> decisions.
>
> When there is more than one person involved, there can be different views on
> the same decision. A board or committee meets and some feel that a course of
> action is "bad" and the majority feel otherwise, are blinded by greed or ego,
> etc. Or do you mean a decision that can be identified by as "bad" by academics
> or other outside observers (non-participants)?
>
> Another example: In some elections, there are quite a few who feel that
> electing Candidate A would be a "bad" decision and there are many editorials
> to that effect. However the majority vote for A and the "bad" decision results
> in the feared bad outcome (or worse). Examples can be found throughout
> history, in many countries and political parties.
>
> --
> Prof. John Naman Katz Graduate School of Business, University of Pittsburgh