Decision Quality Blog

A fine video on the topic of practical wisdom by Barry Schwartz.  I was particularly taken on his point of view on “practical wisdom.”

“Practical wisdom,” Aristotle told us, “is the combination of moral will and moral skill.” A wise person knows when and how to make the exception to every rule, as the janitors knew when to ignore the job duties in the service of other objectives. A wise person knows how to improvise,as Luke did when he re-washed the floor. Real-world problems are often ambiguous and ill-defined and the context is always changing. A wise person is like a jazz musician — using the notes on the page, but dancing around them, inventing combinations that are appropriate for the situation and the people at hand. A wise person knows how to use these moral skills in the service of the right aims. To serve other people, not to manipulate other people. And finally, perhaps most important, a wise person is made, not born. Wisdom depends on experience, and not just any experience. You need the time to get to know the people that you’re serving. You need permission to be allowed to improvise, try new things, occasionally to fail and to learn from your failures. And you need to be mentored by wise teachers.”

With great care I draw your attention to an article by Lee Siegel called The Zero-Sacrifice Presidency.

Obama tells us that we can have quality, universal health care without increasing the deficit. He tells us that he intends to have the 9/11 detainees given a fair trial in a civilian court but assures us that the trials will end in convictions. He declares that he will wage war in Afghanistan, but pledges to start bringing the troops home in 18 months. And everybody nevertheless takes these contradictory, irreconcilable statements seriously, as they parse, analyze, scrutinize Obama’s every word for some kind of coherent meaning. The president is like the character Chance in the novel and movie Being There, whose every fatuous utterance was celebrated for its profundity.

Some of Obama’s defenders chastise his exasperated listeners for their inability to detect the president’s “complexity.” But a fantasy of universal popularity that panders to every conflicting interest simultaneously is not the same thing as “complexity.” It is complexity if I tell my wife that I have to move to another state where I know I can find work, but that I realize the strain it will put on our marriage, and that I know the effect it will have on our child, and that I am aware of the consequences of such an attempt if I don’t find a job, having spent so much money on moving and establishing myself in a new place. It is not complexity if I tell my wife that I have to move to another state where I know I can find work, but that I will be back next week, and with lots of money.

In the spirit of full disclosure, my caution is based on two points.  The first is that I was and largely still am an Obama supporter (though I fully admit my reasons may not be rational).  The second is that I made a promise to myself that I would stop writing political screeds. So why this?

I have been reading for the second time a book on decision making called The Paradox of Choice by Barry Schwartz.

The Paradox of Choice

Barry Schwartz. Harper Perennial 2005, Paperback, 304 pages, $7.07

It’s not my favorite book on decision making though it and he have certainly enjoyed a lot of attention for a “perfect for the times” message that can best me summed up by the B-Head for his book:  How the Culture of Abundance Robs Us of Satisfaction.

Schwartz quotes a considerable amount of research to make the case that:

• An over-abundance of choices ultimately leads to confusion, poor decision making, and dissatisfaction with the decision once it is made.
• The more we are forced to justify our choice, the more dissatisfied we become with our choice.
• The reasons people give for making a choice are seldom the real reaons.
• The more people are forced to make trade-offs, the lower the satisfaction with the choice ultimately made.  Worse, the stress of making difficult trade-offs leads to low quality decision making.

Or to put it another way.  Many of us fancy that we are rational decision makers, or at least we can be on-demand when we must be.  The implication here is that we can, on an as needed basis, turn off our biology, our socialization, the mental short cuts, and the internal angels and demons we haul with us and simply add up the plusses and minuses or review the numbers and make the obvious right choice.  That’s a big ask.

That’s not to say that we can’t wrangle our emotions and engineers ourselves past many decision traps becuase we can.  It is to say that we don’t stop being human through the process. So if we believe Schwartz, and I do, many of us are left looking for paths through irreconcilable differences that often don’t exist, not becuase the facts support such a notion, but becuase we believe in Santa Claus.

I have never met the current or previous president but it seems plausible from afar that one of their many differences is that 43 didn’t appear to agonize and certainly had no visible regrets.  The same can be said for Cheney and Rumsfeld (though not Powell).  Critics of the three would say that one of the reasons that’s true is that they didn’t bother to consider alternatives that conflicted with what they had already decided to do.  If that is in fact an accurate accusation, it makes them no different than most of us (hard as that is for my liberal friends to hear).

Conversely, President Obama appears to pride himself on his thoughtful, inclusive, and complete decision making processes.  As a decision engineer, I heartily applaud his instincts and his practices.  But listening to his recent address at West Point about Afghanistan I am left wondering if Barry Schwartz doesn’t have his number: That at the end of the day, Mr. Obama hates making trade-offs and therefore makes others do it for him.

If that is true, it makes Obama like the rest of us as well.  It is also leadership sin number one: Forcing people below your pay grade to make the tough trade-offs you’re paid to make.

Decision making is a distinctly human activity: it is more than an instinctive “stimulus/response.”  Decisions aren’t found under a rock.  They are the result of cognitive processes that we can control.  They are what make us human. Because we are human, and because decision making is a distinctly human activity, decision making is subject to all manner of pitfalls, errors, traps and flaws. 

Most of us are not as good at decision making as we think we are or would like to be. There are many reasons why this is true.  Here are some.

• While we are experienced decision makers, we are not necessarily skilled in the sense that we have not thought about and internalized processes that lead reliably to high quality choices.
• We are much more easily influenced than we care to admit: by people, by word choices, by events, and by our own emotions.
• We are driven by psychological forces most of us don’t really understand: We were not evolved in modern industrialized, information-overloaded, choice-rich environments.
• We are wired to take mental short cuts.  It’s how we go through without having to make decisions about everything that we need to do.  Those mental short cuts can and do work against us causing us to make low quality decisions (again, far more often than we want to believe).
• We hate having to make trade-offs.
• We are evolved to adapt to our circumstances and to revisionist thinking,  We quickly learn to live with the consequences and outcomes of our decisions and retrofit our stories so that we can be right.

Despite everything we appear to have going against us, most of us manage to be highly functional and successful in life: We can say with confidence that we must be good decision makers judging by the outcomes we’re associated with.  Either that or we just got lucky (or a bit of both).

So why try to get better?  Why spend time and energy learning how to make higher quality decisions (and what does that mean anyway)?  After all, it’s not like we wake up in the morning thinking we need to be better decision makers?

We have over the years asked thousands of executives and leaders two simple and related questions:

• Are you a good decision maker (and how do you know)?
• Are “we” (meaning the group that person is part of) good decision makers?

As you might expect, the most frequently occurring answer to the first question is, “It depends.”  The answer to the second question is most consistently, “No.”

Why all this matters can be summed up in an oft quoted statistic from a now-retired professor named Paul Nutt who after years of research concluded that more than 50% of all decisions in business are unsuccessful.  Some of us think he’s a wild-eyed optimist.

Why Decisions Fail

Paul C Nutt. Berrett-Koehler Publishers 2002, Paperback, 332 pages, $13.87

While the dynamics of making decisions by yourself and making decisions with other people are different in many ways, they are similar in many ways as well.  Particularly where the decision is complicated—meaning difficult trade-offs, lack of clarity about the real problem, lots of uncertainty, long feedback loops, significant consequences associated with the outcomes—we can increase our confidence that we’re making a high quality choice by improving the quality of the decision process we use.  Steps that lead to decision quality include the following:

• Take time to explore the problem.  Words matter.  You’ll get new insights about the problem and later see a better set of alternatives by taking care in how you frame the problem.
• Give yourself good alternatives.  As consumers we usually face way too many choices.  In that case, quality may come from limiting alternatives.  In business, often the opposite is true: We rush to solution.  So time spent thinking about alternatives THE RIGHT WAY is important.
• Be smart about how you gather information.  As is true about choices, it is possible to have too much and too little information . . . and in the end it is not possible to know everything you might like to know.  Focus your information on gathering on what is important.  Focus on what could go wrong and what that means to your decision.
• Identify clear values and not too many of them.  Too many trade-offs is as problematic as too many choices and too much information.  The opposite is also true.

As you would expect, there are many ways to go about building quality into each of those steps.  Fortunately, for most decisions, the principles, methods, and tools you need are simple, easy to understand and master, and easy to use in both individual and group decision settings.

For more on making quality decisions visit these links:

I recently republished a paper I wrote some years ago about the how’s and why’s of tuning up your go-to-market strategy.  Here’s the lead on it . . .

At some point it occurs to every executive. Maybe it’s a nagging thought in the middle of a meeting or while playing chess with a tough opponent. Maybe it’s a raging impatience. Hopefully it’s a strategic and permanent insight. “It” often sounds like this: “”We’re spending all this time, money, and resource on marketing, sales, fulfillment, information technology, and about forty other things. Tell me again how they all fit together“?

Or let’s put it in the positive.

The demand side of our business, the supply side, and the supporting infrastructure must all line up through clear strategies and initiatives that serve customers and produce value.

Well you’ve just defined a go-to-market strategy.

• Go-to-market strategy: A coherent set of choices that align your people, processes, products, premises (physical and virtual channels), and partners to deliver your brand promise, the desired customer experience, and tangible value.

This paper can also be downloaded on this site.

Although piracy continues unabated off the Somali coast, “we the people” have largely moved on to more compelling matters like the Palin book barrage, Lou Dobb’s retirement, and oh yes, Health Care reform.  A couple of items did sneak into the popular press in the past week that cause me to wonder “what were the thinking?”

The first that comes to mind is the case of a British couple named Chandler. 

The Chandlers, married for 28 years, took early retirement about three years ago, sailing around the world. In an entry on a Web site in June they wrote that they were headed for Tanzania, after initially delaying a voyage there “because of the Somali pirate problem.”

You already can surmise the rest: They got within range of the bad guys who grabbed them, apparently in plain view of a Royal Navy boat (another matter entirely).  Now the pirates are issuing videos, ransom demands, and death threats.

If you’re the Chandlers, this is clearly not good.  But I am left asking, not only “what were they thinking?”, but what was the alternative they rejected when they chose to go whistling by pirate land?

One of the big decision traps is a failure to grapple with uncertainty.  One of the big ways that shows up is the understandable assumption that the future will look like the past . . . in other words, all the interesting uncertainties are known and accounted for.  Another version is a failure of imagination: You have no interest in thinking about what you don’t know and what could go wrong.  Finally (but not exhaustively), you may have identified the key uncertainties and decided to go forward anyway.

I have no idea the Chandler’s thought process, but at least according to the news item, the Chandlers were aware of the whole pirate problem.  If your intent is to sail around the world on a 38 foot boat (hardly a yacht by the way), sticking reasonably close to land is probably a good idea, but not something you’re going to have much luck with when it comes to crossing either the Pacific or the Atlantic. 

Tanzania is just south of Somalia, separated by a chunk of Kenyan coast line. 

• Choice A is keep to the coast.  Key Risk Factor: Capture by Pirates.  Probable outcome: Held for ransom; death possible.
• Choice B is to head east towards India. Key Risk Factor: Weather.  Probable outcome: You get wet; death possible.

Meanwhile, news of another pirate attack, this one on a ship called the Maersk Alabama raises another version of the same question, “What were they thinking?”

Somali pirates attacked the Maersk Alabama on Wednesday for the second time in seven months and were thwarted by private guards on board the U.S.-flagged ship who fired off guns and a high-decibel noise device.

Hmmmm, something about the name of that ship is familiar.  Oh, wait . . .

Pirates hijacked the Maersk Alabama last April and took ship captain Richard Phillips hostage, holding him at gunpoint in a lifeboat for five days. Navy SEAL sharpshooters freed Phillips while killing three pirates in a daring nighttime attack.

I guess the whole thing worked so well the last time the locals thought they’d try to crash that party again.

Four suspected pirates in a skiff attacked the ship again on Wednesday around 6:30 a.m. local time, firing on the ship with automatic weapons from about 300 yards (meters) away, a statement from the U.S. Fifth Fleet in Bahrain said.

An on-board security team repelled the attack by using evasive maneuvers, small-arms fire and a Long Range Acoustic Device, which can beam earsplitting alarm tones, the fleet said.

In this case, the pirates live to play another day.  It doesn’t matter what they were thinking.  The ship owners looked at the same information available to the Chandlers, framed the problem statement differently, and came up with what appears to have been a superior choice.

Note to owners of 38 foot sail boats: Think about taking another route.

I’m always on the lookout for pieces about decision making at work, or better still, great examples of decision traps at work.  Richard Thaler writes about one of those traps called “escalation of commitment” in the New York Times when he describes a game that’s sometimes called a dollar auction.  I’ve seen it done several ways but a common form is to auction off a $20 bill.  It goes like this . . .

Bidding starts at $1 and goes up in $1 increments. The winner pays the [auctioneer] whatever the high bid was, and gets the $20. Here’s the catch: the second-highest bidder also has to pay, but gets nothing in return.

Typically, a few brave or stupid [bidders] — nearly always male — open the bidding but fairly quickly only two bidders remain and they discover they are in a war of attrition. The bidding slows when someone bids $20, but then resumes with neither wanting to “lose.” If the two students are particularly stubborn, prices can go over $50. [I have seen it go higher than that]

The dollar auction game was invented by a pioneer of game theory, Martin Shubik of Yale, and it illustrates the concept of “escalation of commitment.” Once people are trapped into playing, they have a hard time stopping. (Consider Vietnam.) The higher the bidding goes, and the more each bidder has invested, the harder it is to say “uncle.” The best advice you can give anyone invited to play this particular game is to decline.

Another version of this same trap is called “sunk cost thinking” which is exactly what it sounds like:  You stay with an investment or keep doing something because you’ve already paid for it. It is one of the big reasons why the US is still prosecuting wars in Iraq and Afghanistan and why tax payers continue to pour billions of dollars into rescuing firms that should be shuttered.

I haven’t actually tried it (and probably won’t), but Thaler holds up yet another example of this decision trap at work.  It’s a company called Swoopo, a self-described “entertainment shopping” company.  It works like this . . .

Swoopo sells new merchandise using unusual auction formats. Let’s concentrate on one of them, the so-called penny auction.

Typically an item — say, a laptop that retails for $1,500, is offered for sale. The bidding starts at a penny, and goes up in one-cent increments, but it costs bidders 60 cents to make a bid. Each auction has a scheduled closing time, but as the deadline nears, that time is extended by 20 seconds whenever someone bids.

The site’s home page displays several attractive objects for sale with closing times fast approaching. It is mesmerizing.

One winning strategy might seem to be this: Bid at the last second, just before an auction is about to end. To “help” you do so, the site offers an automatic bidding program called a Bid Butler that allows you to make bids in the last 10 seconds. Alas, others can also use this automatic program, and you soon discover that just as the clock is ticking down and you’re about to make your big score, a bunch of other Bid Butlers get busy, the price jumps by a few cents, and the clock adds more time. Items can remain “in their final seconds” for days.

What makes this procedure so devilish is that while bidders are looking at what seem to be amazing bargains, the Web site is raking in the money. Because Swoopo collects 60 cents for each penny bid, its revenue is the selling price multiplied by 60. This means that if a computer you covet sells for $100, seemingly a bargain, Swoopo collects $6,000 in revenue, a very juicy profit.

Tags: DollarAuction, EscalationofCommitment, Vietnam, MartinShubik, Swoopo

Uncertainty.

I suspect we’ll all see lots of words spilled on the doings of 2008 and the implications for 2009.  Words like “turbulent times,” “recession,” “depression,” “bailout,” and more rivet the mind and churn the stomach.  It’s all interesting, but I think the key concept and word to focus on is “uncertainty.”

It might be useful to pause for a second to reflect on what the word means.  “Uncertainty” is easiest defined as “what you don’t know.”  There are lots of reasons that might be the case.  For example, something might be knowable but not by you.  Or not in the time frame you have to make a decision.  Or not at a cost you’re willing to bear.  Or not at all.  “Risk,” is a word that describes how you feel about uncertainty.

For example, I don’t know the starting time of the blockbuster movie that’s opening this weekend. But it doesn’t bother me and if I miss the next show, I can go to another.

The worst thing about the current economic situation isn’t the value of your home, your bank balance, or the number you see on your brokerage statement. It’s not projected sales, your stock price, or the prospect of headcount reductions. It’s the voice in your head that says, “yesterday you knew what to expect, today you don’t.” And it is that uncertainty, the feeling of not knowing, that makes people crazy, fearful, and worse.

I have three suggestions about what you can do to help yourself and the people you work with to deal with uncertainty.

Step 1: Talk About Uncertainty

Most people I know don’t like to talk about what they don’t know: We prize confidence and certainty in our leaders.  That’s too bad, because the truth is, there are more things we don’t know than we do know.

In good times, we tend to believe that the balance of factors is in our favor and whatever we don’t know probably won’t do more than delay our victory.  It’s an example of what I think of as “bell curve thinking.”  We simply expect that all the possible outcomes lie close together, and significant deviations from plan are unwelcome, unexpected, and unacceptable.
If the last twelve months have taught us anything, it’s that the range of possible outcomes lie well outside a normal distribution, what statistics mavens call a “power force distribution,” or what noted author and investor Nasim Nicholas Taleb calls “black swans.”

The Black Swan

Nassim Nicholas Taleb. Random House 2007, Hardcover, 366 pages, $9.92

So the first and most important thing you can do as a leader, really any time but particularly now, is to talk with the people you work with about uncertainty.  It will take more than one question and it will take more than five minutes.  Probe for it, talk about it, ask “why,” and then do it again and again until you finally have it all out where you can see it.

Step 2: Put a Number To The Uncertainty

Naming a thing takes a lot of the mystery out of it.  Putting a number to it goes further still.

One of the dynamics that figures into how we respond to uncertainty, the good or bad kind, is our almost universal inability to accurately estimate, well, nearly anything.  For example, try this simple test.  In the margin someplace, right down the answer to each of the following questions.

1. Number of labor strikes in U.S. during WW II (Pearl Harbor – VJ Day)
2. The closing Dow Jones Industrials average for May 26, 1969
3. Height of Hoover Dam (feet)

Now let’s try it another way.

1. Write down what you would consider to be a surprisingly high number for each of the three questions, meaning you’re 90% confident that the number isn’t higher than that.
2. Now write down a surprisingly low number, again meaning you’re 90% confident that the number isn’t lower than that.

So now you should have three numbers for each, low, base, and high.

The answers are at the end of this article.  Unless you cheated, actually know the number, or have experience with the concept of “confidence intervals,” there is a better than 90% chance that all of your numbers are wrong: that the answer does not lie anywhere between your low or high number. The tendency towards overconfidence in our estimations is nearly universal.

In good times, doing a poor job of estimating outcomes doesn’t hurt that much.  In bad times, when we’re afraid, our ability to estimate the future simply goes out the window and the cost of being wrong can be devastating.

So put a number, or better a range of numbers, to the thing that worries you the most.  We sometimes call this the “clairvoyant question.”  It goes like this.

Imagine that a clairvoyant will appear in five minutes.  He/she has perfect knowledge of the future, but will only answer one question and the answer must be a number.  So he can’t tell you if you will be employed on a certain date next year, but he can tell you how much money you’ll make by or on any given day.

Think about this for a second.  There are two cognitive tricks you’re playing here, both of which are good.  The first is the act of forcing yourself to focus on the thing that really worries you.  In times of uncertainty, we tend to think that everything is worrisome and everything matters.  The second point is simply not true.  Not everything matters equally, and in this case, not everything will hurt the most.  So make a list and keep asking yourself, “Why does this worry me?”

Once you have the answer to the first question, put a range of numbers to it.  Make it as broad as you need to in order to feel 90% confident that the likely outcome is in there somewhere.  Now you’ve finally got something concrete to deal with.  It’s no longer an abstraction.

Note, that while I have been personalizing my example, you can and should do the same thing with the people you work with or call on.

Step 3: Create a Plan that Addresses the Critical Uncertainty

Naming the uncertainty demon brings it into the light.  Putting a number on it makes it concrete. The third thing is to honestly and directly create a plan for mitigating, insuring, or avoiding that critical uncertainty.

This is not to say that because you have a plan you’ll be completely successful.  It also doesn’t mean that some other unseen factor might not bang into you. It DOES mean that you have done the one thing that prudence and your psyche demand, which is to deal with the thing right in front of you which is the critical uncertainty.

I had the opportunity to listen to former Secretary of State (among many other distinctions) Colin Powell not long ago on the subject of leadership. He said . . .

In this context, problem solving is the part where we create a plan.  The kind of questions we should be asking are:
What can we do now to make sure the worst case doesn’t happen?

What can we do now to soften the blow if it does happen?

Further on in his speech, Powell had this to say . . .

This may sound counter to what I’ve said up until now, but it really isn’t.  You can and should learn to talk with the people you work with about the big uncertainties without showing or being afraid.

It’s Time To Lead

Leadership means many things, each of those things in their season.  Sometimes the need is to create a shared sense of purpose.  Sometimes it’s facing uncertainty head on.  Both are needed right now.  Trying to do those things without calmly and directly acknowledging and dealing with all those crazy emotions puts you in a position to rationally and logically work on plans to succeed. Failing to do that may seem convenient but under serves you and the people you work with.

Answers

Number of labor strikes in U.S. during WW II (Pearl Harbor – VJ Day)    14,371
The closing Dow Jones Industrials average for May 26, 1969    946.9
Height of Hoover Dam (feet)    726

Tags: leadership, uncertainty, decision making, decision quality, back swan, fooled by randomness, Nasim Nicholas Taleb, Colin Powell

David Brooks is jumping, at least modestly, on the behavioral economics bandwagon in an editorial in today’s NYT.

Roughly speaking, there are four steps to every decision. First, you perceive a situation. Then you think of possible courses of action. Then you calculate which course is in your best interest. Then you take the action.

Over the past few centuries, public policy analysts have assumed that step three is the most important. Economic models and entire social science disciplines are premised on the assumption that people are mostly engaged in rationally calculating and maximizing their self-interest.

But during this financial crisis, that way of thinking has failed spectacularly. As Alan Greenspan noted in his Congressional testimony last week, he was “shocked” that markets did not work as anticipated. “I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms.”

So perhaps this will be the moment when we alter our view of decision-making. Perhaps this will be the moment when we shift our focus from step three, rational calculation, to step one, perception.

As someone who got hid first deep immersion into the finer points of decision making in 2001, I say welcome to the party.  The idea that we’re all “Econs”, to trade on a favorite diminutive of the Nudge guys, and that markets actually behave in reality like they do in theory, is so weirdly laughable it’s almost quaint.

The truth is, we humans are pretty awful decision makers, judging by both the way we go about it and the results we produce. The single biggest explanation is that we fall too easily into thinking traps or what psychologists call “cognitive biases.”  These mental short cuts and short hands cause us to wander off in all sorts of unproductive directions when it comes to making difficult decisions. Here’s a list of some common ones . . .

• Plunging in: Beginning to gather information and reaching conclusions without any thought to what problem you’re really trying to solve and what alternatives you should be considering.
• Frame Blindness: Working on the wrong solution because you didn’t take time to define the right problem.
• Frame Stickiness: We see our situations through one frame at a time. Once we lock into a frame, we tend to stay there. Most problems should be examined through more than one frame.
• Lack of Frame Control: Failing to proactively frame the problem in multiple ways; being duly influenced by the frames of others.
• Incrementalism: making small and often meaningless changes to previously considered alternatives and thinking it’s a new alternative.
• Jumping at the first possible solution.
• Over-valuing alternatives presented by others, particularly by “experts.”
• Overworking the problem so that when you finally get around to choosing, one or more of the alternatives are now gone.
• Sunk Costs: Protecting earlier choices, even if they were bad choices, even if the conditions under which they were good choices no longer exist.
• Intangibles: ignoring or giving undo weight.
• Neglecting the values of a key constituency.

For more on decision making, try some of these links

Tags: Nudge, Richard Thaler, Cass Sunstein, Alan Greenspan. Fooled by Randomness, Nassim Nicholas Taleb, Kevin Hoffberg

Can anyone explain this to me. Markets, at least in theory, are supposed to represent all of what’s known about a stock discounted to a present value. So how is it that every major news outlet had a lead like this one from the NYT?

Widespread fear about the financial sector brought a dramatic end to the recent stock rally, as investors scrambled to take profits from bank shares and sent the Dow Jones industrials down more than 280 points, its worst loss in a month.

Investors are worried that the worst of the tight credit market still lies ahead. The nation’s banks have struggled to escape the cascading effects of paralysis in the debt markets and the decline in home values. Sales of previously owned homes declined in June at nearly double the rate that economists had expected, according to a report on Thursday.

The sell-off in financial shares brought down the broader market, with the Standard & Poor’s 500-stock index finishing down 2.3 percent. The Nasdaq composite index slipped 2 percent. All the major indexes headed downward at the opening bell and never recovered.

So the implication here is that there was some vast new treasure trove of information today that was beyond the ken of the smartest market players in the game. Yesterday that were feeling great about financial services firms, and today they’re racing for the doors.

A better explanation is this . . .

The problem here is that “taking money off the table” isn’t nearly as sexy sounding as shock, panic, and “widespread fear.”

kevin hoffberg

Tags: FinancialStocks, Nasdaq, widespread fear, decision making, kevin hoffberg

This is an example of big-time decision-making.

The struggling automaker, reacting to what it sees as a rapid and permanent shift in consumer tastes brought on by high gas prices, plans to unveil its new direction on Thursday, when it will report quarterly earnings.

Among the changes, Ford is expected to announce that it will convert three of its North American assembly plants from trucks to cars, according to people familiar with the plans.

And as part of the huge bet it is placing on the future direction of the troubled American auto industry, Ford will realign factories to manufacture more fuel-efficient engines and produce six of its next European car models for the United States market.

American car manufacturers have never figured out how to make money on small cars, at least that’s what they’ve said, a feat that the competition from Japan, even building cars here, has somehow mastered. Sitting here today, it seems like a sensible bet, but make no mistake, it’s a bet the company move.

k hoffberg

Tags: Ford, Small Cars, Decision Making