Decision Quality Blog

It’s difficult to not talk politics when the subject is decision making. It’s just that the decisions are so much more visible to the rest of us. With that, a couple of items caught my eye.

The first is the kerfuffle over Scott McClellan’s new book which roundly thrashes the Bush administration on a number of fronts. The part that caught my eye is his reflection on how the book’s tone and direction came to be . . .

Scott McClellan says he did not set out to write a memoir that was sharply critical of the White House. Indeed, one publishing industry insider described his early concept as “a not-very-interesting, typical press secretary book.”

But somewhere between proposal and publication, as McClellan told it yesterday, the scales dropped from his eyes, leading him to write a book that accuses his former boss, President Bush, and his senior aides of abandoning “candor and honesty” to wage a “political propaganda campaign” that led the nation into an “unnecessary war.”

“Over time, as you leave the White House and leave the bubble, you’re able to take off your partisan hat and take a clear-eyed look at things,” McClellan, a former White House press secretary, said in an interview yesterday. “. . . From the beginning, the focus was what had happened to take things so badly off course. I don’t know that I can say when I started the book that it would end up where it was, but I felt at the end it had to be as honest and forthright as possible.”

I’ll leave it to others to debate whether this is a money-motivated hack job or an honest effort at truth telling. The part I’m struck by is the dynamic of stepping back from a situation to get some perspective . . . and how different things look when you do. In our look, we call this a “sober second look.” As a subset of that, I personally find the act of writing about something to be cathartic and a great aid to decision making. Apparently this is what happened here as well.

The second is a bit about Candidate Ron Paul.

Give Ron Paul supporters credit for tenacity.

John McCain may have a lock on the national Republican presidential nomination, but that hasn’t deterred Paul’s followers in this state.

They’re still turning out in droves to support the Texas congressman’s presidential bid, dominating local GOP conventions in places like Spokane and Whatcom counties.

By some estimates, Paul supporters could total up to 40 percent of 1,100 delegates expected at the state GOP convention that starts today in Spokane.

Independence is a quality much prized in American mythology, though not one that’s rewarded at the polls, at least at the national level. And for the record, I rate the chances of a viable national third party or independent presidential capital at zero, give or take a couple of points. The reminder I take from this is a persistent desire for alternatives. Some of that is probably due to boredom or anger. And while we are more creatures of habit than not, I do think people respond to fresh thinking. That’s what lifted Obama to the front . . . and the fact that he’s now in a cage match with Hilary and off his hope message is cause of much consternation with his supporters.

Back here in the non-political world, the Paul candidacy should be a reminder to seek out fresh thinking and new alternatives when it comes time to crack on tough problems.

What Happened

Scott McClellan. PublicAffairs 2008, Hardcover, 368 pages, $27.95

Tags: Choices, alternatives, Scott McClellan, Ron Paul, Decision Making

Watching the Clinton camp down the stretch creates an uncanny echo of 2000, where Hilary is playing the role of Bush/Baker, and Obama is nervously trying to not be Gore. The lessons Bill and Hilary take from that sordid affair are absolutely clear . . .

• Fight to to last minute, the last ballot, the last hanging chad.
• Keep fighting even after that.
• Work every possible angle and don’t worry about whom you piss off or how much collateral damage you create because most people will forget and those that don’t can be either punished or bought off in the future.
• If you still can’t win, you can always retread as an elder statesman and play again another day.

It sounds cynical but I think it’s still an accurate assessment of the decision making process over in the Clinton camp based on what they’re doing in front of and behind the scenes.

Tags: Hilary, Bill, Clinton, Obama, Delegates, President, Democrats, Decision Making

It’s always interesting to wonder about the line of decision making that leads to something like this happening . . .

In a case that echoes the corporate spying scandal at Hewlett-Packard, Deutsche Telekom said there had been “severe and far-reaching” misuse of private data involving contacts between board members and reporters.

The disclosure, prompted by a report Saturday on the Web site of the news magazine Der Spiegel, set off a storm of protest from privacy advocates, journalists and labor representatives at the company.

The German government, which effectively controls Deutsche Telekom through a 32 percent stake, demanded a thorough investigation, describing the spying operation as a “serious breach of trust.”

I’m absolutely convinced that given the perceived context, this decision made sense to someone at the time. Now that it’s splashed all over the Internet, it looks much different. People will swing for this, maybe even those that ordered it up, but who’s to say. I can think of many examples where that didn’t happen.

Another reminder that privacy is a 19th century dream.

Tags: DeutscheTelekom, Spying, ethics, decision making

Recently I was one of the keynote speakers at the SAMA annual meeting. The topic was story telling. Here’s a snip . . .

Before we go any further, perhaps it would be useful to talk about what I mean by the word “story.”

This isn’t a college class so we don’t need to be particular here. One obvious meaning of the word is simply a sequence of events. This leads to this, leads to this, and then that happens. It is a common form of communication between two people, particularly in a business setting. Another word for this type of communication is “narrative.”

More formally, we might reference Aristotle. Although humans have been telling stories for as long as we’ve had language, the Greeks brought story telling to a high art. Their epic heroic tales and classic tragic plays adhered to what we would now regard as classical form.

Obviously a story should have a beginning, middle, and an end. A good story should include characters with some complexity. It should have a plot that incorporates a change of fortune and then the subsequent lessons learned. And finally a story should engage the imagination so that the listener might visualize what the characters see, feel, experience, and hear.

For the purposes of business people, we are not looking to win a prize in literature. What we are interested in is how our clients and colleagues talk about what’s important to them and their companies. We are interested in how the people who work in our client companies talk about what’s wrong and what’s right. And equally as important, our clients are interested in how what we have to say matches up with what they think is important.

It is these kinds of stories, or what I like to think of as “narratives around the edges,” that give us the real insight into what we need to know about the people we’re trying to influence.

The key, as we will see, is in the details. It is in the details, in the little things, that we find the texture and meaning that turns a bunch of words into a story. And it is the stories that people tell themselves and others that explain and deliver their decisions.

Having thought about and told a lot of stories over the years, I would add a couple of comments to the framework laid down by Aristotle.

The first is simply this: Stories win. They are the great leveler. Humans have been telling each other stories for so long that the elements of telling and hearing are deeply engrained in each of us. I have yet to meet someone who doesn’t love a good story. I have yet to meet someone who doesn’t tell stories, however poorly or expertly woven. When someone introduces a story into the proceedings, something in the dialog changes.

Over the arc of time, every tribe, village, culture, team, and organization has used stories to communicate what it means to be . . . to be a man, a woman, a hunter, a warrior, an adult, a wife, a team mate, a competitor . . . The list is endless. The Bible, just to pick one piece of the canon of wisdom literature, is filled with stories instructing us as to the why and how of living an obedient life, a just life, a life of grace. At some fundamental level, we immediately recognize these stories as both tales of our people, and tales of the inner journeys we have taken and have yet to take. Reaching back to my previous point, this is why stories win.

In this way, I think stories can also be thought of as containers, containers that hold important information about context, frames (what’s in and out), values, and choices. I’ll touch on each of these topics in the following paragraphs.

Stories are “space-makers”: They make room for people to enter into a state of boundarylessness with each other. Inside the comfortable confines of a story, you stop being you and I stop being me and we become caught up in the arc and the detail of the story. In those moments, we find a new ground on which we can relate to each other.

Finally, and I think most powerfully, when I am able to hear me in your story, when you are able to hear yourself in my story, the space extends and the boundaries that separate us become less formidable, less permanent. We’re not so different after all. We’re not so strange. Perhaps we can travel together after all.

This is why I believe that stories win.

You can read my comments in their entirety, or mostly so, at www.kevinhoffberg.com.

Tags: SAMA, Story Telling, Strategic Accounts Management Association, Influence

You can’t swing a dead cat without hitting another article about rising prices . . . being linked to either or both the price of oil or the price of gas. Airlines are fiddling the price of everything they do . . .

Airlines ratcheted up the pressure on fliers ahead of the holiday weekend, significantly raising ticket prices to offset the runaway cost of fuel. The three biggest carriers each boosted most domestic fares by up to $60 round trip, while budget airline AirTran Airways raised its leisure fares by $30 round trip. United Airlines led the round of increases late Thursday, lifting round-trip ticket prices by $10 to $60, depending on how far passengers fly and the competition on the route.

Travelers will pay the biggest increase on routes of 750 miles or more — less than the distance from New York to Chicago — that low-cost carriers such as Southwest Airlines do not serve.

Drivers are abandoning their road going ways . . .

With the nationwide average price for regular gasoline closing rapidly on $4 a gallon, people are bracing for a summer of expensive driving.

As the Memorial Day holiday approaches, starting the summer driving season, record prices are provoking dread and upsetting vacation plans. A recent survey by AAA, the automobile club, found a rare year-on-year decline, of 1 percent, in the number of people planning to travel this summer.

Americans have started trading their gas guzzlers for smaller cars, making fewer trips to the mall and, wherever possible, riding public transportation to work.

For years, it was not clear whether rising prices would ever prompt Americans to use less gas. But a combination of record prices, the slowing economy and tight credit have beaten consumers down.

Gasoline demand has fallen sharply since January and is headed for the first annual drop in 17 years, according to government estimates.

The Transportation Department reported Friday that in March, Americans drove 11 billion fewer miles than in March 2007, a decline of 4.3 percent. It is the first time since 1979 that traffic has dropped from one March to the next, and the month-on-month percentage decline is the largest since record keeping began in 1942.

High gasoline prices, plastered on 20-foot signs from coast to coast, are turning into a barometer of the country’s mood.

“The psychology has changed,” said Sara Johnson, an economist at Global Insight. “People have recognized that prices are not going down and are adapting to higher energy costs. It’s a capitulation.”

And in a sign that the end of the world is drawing near, both ticket prices and popcorn prices at the local Bijou are on an escalator ride as well . . .

Partly because of the rising price for popcorn, Kansas City-based AMC Entertainment announced Thursday that it was increasing its ticket prices. Also beginning Friday, AMC’s popcorn price jumped 25 cents nationwide.

Ricard Gil, an economics professor at the University of California, Santa Cruz, predicted earlier this week that movie ticket prices might leap as much as 30 percent because of the cost of popcorn. Gil said concession sales allow theaters to keep down the cost of a movie ticket by nearly 25 percent. And popcorn accounts for a third of those sales.

In a Los Angeles Times interview, Regal Entertainment CEO Mike Campbell said that if theaters didn’t charge what they do for concessions, “movies would cost $20.”

Gil, interviewed before the AMC announcement, said that a big release — such as this weekend’s “Indiana Jones” movie — would be an ideal time to introduce higher-priced tickets.

“You’ll show up at the theater and find you’re paying 25 to 50 cents more for a ticket. This means that the most valued customers, the ones who come out to see a movie on opening weekend, will end up paying the most.”

AMC based Friday’s increases on dozens of economic factors, not just the price of popcorn, company spokesman Justin Scott said.

And I thought the whole point of going to the movies was to escape from the daily grind! No more. Taking a family of four to see the latest Blockbuster is shaping up to be a major financial event.

It seems like academics are still stuck in debating the finer points of whether or not we’re in a recession, but the markers seem everywhere: consumers are feeling the pinch.

Pricing is tricky business; much like tax policy. It’s a constant game of finding the point of “indifference” where the most people are willing to buy at the highest price (assuming away luxury items). In the case of airlines, they seem to be flying at or near capacity and are bleeding cash. So there is no obvious choice but to raise prices. The folks in the entertainment business are stuck on the horns of a puzzle of their own making: from movies to professional sports, they all over pay for talent and all that goes with it.

The American consumer has been the lubricant that has kept a big chunk of the global economy spinning smoothly upwards. I’m thinking that’s going to change.

Tags: Inflation, recession, price rises, price of gas, corn, movie tickets, popcorn, decision making

This seems to be a very odd response on the part of airlines . . .

Now, for the first time, a major U.S. airline says it will begin charging many passengers to check even one bag, a move that’s angered customers amid predictions that it will spread to other carriers and cause havoc during the peak summer-travel season.

Hit hard with record-high fuel costs and an aging, gas-guzzling fleet, American Airlines, the nation’s largest carrier, said Wednesday it will begin charging some domestic economy-class passengers $15 each way for the first checked bag.

I think everyone gets that airlines are operating under very difficult conditions. Every decision is freighted with trade-offs. The idea of unbundling services probably isn’t a bad one either, but at some point, you have to wonder if the loss of transparency is worth it. I see two problems here . . .

Already facing a huge consumer backlash in the form of proposed traveler’s bill of rights, the constant unbundling of pricing will ultimately generate another one. It used to be that the price was the price: a couple of dollars of taxes on the end were both easy to understand and uniformly applied across the industry. Now, the price isn’t the price. It’s just a matter of time before someone fires up a class action law suit.

More troubling is the follow-on effect that systems dynamics people call “burden shifting.” Cabin personnel and gate agents hate carry on baggage. Every extra bag walked on the plane delays the boarding process even further. This goes double for casual travelers. Every extra bag they carry on clogs the process double. So charging for the first bag, and the people hit with the charge will be the casual travelers, will have a perverse and unwanted effect.

Tags: BurdenShifting, Airlines charging for bags, systems dynamics, decision making

The price of everything (other than housing) is rising with no immediate end in sight. After flirting with $100 a barrel, oil has zoomed to nearly $130. While some of that is driven by speculators, there is no reason to believe it will deflate to any significant extent. There is simply too much demand. The same dynamic is driving food prices: big demand.

There is a silver lining in high prices: it makes economic what wasn’t before. In the case of the oil patch, $130 oil now makes it possible to go after harder to get at oil fields. It also makes it economic to develop alternative sources of carbon-based and non carbon-based energy. Again, the same is true with food stocks. High prices are a spur to innovation across the value chain. Here’s a bit on that from the NYT . . .

“When something becomes dear, you invent around it as much as you can,” says David Warsh, editor of Economicprincipals.com, a newsletter on trends in economic thinking.

Joel Mokyr, an economic historian at Northwestern University, adds, “All of a sudden, some things that didn’t look profitable now do.”

Consider the periodic surges in prices for computer memory hardware. Because its price is declining over the long run — a result of new technologies and automation — innovators tend to stay away from the field, leaving it to a few large, established companies.

For decades, declining prices for food had the same chilling effect. In the United States and Europe — the world’s two biggest consumers of new technologies — food was plentiful and relatively inexpensive. Innovators turned their attention elsewhere.

With higher food prices possibly here to stay, clever people can now try things that simply weren’t cost-effective before.

“I don’t pay attention to inflation, but I do pay attention to big problems,” says Bill Gross, chairman of Idealab, the business incubator based in Pasadena, Calif. “If you can beat the price of the big gorilla in the marketplace, there’s big opportunity.”

One clearly “big opportunity” lies in changing the relationship between food and energy. Fertilizer lets farmers raise production but is energy-intensive to make. Transporting food great distances also requires much energy. So does processing. Finally, some foods are now being valued in relation to oil because of their potential use in fuel.

For some years now, innovators have trained their attention on alternative energy; they are now likely to concentrate on food production as well.

For Americans, that would be going back to the future. Seventy years ago, farming was the technological high frontier.

In the 1930s, after the Depression wiped out so many small farmers, the federal government introduced “price supports,” which lifted the return to farmers on basic crops. Higher prices got the attention of innovators in farm equipment, seeds and other so-called inputs.

Sally Clarke, a historian at the University of Texas, has found in a study that higher prices enabled Midwest farmers, then reliant chiefly on animal-drawn plows, to justify investment in tractors, raising efficiency. A study in the 1950s by the economist Zvi Griliches of American farmers’ adoption of more productive varieties of corn showed how higher prices reduced the cost of adopting new technologies.

Energy and food prices are obviously a big deal and a sizzling hot political issue. Time will tell if we’re about to enter a period of real innovation in these areas, but my bet is it’s all a matter of timing. The big picture forces are all against prices “settling back.”

On a smaller level, it’s a good lesson in decision making dynamics. When the values change dramatically, and price is a huge signal of value, that creates an opportunity to bring into play new problem definitions and new alternatives that were previously not viable (politically, socially, economically). True leadership recognizes the opportunity and uses it to drive change in the large. Demagogues recognize the opportunity and use it to create fear, reaction, and change in the small (pick me; do what I want you to do).

Tags: Oil, Food, Corn, Prices, $130 a barrel, demagogues, innovation, change, decision making, values

Many of our clients are interested in talking about increasing innovation. But it won’t happen unless you change what you measure, what you value. A recent AP piece illustrates this point in a fun way . . . how “tough times” cause many people to redefine luxury.

“There are friends who get the $300 Caymus and there are friends who get the $10 bottle,” Vorbach says. “They’re saying, ‘I like them, but I don’t like them that much.’ “

Even wealthier customers are stocking up on bargain bottles, though they tend to purchase by the case.

“Before, they wouldn’t be caught dead with a $9.99 bottle in their presence,” she says. “But now they will. As long as I tell them it’s a good one.”

It’s a matter of redefining luxury — and redefining nonessential — in an economy whose most consistent product may seem to be dismal daily headlines.

Ultimately, though, “essential” and “luxury” are personal definitions, choices driven not only by how much money remains when the bills are paid but also by our position on the social ladder, our sense of how to stay there and the feelings we get from the things we buy.

This last bit is actually inaccurate. “Essential” and “Luxury” are values, the choices are what we chose to buy with our time and money.

So the point here is that the choices were always there. The $10 find was always an option. It just never entered into the consideration set under the “old” definition of luxury. And some day in the future, it won’t again.

Similarly, you and your colleagues will struggle to consider interesting, innovative alternatives if you continue to define what’s important in the same old way.

Tags: Innovation, Mavericks, Luxury, Tough Times, Decision Making

I found this on MindSet Media’s website. It’s a snip from a press release on how they think independent voters will swing in the November elections. There’s a bit of psycho-speak, but it’s an interesting insight into a key dimension of decision making: values, or another word “preferences.” In this case, these preferences may not be well articulated by the person in question. Rather, they exist at a deeper, psychological level.

To understand the terms, click on the company’s link.

Tags: Independentvoters, Mindset Media, Creativity , Dogmatic, Decision Making, McCain, Obama

I recently attended that BAI Mavericks in Banking Conference. You can read my summary thoughts at Tom Brown’s excellent site, bankstocks.com.

Tags: TomBrown, BAI, Bankstocks.com, Mavericks in Banking, Kevin Hoffberg