Theodore Vail was perhaps one of the most effective decision makers in American business. Vail was the president of Bell Systems during the turn of the century. He built that company into what was to become the largest private business in the world. So large in fact that the government had to break it up into many smaller companies. Such a behemoth was Bell that it took nearly an entire decade to accomplish the break-up of the monopoly.
Back in 1914 however Bell was in some trouble. Its phone patents had expired and other smaller companies were getting into the business. Suddenly, Bell had competition. Vail solved this problem in three ways. First, he decided Bell would be called AT&T. He decided they must have the very best phone system available. He committed the company to building a long-distance system that would cross the entire US. To do this he knew he would have to invest in scientific research, and he developed AT&T’s own research laboratory, Bell Labs. Second, he cooperated with the competitors, leasing them the use of AT&T’s phone lines. Third, he managed to convince the public and the government that the best possible phone system was one that could provide “universal service” around the country, in essence, the best phone system would come from a monopoly like AT&T.Management guru, Peter F. Drucker talks about Theodore Vail in his book, “The Essential Drucker.” He credits Vail’s decision to grow AT&T as based on implementing the four elements of effective decision making:
- Rule of principal
- Boundary conditions
- Moral “right”
- Action commitments
The Rule of Principal
The first issue that confronts business leaders in making a decision is to determine if the circumstances are generic or exceptional. In other words is the situation in which we find ourselves caused by a symptom of a greater, more generic problem or is it a truly unique event. Vail knew that the lapse of those patents would forever change the way Bell would compete in the marketplace. He knew they were symptoms of a far larger problem within Bell. He recognized that Bell needed again to become a research-driven organization. I see so many business people today ignoring the generic issues in their businesses. Instead they ascribe problems to a never-ending series of “unique exceptions.” I encourage leaders to make every attempt to associate the exceptional symptoms in their businesses to the generic and create rules of principal or business “values” in order to help make effective decisions.Boundary Conditions
The second major element in the decision process is clearly defining the specifications of what the decision needs to accomplish. What are the minimum goals? What is the ultimate vision of success? Science has a name for this type of discipline. It is called “boundary conditions.” What boundary conditions must be satisfied in order for a decision to be effective? The clearer the boundary conditions, the more effective the decision. Boundary conditions must be rooted in the values that are the core of any business or institution. These are the guiding principals that give strength and uniqueness to any business. If our decisions are consistent with these principals then we have greatly improved our odds for success.Moral “Right”
Who can say what is “right?” What is morally right for one is anathema to another? We only need look to the horrific events of September 11th to see this clearly. What was an act of cowardly aggression from our vantage was heroic retribution from the Talaban’s. But if we are determining what is morally correct by measuring our decisions against our “boundary conditions” or business values as discussed above, then we are evaluating moral “right” in a viable way. Again, I see far too many business leaders measuring their decisions NOT by what is “right” but rather what is “acceptable.” Some might say, “come on Mark, you’ve got to compromise don’t you?” Like the old saying, “half a loaf is better than none.” But what about the old proverb from the book of Solomon? Is half a baby better than none? I implore all leaders to start measuring decisions by predefined business values and like good scientists with well thought-out boundary conditions.Action Commitments
Even the decision that meets the rule of principal, is consistent with the boundary conditions, is morally right is useless without the effective plan of action. Decisions result in change. Typically people have to carry out the decision. If this part of the formula is missing in our decision making process than our decisions will be completely ineffective. We need to answer the questions: Who needs to know about the decision? How will they react? What could be the consequences? What is our plan to ensure that the decision is carried out and that change occurs? As leaders it is our responsibility to not just make decisions but to ensure their implementation.Let’s face it effective decisions require good judgment. It is a choice between alternatives. It requires more than merely gathering the facts and weighing them. While that is important, it isn’t enough. We need to be able to discern the cause of the problem. Is it a symptom of a larger issue? We need establish boundary conditions and measure the decision against our values. And finally we need to take ACTION to ensure that transformation occurs and our goals are accomplished.At the Small Business Advisory Network we like to say that we influence decisions, improve performance and inspire change. That’s what our consulting, workshops, web site, weekly articles and The Small Business Hour Radio Show are all about.