1 Sigma Decisions in a Six Sigma World

Six Sigma has become the standard for product quality in our highly competitive world, but we are still wrestling with decision-making that is running at a less than one sigma success rate. Paul C. Nutt in his book, ?Why Decisions Fail? reports, ?For more than twenty years I have been studying how decisions are made, writing about what works, what doesn?t and why. The key finding is startling ? decisions fail half of the time.?

In this world of ?Continuous Improvement? it seems incomprehensible that we are still working with a decision-making process that results in a 50% success rate. Why worry about competition from off shore when decision-making with a 60%, 70% or even higher success rate would really give organizations a huge competitive advantage. The amount of time and money spent on bad decisions is incalculable and it boggles my mind to think about the cost of covering up bad decisions not to mention the blot a bad decision can be on a reputation or the personal friction it might cause.

Historically, most decision-making has been based on the ?rational model.? This involves: define the problem; state objectives; outline alternatives, estimate consequences; evaluate tradeoffs; recognize uncertainty; estimate risk tolerance; remove emotion and choose the best option. Somehow this whole process sounds negative to me. There is nothing positive about problems or estimating consequences. Evaluating tradeoffs signifies settling for something less than the optimum. Estimating risk tolerance doesn?t sound very positive either. Given that we are always faced with imperfect knowledge and the risk of unintended consequences in any decision, choosing the best option seems like a pretty risky proposition. My experience has proven to me that attitude is a huge determinant of success and if this process is negative by its very nature, it seems easy to understand why ?decisions fail half of the time.?

There is another school of thought that suggests when faced with a problem, it makes sense to create an hypothesis and then gather data to test the hypothesis. Unfortunately, this approach falls prey to some of the same problems with our traditional model. Problems equate to negatives. The symptoms of the problem may lead you to identify the wrong problem. Data gathered to support an hypothesis might provide the right decision but the wrong problem. Both the traditional and the hypothesis models are based on the ?how? of decision-making. The hypothesis approach appears to me to be an expeditious way to the same results. Since data shows that ?decisions fail half of the time,? it seems safe to say that reality is often more confused and messy than a neat model can allow for.

Peter Drucker once said, ?The best way to predict the future is to create it.? This truth also applies to decision-making. Decision-making is not a problem solving activity. It is an exercise in the construction of a preferred future. Traditional decision-making is grounded in the negative and in the past. The new way to make decisions is to establish a positive mind set, to fully appreciate the ?why? of decision-making and build from there. Since we move toward that which we define, what better way to make decisions than to utilize the Appreciative Inquiry process. Modified slightly as the Taking Aim approach, we ?marshal? our resources and think about the best of what is, our successes, the things we have done well and felt good about. This step sets up the positive attitude that is so critical to success. Next we get ?ready? by envisioning the perfect future or what might be. This desired future provides us with the answers to ?why.? ?Aim? is the next step where we actually design what should be and finally we ?Fire? or execute what will be. This is a much more positive approach and builds around the desired outcome rather than around the obstacles that may or may not exist. If in this process we can fully understand the why of what we are about to undertake, we can adapt to the vagaries along the way that can stifle a how based solution.

Appreciative inquiry is real and the supporting data is building. Paul Nutt in the book, ?Why Decisions Fail? points out that staying issue-centered is critical to good decision- making and AI is a process to stay issue-centered. Successful business users include Roadway, John Deere, Green Mountain Coffee and others.

We all agree that our customers deserve six sigma products. If our organizations are to survive; our customers to have an ongoing supply of our products; our owners are to earn a return on their investment and our associates are to have secure well paying jobs; don?t they deserve a better success rate on decisions than 50%. If that rate could be increased to 60% or 70% what kind of competitive advantage would you gain in your industry? Isn?t it time you thought about a new approach to decision-making?

Copyright Bob Cannon/The Cannon Advantage, 2003. All rights reserved.