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Our intrepid explorer of the technological hierarchy looks at the complex process of making up the corporate mind; he finds, and sets down here, five rules that should be invaluable to the upward-oriented technologist
Successful managers know they are measured on their ability to make decisions and then - right or wrong - take quick action. Thus they readily grasp the significance of the First Law of Decision-Making:
Managers make decisions
Nonmanagers, by contrast, seldom concern themselves with this law. They may therefore commit the fatal error of making all decisions themselves. This is particularly true in technical hierarchies, where low-level technologists continually make decisions in their areas of expertise. Finding so few issues that the manager is qualified to decide, they are likely to forget to bring any issues to him at all. This was one of Roger Proofsworthy's many problems at the Ultima Corporation, where he performed all of his assignments so perfectly that his accomplishments went unnoticed. Thus he never progressed beyond the first level in the hierarchy and finally left in disgust.
The final blow to Proofsworthy at Ultima was management's rejection of his best project proposal, which was intended to provide Ultima with a continuing stream of new products. Proofsworthy called it project HOPE, an acronym for Highly Original Product Exploration.
Management was at first quite interested, and Proofsworthy was asked to make numerous presentations. At first, the questions were limited in scope; but as interest increased, they were broadened to include competition, patents, manufacturing, marketing and finance. Each time, Proofsworthy was ready. No matter what the question, he had already considered it and had an answer at hand. If management accepted Proofsworthy's project, Ultima's future exploratory activities would be fully determined. No additional decisions would be needed by management either now or in the foreseeable future. Proofsworthy's excessive perfection thus threatened to deprive management of its primary function - decision-making.
Members of management reacted in the only way they could. They rejected the project.
One of their first decisions, after Proofsworthy left Ultima, was to assign a technologist named Brightman to look again into new product explorations. After careful study of Proofsworthy's proposal, Brightman made an "entirely new" proposal called MOPE, an acronym for Management Originated Product Exploration.
It was immediately well received.
With the help of Proofsworthy's earlier study, Brightman solved most problems associated with the proposal. However, he was careful to reserve several items specifically for decision by management. With their involvement in the project thus assured, management eagerly supported it. Even the chairman of the board took delight in selecting the color for the walls of the laboratory in which project MOPE would run.
Now, such a decision may sound trivial, but it was one of the few topics on which all members of management could express an opinion. All felt qualified to comment, and did - until the final and correct view was given. It was correct not just because it was given by the chairman of the board, but also because it was expressed by a man with full command of the Second Law of Decision-Making:
Any decision is better than no decision
and also the Third Law:
A decision is judged by the conviction with which it is uttered.
Decision-making in the technical hierarchy is distinguished mainly by the use of analytical decision-making methods (also known as operations research).
An example of the use of analytical methods is provided by thc case of Xavier Y. Ziegler, newly appointed director of advanced development for the Solid Status Company. an electronics firm. His promotion to director was based partly on his success in using cost-benefit analyses - a skill he had acquired in his previous association with a "think tank."
Shortly after his promotion, some scientists and engineers proposed a new product. The idea was exciting but it would require considerable development effort. X. Y. Ziegler was delighted with the opportunity to demonstrate his analytical decision making skills so soon. Within a week. e had assembled the talent required to evaluate the proposal including specialists from research, manufacturing, marketing and finance. Ziegler worked on the entire study, but he paid particular attention to the cost-benefit analysis.
When the study was completed, a special meeting of the corporate officers was called, to which selected members of the financial and technical staffs were invited. Ziegler began the presentation with a simplified version of the technical evaluation. However, even this much technology was beyond many of those present. The president and two of the vice presidents excused themselves for important phone calls. Several of the others began doodling or whispering among themselves.
X. Y. Ziegler tried to skip over material in order to reach his conclusions more quickly, but this was not possible. The technical staff members present felt obliged to demonstrate their knowledge by asking for clarification of many points and challenging some of the assumptions. Several of their questions revealed their lack of understanding or their technical ignorance to Ziegler, but not to the corporate executives, who were increasingly bored.
It had not occurred to Ziegler before, but leaders in a technical hierarchy become accustomed to having all the technical decisions made by specialists at lower levels. Their own analytical skills atrophy - perhaps more rapidly than those of leaders in other hierarchies where analytical skill is less usual in the lower levels. The selection of Ziegler for a mid-management job was not intended to help management have a better understanding of the technical issues. Just the reverse was true. His job was to interpret technology at his level so that management would not have to concern itself with such intellectually difficult problems.
Above Ziegler's level, all decisions regarding the technical direction of the organization were to be made without considering the technical issues. Ziegler was learning, through this presentation, about an important law of decision-making that may be unique to the technical hierarchies:
Technical analyses have no value above the mid-management level
This law is illustrated more quantitatively in the accompanying figure. The value of technical analyses is highest among support and staff personnel who have the time and expertise to understand them. The value drops rapidly through the management levels, reaching zero between the department director and vice presidential levels. At all higher levels, it has a negative value. Not only would the president and senior vice presidents be unable to understand a technical analysis. they would feel un- comfortable if confronted with one.
Some observant individuals have noted that the curve in the figure looks
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like a backwards S-curve. This is indeed so; and because all progress in technical hierarchies follows S-curves, such hierarchies might function better if the president were at the bottom and the support and staff personnel were at the top. This possibility deserves more careful study.
Ziegler finally got to the summary and cost-benefit issues, the gist of which was that the return on investment for the new product, even if it were successfully developed, would not be as good as for the current products. Furthermore, it would require new facilities, large expenditures, and a considerable risk for the company. In contrast, Ziegler showed that a relatively small additional expenditure on the present products would be expected to provide the same increase in revenue and even greater profits. This would involve very little risk for the company.
Ziegler ended his presentation with a recommendation not to initiate the proposed product program. The attendees were stunned. The program would have resulted in a substantial increase in Ziegler's responsibility. For the sales manager, it would have meant a larger sales force and new areas to cover. The director of manufacturing would have needed an addition to the plant. For all, it would have enhanced the standing of Solid Status Company by broadening the product line.
After the presentation, discussion began hesitantly. The analysis appeared to be correct, but no one said so. A number of meaningless questions were asked and there were uncomfortable moments of silence. Finally, the director of product development sensed the feeling of the group and spoke up.
"The arithmetic is OK," he said, "but that's all it is - arithmetic. This company didn't get where it is through arithmetic. It got here through imagination, hard work, and taking risks. Men smart enough to come up with ideas like this proposal can also come up with better ways to implement it than have been assumed by our director of advanced development. Put those men into an aggressive product development group like mine and you can throw out all that arithmetic."
After further discussion, the other corporate officers agreed. The analysis indicated there was risk, but it did not rule out the possibility of some success. Management, after all, was paid to take risks - and in this case, they would. The program and several of Ziegler's best people were transferred out of his area and placed under the director of product development. The program was initiated rapidly and had full support of all the officers of the corporation.
X. Y. Ziegler's failure to find support for his recommendation resulted from his failure to consider the costs and benefits to the decision-makers as well as to the company. The question of who benefits is all-important in any practical cost-benefit analysis. In making decisions, decision-makers are generally concerned primarily with the costs and benefits to themselves. This is clearly stated in the Fifth Law of Decision-making:
Decisions are justified by benefits to the organization;
decisions are made by considering benefits to the decision-makers
In time a number of difficult technical problems arose that had been predicted by Ziegler's original evaluation. To solve these, he and his remaining people were placed under the supervision of the director of product development. The president of Solid Status simultaneously announced the elimination of Ziegler's previous position of director of advanced development. That function, he explained, was now contained within the product development group.
