Crucial Decisions - Hardcover

Janis, Irving L.

Hardcover

ISBN 10: 0029161614 ISBN 13: 9780029161616

Publisher: Free Press, 1989

Synopsis

It was poor policymaking by corporate heads that brought Lockheed and Chrysler to the brink of bankruptcy; it was the failure of top managers to respond to new market conditions in the early 1980s that led to the demise of hundreds of corporations, both large and small; and it was "quick-and-easy" decisions by Presidents Kennedy and Reagan that resulted in serious mistakes in foreign policy. Now, Irving Janis, one of the world's leading authorities on decisionmaking, presents a comprehensive analysis that shows corporate executives, government and organizational policymakers, and general managers how to avoid making critical errors and ensure quality in making vital decisions. Using cogent evidence and illustrations from studies of top-level policymakers in government, business, and public welfare organizations, Janis shows how the likelihood of failure is substantially reduced if sound procedures of information search, appraisal, and planning are used. He alerts executives to the preconditions, precipitating events, and catalysts that create situations where the most dangerous error of decisionmaking -- relying on simplistic decision rules -- often occurs. For issues perceived as routine or unimportant, Janis contends that policymakers typically resort to a "quick-and-easy" or "seat-of-the-pants" approach to decisionmaking. When that judgment is objectively incorrect, the results can be disastrous. Similarly, critical mistakes are made by policymakers coping with problems they regard as serious when they give priority to constraints which result in failure to carry out the crucial steps of effective problemsolving. By following the four essential steps outlined by Janis, policymakers can adopt "vigilant problem solving," the high-quality procedural strategy for arriving at policy decisions When policymakers utilize the vigilant problem solving approach, they are likely to take full account of the various constraints involved in a situation and may even seek out additional information about them. Consequently, the risk of failure, especially in critical situations, is substantially lowered. Janis also details how executives can deal with challenging threats and opportunities and reveals what specific leadership practices are likely to improve crisis management. A profile of twenty leadership practices will help managers function as effective executives who practice and promote high-quality decisionmaking on issues that affect the vital interests of the organization. A set of seventeen characteristics for selecting the best personnel for policymaking positions is also provided to aid managers in reducing their sources of error. Janis' highly acclaimed decisionmaking strategies give a powerful advantage to managers in all kinds of organizations, from the smallest family business to the largest corporation and government agency.

About this title

About the Author:

Irving L. Janis is adjunct professor of Psychology at the University of California, Berkeley, Professor Emeritus of Psychology at Yale, and author of two landmark books, Groupthink and, with Leon Mann, Decision Making (The Free Press).

Excerpt. © Reprinted by permission. All rights reserved.:

Chapter 1

Order Out of Theoretical Chaos?

Causes of Successful Versus Unsuccessful Outcomes

Leaders of governments, major business corporations, and other large organizations typically make policy decisions with the expectation that the outcomes will be sufficiently successful to achieve fairly well the objectives they have in mind. But all too often they are bitterly disappointed. Obviously, several different causes contribute to unsuccessful outcomes.

Unforeseeable obstacles to effective implementation and uncontrollable events, such as countermoves by adversaries or competitors, can drastically interfere to such an extent that the policy does not work out as intended. Another contributing cause of unsuccessful policy outcomes consists of the leaders' oversimplified beliefs and ideological stereotypes that give rise to faulty assumptions about the requirements for a good solution or about the consequences of their choice. Even when policymakers are open-minded and conscientious about obtaining factual information pertinent to the policy question they are grappling with, the available evidence may be too ambiguous to indicate that their assumptions are wrong. In other instances, the cause of a policy fiasco can be attributed mainly to misleading information that the policymakers had no way of knowing was erroneous because it came from seemingly dependable intelligence reports or the testimony of experts, with no signs of contradictions or lack of consensus. Then, too, there are unknown and chance factors that can adversely affect the outcome, commonly called "bad luck." Nevertheless, among the major causes of unsuccessful outcomes is one that is very much under the leaders' control: poor quality of the decisionmaking procedures used either to arrive at a new policy or to reaffirm the existing policy.

Defective procedures -- entailing, for example, inadequate information search, biased appraisal of consequences, and lack of contingency planning -- do not guarantee that a policy decision will turn out to be a fiasco. The net influence of the uncontrollable, unknown, and chance factors can occasionally result in "good luck." But the likelihood of failure is substantially less if sound procedures of information search, appraisal, and planning are used. (Evidence bearing on this important point will be presented later, in Chapter 6.)

Some of the causal sequences that lead to defective policymaking procedures in government, business firms, and public welfare organizations are well known to practically all executives. For example, when a chief executive is provoked to anger, or becomes extremely apprehensive or extremely elated in response to a sensational event, he or she might decide impulsively to make a drastic change in policy, while dominated by the mood of the moment, without consulting any advisors who could point out flaws and suggest better alternatives to be considered. Or, after a fair amount of information search and deliberation about fresh alternatives to an old policy that has turned sour, the members of an executive committee might conform to powerful social pressures from the chief executive. Sometimes policy advisors assent to what they regard as an inferior choice rather than facing the damaging personal consequences of arguing against the chief's pet initiative. These and a number of other, less wellknown, pathways to failure will be elaborated in detail in this book. The defective pathways will be contrasted with a pathway embodying high-quality procedures that increase the chances of successful outcomes. Much of the inquiry will focus on multiple causes for deviating from the latter pathway. Special attention will be given to the preconditions, precipitating events, and catalysts arising from the current situational context, which play a significant role in determining whether executives will use good or poor procedures to arrive at a major policy decision when vital interests of the nation or organization are at stake.

Avoiding Policy Disasters That Could Be Lethal

In a comprehensive review of research on "leadership and power," Edwin Hollander points out that a president who is popular can carry out the main functions of a policymaker expeditiously, with a minimum of resistance from other powerholders, but the president's policy decisions can turn out to be very poor ones that result in disastrous losses. The same can be said about top-level leaders in any organization. Among the defective pathways that lead to disastrous policy decisions are those that fail to correct avoidable errors -- rectifiable misperceptions, refutable false assumptions, resolvable ignorance, and remediable lapses in judgment concerning the probability or magnitude of expected costs and benefits. Those pathways can prove to be destructive in several ways: The outcome can turn out to be lethal for the careers of the responsible leaders, for the continued existence of the organization, and sometimes for the very lives of large numbers of people who are affected by a major policy decision.

Conventional wisdom says that there is only one answer to the question, "What needs to be done if the top-level leaders repeatedly make poor policy decisions that turn out to be detrimental to vital interests of their organization?" The well-known answer is that they should be fired before they cause such lethal damage that the organization itself cannot survive. But there is evidence suggesting that this bit of conventional wisdom is seldom heeded? William Starbuck, a specialist in management studies who has investigated the survival rates of governmental agencies and business firms, has this to say about what often happens to top-level leaders and their organizations:

Many organizations drift along, perceiving that they are succeeding in stable environments, until they suddenly find themselves confronted by existence-threatening crises? Most of the organizations my colleagues and I have studied did not survive their crises, but in every case of survival, the reorientations included wholesale replacements of the top managers, and we infer that survival requires this....

...Crises evidently afflict all kinds of organizations, although they may be more likely in bureaucracies that have recently enjoyed great success? Some organizations facing crises...replace their top managers, reorient, and survive More organizations...die. Thus, nonadaptiveness turns organizations into temporary systems, nearly all of which have short lives? The 50-year-old corporations represent only 2 percent of those initially created, and 50-year-old Federal agencies only 4 percent (Starbuck & Nystrom, 1981)....Approximately 30 percent of the 50-year-old corporations can be expected to disappear within ten years, as can 26 percent of the 50-year-old Federal agencies. (Starbuck 1983, pp. 100-101)

Starbuck's conclusion is that "because organizations modify their behavior programs mainly in small increments that make sense to top managers, they change too little and inappropriately, and nearly all organizations disappear within a few years."

Even if the extremely low survival rates emphasized by Starbuck are somewhat exaggerated, the general thrust of his conclusion may prove to be well warranted for business firms and nongovernmental welfare organizations, such as hospitals, clinics, schools, legal aid societies, social service, child welfare, charity, and philanthropic institutions. Jeffrey Pfeffer and other leading scholars in the field of management studies concur that a substantial percentage of organizations in the private sector go out of existence every year, most notably among small retail and service firms in highly competitive areas. Many of those failures probably are the result of defective policymaking by the owners or managers, but at present there are no depe

About this edition

• Publisher: Free Press
• Publication date: 1989
• ISBN 10: 0029161614
• ISBN 13: 9780029161616
• Binding: Hardcover
• Number of pages: 388