Principle 5: Improved Decisions (Item 4)

Effective use of facts, data and knowledge leads to improved decisions.

Why this is important

Question 37 talked about hypotheses. What nonsense is that. In the business world, we do not make hypotheses! Wrong, we do indeed. We call them assumptions and our companies are full of them. We make assumptions about everything, every person and every situation. Our assumptions give us our `mind-set' — our mental attitude about how we approach everything. They are usually based on experience and are very often wrong. We usually make no effort to challenge our assumptions and they remain the biggest barriers to effective decision making in all companies.

What we described above is a fundamental shift that happened in science during last century. The business world has not yet moved to this thinking, which is largely why it is still swamped in unusable data. It is time the business world took a scientific approach to the expensive process of gathering and storing data. And to the very expensive process of decision making.

Whether we like it or not, our beliefs about the world affect the way we see the world and consequently our decisions. There is significant evidence that it is difficult for each of us to alter the beliefs/ assumptions/ hypotheses we form first. (This is why it is always important to get your story to the boss first.)

Good decision-making begins with asking the right questions

When we combine these concepts we see, as Goldratt suggests in his book "The Haystack Syndrome", that information is the answer to the question asked. This suggests that the secret to good decision-making begins with asking the right questions. Asking the right questions leads to getting useful information on which we can then base our decisions.

If you ask the wrong questions, you get rubbish information.

If you do not challenge your assumptions, your decisions can be very unsound.

Challenging your assumptions

In almost all situations where people who would like to agree but cannot do so and cannot compromise, the resultant conflict is probably due to different assumptions being made by the different people.

In his books The Goal and Its Not Luck, Goldratt gives a very useful tool for uncovering assumptions and challenging them.

• First, write down the problem clearly. Fill in the boxes in the diagram below.
  1. What action are they complaining about (right top)
  2. What do you want (right bottom)
  3. To satisfy what need, do they insist on what they want (middle top)
  4. Why is what you want so important to you, or what is jeopardized by what they want (middle bottom)
  5. What is your common objective (left)
• Check that you have written it correctly. You should read it like this: In order to have 5, they must 3. On the other hand, in order to 5, I must 4. Next, in order to 3, they must 1. But in order to 4, I must 2. The conflict should be clear. And no compromise possible.

• Read what you wrote to the people involved. If what you wrote is wrong for them, do not argue, cross it out.
• Uncover the assumptions. Read the diagram again. This time, add the word "because" and answer the implied question, as follows: "in order to have 5, I must 4 because...?", etc. Do all five arrows, including "1 is mutually exclusive to 2 because...?". There is often more than one assumption per arrow. Find as many as you need.
• Examine the assumptions. Can you break an arrow by finding something to destroy the assumption? Some useful hints are:

• Concentrate on the arrow with the assumptions that irritate you most.
• Find a solution at the 3, 4 level. Do not argue at the 1, 2 level.
• For each assumption ask, "is there another result?" Keep challenging the implications of the assumptions. You are looking for a thinking shift.

• If you can find a different approach for a major assumption, the problem disappears.

I don't have time for this business improvement crap

This situation faces almost all companies.

Most companies are trying to be successful in the long term. (Write that down as your objective 5.)

In order to be successful, everyone in the company from CEO to most junior employee and every system must provide value to the customers. We have just described this in Principle 3 (`Customers'). (Write that down as 4.)

In order to provide value to customers, each person in the company is working flat out to look after customers or to look after those people who are serving customers. We described that in our discussion about gemba in Principle 4 (`To Improve the Outcome, Improve the System'). (Write that down as 2.)

All that is very clear and follows the Principles described here. However. Remember Dr Hausner's findings we described in the Introduction.

In order for a company to be successful now and in the future, it must be very good at these Business Excellence Principles. Dr Hausner's research shows that unless the company can score more than 300 points, it is going backwards and will not be successful in the future. (Write that down as 3.)

Being good at these Principles does not happen just be chance. In order to be good at these Principles, a company must take time to work on them. (The complaint would be "I don't have time for this business improvement crap. I have a business to run". Write that down as 1.)

The conflict is very clear. People must spend time to improve the business's performance on the Principles but no one has time to do so.