It’s the end of the year and the decade and I’m facinated with all of the “top ten” lists coming at me. I now know the top ten medical stories, the top ten vacation spots, the top ten movies, the top ten songs, and on and on and on.

I’d like to compile a list of the top ten individual or collective lapses in good thinking from the past decade. Here are a couple of my nominees.

• What were the mortgage companies thinking when they gave NINJA (no income, no job, no asset) loans for mega-houses?
• What was Merck thinking when it kept Vioxx on the market after it’s own studies showed it to increase risk of heart failure?
• What was management at Pontiac thinking when they introduced the Aztek? (See if that doesn’t bring a smile to your face?)

Please add to the list. What were they thinking?

Sooner or later, congress is going to pass legislation affecting your industry. Right now it’s all about health care, but sooner or later your environment is going to change, no matter what your industry. When that happens, managers at all levels will be faced with decisions that have to be made in response. What are some of the attributes of “better” decisions?

Heres’ my list. Please add to it.

The decision makers:

• Consider the “futurity” of their decision. That is, they consider long term implications as well as the short term.
• Address the real issue (This may sound strange, but ask any consultant about being asked to solve a problem that was not the real problem.)
• Consider multiple points of view (their POV is only one of many.)
• Actively consider the risk involved with the decision.
• Understand ALL of the criteria that will be used to make the decision.
• Consider the ability of the organization to execute the decision.
• Expose and vet the assumptions underlying the issue and decision.
• include emotional and cultural realities in their deliberation.
• Are willing to consider the “cons” as well as the “pros” of their favorite option. 

Many of you are already good at making decisions. What would make you better? What should I add to my list?

More about the eight skills of the Prepared Mind.

In the past two weeks I’ve touched on the skills of Challenging and Observing. Here’s another skill you need to consider – the skill of deciding

Why do you get paid? Let me be blunt – if it’s not because you have responsibility for making or influencing decisions at your organization, then your job is in big trouble.

It’s easy to outsource “transaction stuff” (“Why yes, I’ll be happy to take your order for …”) and it’s even easy to outsource important “knowledge stuff” (Was your recent x-ray read by a radiologist in your hospital or in another country?) However, decisions and decision making stays close to home – this act of management is too important to outsource (that said, has your organization outsourced key decisions to your local band of consultants? But that’s another story.).

Get it? You want to be in a position that accepts the risk (and rewards) of decision making.

So where does the concept of having a Prepared Mind come into play? Well, there are plenty of books that delve into the mechanics and processes of good decision making. They are important, but not enough. If you are going to be prepared for your future, and make good decisions that will bring your organization into the future, you need to consider (as Peter Drucker put it many years ago) the “futurity of present decisions.” In other words, you need to think about the intended and unintended consequences of today’s decisions. Want a couple of examples? Try these:

• DDT (easier to say than dichlorodiphenyltrichloroethane) was the very first modern pesticide and was widely used in crop protection and for the eradication of malaria-bearing mosquitoes in the 1940s and 1950s. The Swiss inventor was even awarded the Nobel Prize “for his discovery of the high efficiency of DDT as a contact poison against several arthropods.” Unfortunately DDT has toxic side effects and caused the death of fish and birds, so it was banned in many countries in the 1970s. Unfortunately, the banning lead to a resurgence of malaria in many tropical countries by the end of the 20th century. Was the widespread use of DDT a good decision? Was the wholesale banning of DDT a good decision? There may have been a better middle ground if scientists and politicians had looked into the future.
• Let’s look at today’s dire circumstances with “new” General Motors and consider just one of the many sets of decisions that brought the old GM to today’s condition. The relationships between management and the UAW have been rocky for a long time and both parties “bought peace” through contract language that provided unsustainable benefits for laid-off and retired workers. Unlike the DDT story, where the decision-makers may not have fully understood the science and biology involved, the long term impact of the contract language with GM and the UAW could have been seen by any good actuary and could have predicted the conditions facing both parties today. (Hmmm, did they?) Maybe the executives thirty  years ago knew fully well that they were laying the groundwork for a future problem. They just knew it wouldn’t happen on their watch.

So what do these simple stories have to do with you and your ability to make decisions? First, be careful when you’re dealing with situations that are novel and have yet-to-be-understood consequences. Go back to the skill of Observing and put a system in place to actively watch for early warning signs and be prepared to alter your decision.  Second, “run the numbers” well into the future for decisions that have quantifiable consequences and then use the skill of Challenging to test all assumptions. (Who knows, maybe GM execs in years past thought they made good decisions? It may be that their assumptions were overly optimistic.)  

Where have you seen organizations neglect to consider “the futurity of present decisions” and what have been the (unintended) consequences.

I just finished reading an article from the July-August issue of Harvard Business Review that I found  frightening and thought provoking. The article is about Global Competitiveness — but the sub-title is what caught my eye — WHY AMERICA CAN’T MAKE A KINDLE. Although the Kindle was designed in California, the important components are made in China, Taiwan, and South Korea and the entire unit is assembled in China. Consider the major components:

• The battery comes from China  — When America outsourced laptop computers to Asia we gave up on battery technology
• The display comes from Taiwan — We no longer have the expertise because we gave up flat panel LCD manufacturing to Asia.
• The wireless card is made in Korea — the Korean mobile phone industry is more advanced than ours, so the latest advances in wireless technolgy come from there.
• The injection-molded case comes from China — We don’t have much of this capability left inasmuch as we have outsourced most toys, consumer electronics, and computers to Asia.

We have focused on the short-term and “shareholder value” for the past fifteen years or so. But we have neglected to consider the long term sustainability of our manufacturing base. We have deluded ourselves into thinking that we can be a service economy (What !? Selling sub-prime mortgages to one another?) and that only we have “imagination” for the next great thing. I think that both of these assumptions are frightfully weak.

Frankly, I don’t know what to suggest except to say that all of us need to worry about our knowledge base and our collective willingness to mortgage our future for “every day low prices.” That said, there are NO short-term solutions. We need to rebuild our expertise so that we have the competitive advantage here at home to make some of the things we want to buy.

What do you think? Am I being a crabby old man and too narrow-minded or am I right to be worried about our future?

When I decided to add a blog to my website I tried to be real about how often I could enter a new post. I decided that a good weekly post should suffice to keep me active with clients and others. As you can see by my recent posts, they have slipped beyond the once-per-week schedule I set for myself.

Thinking, reading and writing are fun, but since I need to pay my bills I also conduct workshops on Critical and Strategic Thinking. And in the course of conducting each workshop I always talk about the need to actually schedule time to think and reflect. My pitch is that “If you don’t schedule it, time will slip away and you will miss the opportunity.”

Hmmm, it seems that I need to actually schedule writing a weekly post. Otherwise the opportunity will slip away. (As it has.)

That’s my confession and my resolution.

What’s important in your life that you say you’ll accomplish “one of these days?” Will it happen if you don’t schedule it? Think about it.

I named my business Adaptive Strategies in the early 1990s in response to an economic downturn. As they say, what’s old becomes new again. That said, the reality of our world is that we have always had to adapt. The problem is that too many people are waiting for “normal” to return. It never will.

Adapting is not an option; it separates the winners from the losers. Just think about past inflection points and those who did and did not adapt.

• Electronics in the 1950s — from vacuum tubes to transisters
• Aircraft in the 1960s — from turboprop to jets
• Autos in the 1980 — from quality vs. price to quality at every price
• Internet in the 1990s — from bricks and mortar to bricks and clicks

Think this “adaptation thing” only applies to businesses? I was a darn good Fortran programmer in the 1970s. Anybody want to hire me today?

Look at your career and your business. To what do you have to adapt? Are you adapting fast enough?

The title of this post is from the March 23 & 30, 2009 issue of Business Week — and I love the message. So much has changed that “the game” is permanently changed — and that is a GOOD thing.

“Big ideas” happen when people and organizations finally decide to do something to take advantage of tough times. When times are good we fall into the trap of active inertia — we keep doing what we’ve been doing. When times are tough we are forced to think differently or become irrelevant. And NOTHING should be more embarassing to you or your business than to become irrelevant to your customers or your team members.

In the coming years we will look back and be amazed at some of the innovations that will come out of the current crisis. Face it, the current crisis will result in some people and organizations that will be labeled as winners — it might as well be you. What can you do to take advantage of this situation?

The metaphor “crossing the Rubicon” harkens back to the move the Julius Caesar move to control the Roman provinces. Once he crossed the Rubicon River there was no going back.

Our current economic times are tough, to say the least. But now is a good time to make some of those Rubicon Decisions you have been putting off. Should you kill a product line? Should you close a plant? Or, on the positive side, should you start that new business line and prepare yourself for the future of your business?

Standing on the bank your personal Rubicon River may make you nervous, but you will never know the results until you cross the Rubicon. And the river is much too wide to keep a foot on both banks.

Be honest with yourself. What tough decisions have to be made and are you willing to make them? If not, let someone else run you business. You don’t have what it takes. (Or do you?  It’s up to you, and you alone)