|
Hi,
Back in the 80’s, the Clash sang:
Should I stay or should I go now? ...Should I stay or should I go now?
If I go there will be trouble…and if I stay it will be double.
So come on and let me know…should I stay or should I go?
OK, that’s an easy one. If I have 2 choices, stay or go and I'm going to have trouble either way, best to take the one that’s regular trouble, not double trouble, right? That’s a classic example of a decision. Let's talk about that word for a bit.
The word “decide” is derived from two Latin words, “de” which means “off” and “caedere” which means cut. So literally, the word decide means to “cut off” one alternative. In the lyrics above, the “double trouble” alternative is the one I’d cut, and I think you would too. Anyway, when all we have to worry about is getting rid of one alternative, that’s a decision. A decision is different from a choice or a strategy.
A strategy is part of what economists and mathematicians call a game and whether we realize it or not, most of the time, we all play games in one form or another.
In a game, the strategy is predicated on what you think others will do. We all make choices based on how others will react to them. We call them “decisions” but they’re really games.
Many people are familiar with the “prisoner’s dilemma” which is a game where two people are accused of a crime and each has the option to confess or deny committing the crime. The scenarios are such that there is a set of outcomes for confessing or denying but those outcomes are predicated on whether the OTHER PERSON confesses or denies. It would take way too long to explain it all here; just take my word for it or google it.
In the end, BOTH find it in their best interests to confess to the crime, even though one of them is innocent. SO, neither can act in a vacuum and each must consider what the other person will do.
If this all seems complicated, go play “rock, paper, scissors” or read Hamlet.
Got it now?
OK, here is an example from a deal that really happened but I’ve changed the names and simplified it to make it less boring. There were two companies, ACME Munitions Inc. and its competitor and arch enemy, RoadRunner Enterprises. ACME was considering an acquisition of RoadRunner. ACME and RoadRunner were in the same business but went about things very differently and the two management groups definitely did not get along.
The valuation made sense, the accountants did a quality of earnings study, the lawyers wrote the agreements, and everything looked hunky-dory. If this were a “decision” and the owner of ACME only had to be concerned with ACME, (like in The Clash song), it would have been fairly simple.
Now let’s simplify things and pretend that the only concerned parties were the ACME and RoadRunner employees, the ACME’s suppliers, and most important, RoadRunner’s customers, who were coveted by ACME.
How will the employees feel about the integration of two workforces (RoadRunner was unionized, ACME was not)? How will the suppliers be affected by the combined company? How will the RoadRunner customers react? Will they stay or will they go?
Clearly, there was more to consider than balance sheets and legal documents. In the end, the deal got done and the discussions around the integration of the two companies took WAY longer than the rest of it. Yes, there was some rolling of eyes and gnashing of teeth but as of right now, so far so good.
I think most people would say that the ability to make “decisions” is a positive trait but I think we should reframe that and say that it is better to be someone who can make a strategic choice based on the alternatives and considering their ramifications.
Sounds pretty easy, right? Don’t worry, I bet you already know how to do it – you probably did it 7 or 8 times in the last 20 minutes. Think about it the next time you have to make a choice. Is it a decision or a game?
Now here are some words of wisdom from people who aren’t me.
“A good decision is based on knowledge and not on numbers.” – Plato
“The essence of strategy is choosing what not to do.” – Michael Porter
"However beautiful the strategy, you should occasionally look at the results" – Winston Churchill
Thanks for reading. Be good and be well.
Best,
Tony
|
