To Do or Not To Do

To Do or Not To Do: That is the question, but what is the answer?, by Mark Chussil

In politics we expect opposing viewpoints. That’s what happens when reasonable people constructively disagree as they forge sober solutions to the pressing issues of the day. Of course they use a special political language that just happens to sound like radiant ideological purity, informative ad hominem attacks, and thoughtful sound bites.

In business we expect decisions to come from careful analysis in which experts lay out the options, quantify the costs and benefits, and make the right choices. So it may seem perplexing when two senior executives, in symbiotically linked companies, publicly and decisively disagree on a key decision.

The issue at hand is whether to develop new, more-efficient engines for existing single-aisle jetliners; that is, to “re-engine” current aircraft. The executives represent Airbus, maker of the jetliners, and Rolls-Royce, the top engine supplier for those jets.

Today’s quiz

Match the opinion to the executive:

Opinion 1: “If you look at the benefits of re-engining and all the costs, there’s no net benefit. We can’t make the business case work.”

Opinion 2: “The business case is really very convincing [for the re-engining].”

Executive 1: Tom Enders, Chief Executive of Airbus.

Executive 2: Robert Nutall, Vice President of Strategic Marketing for Rolls-Royce.

Not knowing who said what makes it easier for us to focus on the core issue, the disagreement itself, so I’ll reveal the answer later.

The source of the quotations is an article in today’s Wall Street Journal. I’ll provide the citation later too, because the article title would spoil the suspense.

Delaying judgment

We might not expect the two executives to disagree. Each is smart, each has plenty of data and analysis, and above all each has ample incentive to get this decision right. Yet they disagree. And not just a little: they have staked out starkly opposite positions.

I don’t know enough about re-engining to have an opinion about it. I do know that adherence to an answer, whatever it is, increases the more its advocate is called upon to defend it and the more public the venue in which the disagreement is aired. (Think about the implications for all that dignified political discourse.) Call it “face,” call it commitment, call it defensiveness, call it the desire to win; once we humans have a story we tend to stick to it.

If sticking to a story is a problem, then we should avoid adopting stories too soon. You can do that by delaying judgment as long as possible.

By “delaying judgment” I don’t mean you should procrastinate or prolong the process. I mean you should resist the temptation to adopt a story while you ponder the problem. You can do that by splitting the problem in two. First part, decide how to structure your analysis. Second part, put in the numbers and apply the structure.

I have built many strategy simulation models that many strategists have used to assess their strategy options. These models answer the question “if we do this and they do that, what’s the net result?” Over the years I’ve been pleasantly surprised at how readily strategists have accepted the results of my simulators. I believe it is because my clients and I use that two-part process.

Agreeing first on the structure ensures that we’re taking into account everything that we should. Such a discussion tends to be highly constructive. It’s not only that everyone feels heard; it’s more than that. It’s that it synergistically combines the expertise and experience available within the client’s organization.

When the structure is done, then the numbers go in and the results come out. Of course there’s further discussion and what-if analysis. The point is that this process shifts the nature of the debate from advocacy to discovery. It’s the equivalent of teamwork in analysis.

Quiz answer

Opinion 1 goes with executive 2 and opinion 2 goes with executive 1. Airbus sees the business case for creating new engines for the Airbus aircraft; Rolls-Royce doesn’t. The Journal article is “Rolls-Royce Isn’t On Board With Airbus’s Engine Plan,” by Daniel Michaels and Peter Sanders.

I don’t know how Messrs. Enders and Nutall came to their differing conclusions. It’s even possible there’s no solution: they may agree on all the numbers yet have different judgments for acceptable ROIs or levels of risk.

If you’ve got irreconcilable differences, locate the disagreement by comparing the structures behind the relevant models. (Might be helpful for Airbus and Rolls-Royce, if they’re not already doing so.) To avoid irreconcilable differences in the first place, start your analysis by reaching agreement on how you’ll answer the question.

“I try not to think with my gut. Really, it’s okay to reserve judgment until the evidence is in.” — Carl Sagan

Further reading

All About Models. Discusses “mental models” and how our thinking affects our analysis.

House, MBA. Discusses the structure of problems, and discusses how business war games clarify problems and solutions.

The Limits of Reason: Why evolution may favor irrationality,” by Sharon Begley in Newsweek, August 5, 2010. Discusses why irrational advocacy can be effective despite its irrationality.

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