A Systems Thinking Decision-Making Process: How to Avoid Burnt Toast (Management for Professionals) [1st ed. 2022] 3030899594, 9783030899592

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Management for Professionals

Vincent P. Barabba

A Systems Thinking Decision-Making Process How to Avoid Burnt Toast

Management for Professionals

More information about this series at http://link.springer.com/series/10101

Vincent P. Barabba

A Systems Thinking Decision-Making Process How to Avoid Burnt Toast

Vincent P. Barabba Capitola, CA, USA

ISSN 2192-8096     ISSN 2192-810X (electronic) Management for Professionals ISBN 978-3-030-89959-2    ISBN 978-3-030-89960-8 (eBook) https://doi.org/10.1007/978-3-030-89960-8 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

This Book is dedicated to my Mother Elvira and Brother John, who sacrificed a lot their time to allow me to complete my education. And also to my wife Sheryl, my daughter Heather Buff, and my son Jason Barabba. For over fifty years they not only tolerated my constantly being on the road but they were always there for a warm welcome back.

Introduction: What Led to the Writing of This Book

This chapter provides the background that led to the development of an Inquiry Center designed to assist in determining and collecting the most appropriate information, and importantly the need to provide that information in a form that is not only useful but accepted by the eventual policy and decision makers. I had not planned on writing another book following my retirement. However, on February 07, 2021, nearly 18 years after my retirement from General Motors, I received a note from danah1 Boyd of Data & Society, an independent nonprofit research organization, stating: Hi Vince! I have a peculiar question for you. Have you read Jill Lepore’s book “If/Then”? Jill Lepore does not address Datamatics in her book. She didn’t know about your company when she did this research. She’s focused on a different company of the same era  – Simulmatics. I’m fascinated because it seems to me that there might be interesting parallels and differences between these companies. The whole book is about Simulmatics, structured temporally beginning with its creation in 1959. It’s also an account of Ithiel de Sola Pool. Did you know him? I was wondering if Datamatics was anything like Simulmatics? I’m fascinated by the 1960s ideas of what data analytics could do because we’re living in another era where the imaginary has gotten ahead of the technical reality. What my collaborators and I are wondering about is your experiences with Datamatics – and more generally the data science efforts of the 60s and 70s. Jill’s book is the trace of one company and one group of people. But we suspect you had different experiences. That’s why we’re curious.

danah sent me a copy of the Jill Lepore’s book and ask me if I would respond to her question. After reviewing the book, I responded: danah…Responding to your request led to the uncovering a trove of documents which may be more than you require. I’ve included a list of work history that occurred over a period of time and a copy of a contract with the American Medical Association Political Action Committee (AMPAC) which does a pretty good job of describing what Datamatics was capable of in 1966. We were aware of Simulmatics and Ithiel de Sola Pool, but did not connect since our work was based on what we learned from actual political campaigns (as shown in the AMPAC contract) and not primarily on academic social science. Obviously a  danah’s name used a lower-case d in its spelling.

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Introduction: What Led to the Writing of This Book lot more was developed and implemented at Datamatics which became Decision Making Information (DMI), including joining up with Richard Wirthlin, which you might be ­interested in. Perhaps we should talk so I have a better understanding of what you wish to accomplish.

It was the dialogue that took place with danah and her colleagues that led me to writing this book with a focus on how my nearly 60 years of positive and negative experiences led to the idea of an improved decision-making process. A process that would allow decision makers and information providers to effectively work together and collect and use relevant information and to learn from their decisions after they have been made. The understanding that underlies this process was developed while developing my own decision support company, serving as director of the United States Census Bureau, and attempting to apply what had been learned at three major corporations: Xerox, Eastman Kodak, and General Motors.

List of Endorsements

“This is an absolutely incredible book by a distinguished practitioner. The range of knowledge and experience that Vince Barabba has had is astounding. I urge everyone who is interested in complex, messy problems to read this amazing book.” — Ian I. Mitroff Professor Emeritus “All too often businesses fall prey to ‘strategy not executed upon, is strategy lost’. While many purport solutions to overcome this pitfall, Vince has masterfully blended the art of organizational respect with the science of data inquiry to drive change and realize strategic vision. A master storyteller, he does not just teach, his book brings his learnings to life in a meaningful way that if carefully listened to, can change the course of a career.” — Paul D’Alessandro AI Innovation Leader and Principal PwC “In his latest book, Vince Barabba integrates his vast knowledge from 50 years of dedicated work in both the public and private sectors in order to provide leaders with an actionable framework for radically improving how their organizations collect and use information to make the best decisions for all the wicked messes that now appear in our global village. If we want to survive and thrive in today’s increasingly turbulent world, leaders must implement his insightful recommendations for establishing an effective “Inquiry Center” that collects the right marketing and business information (accurate and up to date) and then delivers that vital information in the right form to the key decision makers exactly when they need it the most. This book can save your company from living in the dark with false assumptions about all your key stakeholders.” — Ralph H. Kilmann, Ph.D. CEO of Kilmann Diagnostics and Co-author of the Thomas-Kilmann Conflict Mode Instrument (TKI)

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List of Endorsements

“Absorbing just a few of the many smart ideas in this book will make you a better leader and decision maker. Thinking systemically about how the hard-earned lessons from Vince Barabba’s brilliant career apply to your enterprise could make you a great one.” — Chunka Mui Co-author A Brief History of a Perfect Future and Billion Dollar Lessons “This book takes you on a journey from when information was scarce to today, where data and information are abundant, which makes distinguishing between signal and noise a daunting task —Maybe that is why so many decisions fail to achieve intended outcomes. Also, if you are interested in “thinking in systems,” this book is for you. The “On Star” story demonstrates to you how the initial product-centered thinking was proselytized to “thinking in systems.” Finally, you learn how in the absence of an ability to predict accurately, you can endow your organization with the capability to ‘learn and adapt’.” — John Pourdehnad Visiting Professor at IESE Business School and the faculty of Systems Leadership program at Thomas Jefferson University “In writing “How to Avoid Burnt Toast,” Vince Barabba is addressing the limits of Knowledge Management systems which enable “Organizations as Usual” to share best practices on how to scrape toast faster and cheaper. What’s missing is the wisdom Vince has gained from the likes of Russell Ackoff and Peter Drucker to distinguish efficiency, as in the ability to perform faster and cheaper, from effectiveness, as in the ability to do the right things right. And, should an apparent “right thing” be revealed in hindsight to be another “wrong thing,” learning has occurred (with processes detailed by Vince), with the accompanying dimensions of pain, whether financial, physical, or emotional. The examples shared by Vince, from his first-hand experiences in corporate America or his services as a marketing consultant, contribute invaluable clarity to his goal of providing a “sketch of an Inquiry Center Learning and Support System” for those with the ambition to lead efforts to work smarter, not harder, firmly against the grain of “Organizations as Usual.” In doing so, this book is an invaluable guiding light for those leading ‘Organizations as unUsual.’” — Bill Bellows, Ph.D., President, InThinking Services, Adjunct Professor, California State University, Northridge and Southern Utah University, Advisory Council Member and Former Deputy Director, The W. Edwards Deming Institute®

List of Endorsements

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“In his “last book”, Vince weaves the experiences and learning of a lifetime into whole cloth of insight and wisdom. He helps us to find relevant information from a rapidly changing world and apply it to making good decisions. This is a masterpiece of knowledge presented in a very entertaining way.” — Carl Spetzler Chairman Strategic Decisions Group International LLC “This is a truly inspiring and mind changing book directly relevant for our times. Our problems have changed and so must we – at this time of climate emergency and rising social pressures businesses and government alike  must join forces, to tackle global societal and environmental challenges that are too big, too expensive, and too complex to tackle alone. Vince has shown through his remarkable work that business and government are a force for good when leaders think long term, work with, not against nature, and use their influence and resources for the many, not the few. This is in my mind good growth and the book helps you think about how to tackle planet-wide problems in service of people and planet. A strong contribution to leadership and management when we need it most.” — Osvald Bjelland Founder and President, Xynteo Founder, The Performance Theatre Foundation

About This Book

This book is based on extensive experience gained while working in  local and national political campaigns, the government, and the private sector. Based on those well-documented experiences, this book provides actual experience-based insights into how to improve the decision-making process of your organization, be it large or small. At the heart of the process is the development of an Inquiry Center that assists in determining and collecting the most appropriate information and providing that information in a form that is not only useful but accepted by the eventual policy and decision makers Some of the ideas in this book have appeared elsewhere in my writings. Here, however, relevant new and timely information is also provided and integrated with the earlier ideas in a more useful, systems-oriented approach. Or, as Russel Ackoff would have stated: Creating a whole that is greater than the sum of the parts. The benefit is twofold. First, there are many interesting applications of the systems approach which provide a deeper understanding of the impact of the approach to decision-making. Second, in doing this, the book provides in detail actual use of systems thinking, something largely absent from much of the existing literature. The relevant insights on the practical use of information in decision-making are provided in two related parts.

 art I: How I Learned to Access the Right Information P for Making the Best Decisions During Complex Conditions This part provides an experienced-based perspective for those looking for the development and improvement of the business decision process. The perspective is found in actual applications of how I learned to develop and implement approaches to decision-making. These applications were developed and used during my personal journey through political campaigns, serving in government and private sector. All of these activities offer some interesting discoveries that should be of historical interest, including a visit to Plato and Sophistry. This part involves not only successful and unsuccessful examples but also what was learned from them. To demonstrate the learning that took place by contributions from the academic community, I have documented how the world of practice has benefited from their knowledge and how their knowledge has also been improved by experiencing the xiii

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About This Book

world of practice. This is most evident in my own education and direct interactions with Russell Ackoff, Harvey Bell, Osvald Bjelland, C.  West Churchman, Tom Davenport, Edwards Deming, Peter Drucker, Ron Howard, Harold Kassarjian, Ralph Kilmann, John Little, Richard Mason, Ian Mitroff, Chunka Mui, Henry Munn, John Pourdehnad, C.  K. Prahalad, Nick Pudar, Jerome Richfield, Everett Rogers, Malcom Sillars, Adrian Slywotzky, Lawrence Starr, John Sterman, Don Tapscott, Glen Urban, Ramasamy Uthurusamy, Ernest Velardi, Gerald Zaltman, John Sviokla, and Andrew Norton.

 art II: Based on Those Experiences Here is What You Need P to Design and Implement an Inquiry Center for Your Enterprise For decision makers and those providing them with market information and examples for making decisions, this part provides the guidelines for a framework which includes thinking systemically. For those interested in change management and corporate governance, I present a suggested format and examples where the approach was done well and some examples where it was not and the ensuing consequences.

Contents

Part I How I Learned to Access the Right Information for Making the Best Decisions During Complex Conditions 1 An Uncertain and More Complex Environment Requires You Learn from Your Decisions: Question the Known and Seek Answers to the Unknown����������������������������������������������������������   3 The Importance of Learning from the “Avoid Burnt Toast” Thinking of Edwards Deming��������������������������������������������������������������������    3 Addressing Edward Deming’s Concern About Burnt Toast����������������������    4 What Senator John Tower Learned From “Uncomfortable” Data that Contributed to His Re-election��������������������������������������������������    5 Make Sure You Fully Understand the Problem Before You Try to Fix It! ��������������������������������������������������������������������������������������    6 2 How the Journey to Improved Decision-­Making Started with My Introduction to the Silo Problem and the Importance of Understanding Both Sides of a Story��������������������������������������������������   9 Learning to Question What Appeared to Be True by Hearing Both Sides of the Story������������������������������������������������������������������������������   10 There Is, of Course, Another Side to Almost Any Story����������������������������   12 3 What Was Learned by Supporting and Making Decisions During Local and National Political Campaigns������������������������������������  15 I Gained Insight Even Though the Candidate in My First Political Campaign Lost����������������������������������������������������������������������������   15 Decision Time��������������������������������������������������������������������������������������������   17 The First Campaign Outside of California Using New Campaign Techniques ������������������������������������������������������������������������������������������������   17 When Attempting to Reach a Group of Very Influential People, Try Something Different!��������������������������������������������������������������������������   19 An Interesting Insight into a Future President ������������������������������������������   20 Evolving from Datamatics to Decision-Making Information��������������������   21 Practitioners and Academics: Benefits of a Shared Learning Experience in the Real World��������������������������������������������������������������������   23

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Electronic Hillsides������������������������������������������������������������������������������������   24 A Glimpse of the Possibilities and a Hope for Future Electronic Hillsides ����������������������������������������������������������������������������������������������������   24 4 My First Government Job: Getting to the Census Bureau: An Important Personal Decision��������������������������������������������������������������  25 The Confirmation Process��������������������������������������������������������������������������   25 An Introduction to a New Way of Thinking����������������������������������������������   27 A Valuable Lesson Learned ����������������������������������������������������������������������   28 Addressing Racial Disparity����������������������������������������������������������������������   28 Another Interaction with Nelson Rockefeller��������������������������������������������   30 Making Effective Use of Information��������������������������������������������������������   31 Time to Move On… ����������������������������������������������������������������������������������   35 5 My First Job in the Private Sector – Xerox ��������������������������������������������  37 How We Got Senior Leadership to Focus on What to Do with the Information Instead of Arguing Over the Accuracy of Something They Did Not Want to Hear������������������������������������������������   38 Make Sure Those Who Will Allocate Resources Are Involved in the Research Project’s Design����������������������������������������������������������������   38 An Introduction to Sophisticated (and Useful) Market Models����������������   40 6 My Second Job in Government: Back to the Bureau ����������������������������  41 Another Confirmation Hearing������������������������������������������������������������������   42 The Benefits of Bobby Seale’s Advice to Make Sure Credible People Were Selected to Our Advisory Committees����������������������������������   42 A Little Help from a Junior High School Friend ��������������������������������������   43 Anticipating and Preparing for Legal arguments��������������������������������������   44 The Importance of Being Neither Arbitrary nor Capricious����������������������   44 Thanks to Justice Thurgood Marshall, the Count Was Finally Delivered… and on Time!��������������������������������������������������������������������������   47 Sometimes It Takes a Long Time for the ‘Truth’ to Prevail����������������������   47 7 My Second Job in the Private Sector: Getting to Kodak on My Way to General Motors ����������������������������������������������������������������  49 An Example That Shows the Real Value of Knowledge Creation Is in Its Use and Not Its Collection������������������������������������������������������������   49 Getting Behind the Silver Curtain��������������������������������������������������������������   50 The Appropriate Use of Mathematically Based Models����������������������������   51 The Genesis of Barabba’s Law: “Never Say, the Model Says” ����������������   51 Conducting a Strategic Assessment of Possible Changes to Customer Behavior and Market Conditions������������������������������������������   52 How Strongly Held Positions Can Affect Response to a Survey’s Findings�����������������������������������������������������������������������������������������������������   52 An Unexpected Request Led to My Joining General Motors��������������������   53

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8 My Final Job in the Private Sector: How Earlier Involvement in the GM Decision-­Making Process Led to More Effective Use of Market Research����������������������������������������������������������������������������  55 Traveling 70 Miles from Flint, Michigan, to Detroit, in 24 Years��������������������������������������������������������������������������������������������������   55 How I Got from Kodak to GM������������������������������������������������������������������   56 Getting Started and Uncovering Some Startling History��������������������������   57 An Indication of Predisposed Positions That Would Have to Be Addressed ����������������������������������������������������������������������������������������   57 Thinking About a GM Decision Loom������������������������������������������������������   58 Weaver’s 1932 Customers Drawing and the Mid-1950s Volkswagen Transporter ������������������������������������������������������������������������������������������������   60 The Need to Regain Weaver’s Lost Legacy ������������������������������������������   61 Meeting Harvey Bell: Getting Behind GM’s Version of Kodak’s Silver Curtain ����������������������������������������������������������������������������������������   62 Decision-Makers and Those Responsible for Innovation and Design Must Engage in Active Listening����������������������������������������   63 Laying the Groundwork: Changing How GM Developed and Introduced New Products����������������������������������������������������������������   63 The First Strategic Initiative: Vehicle Development������������������������������   65 The Dialogue Decision Process ������������������������������������������������������������   65 Present Findings in the Form Preferred by Decision-Makers����������������   66 Single and Double-Loop Learning��������������������������������������������������������   68 What the Midsized Car Program Did for GM ��������������������������������������   69 Double Loop Learning������������������������������������������������������������������������������   70 The 2002 Truck Program ����������������������������������������������������������������������   70 The Best Corvette Yet��������������������������������������������������������������������������������   73 Beginning to Align Imagination and Knowledge����������������������������������   73 Understand the Thinking Process of Those Who Use Your Information������������������������������������������������������������������������������������   74 An Example of a Design Process Influenced by an Involved Market-Based Decision-Making Process����������������������������������������������   76 Cadillac Escala Concept Vehicle������������������������������������������������������������   76 Thinking Metaphorically ��������������������������������������������������������������������������   77 A Visualization of a Book����������������������������������������������������������������������   77 Working for Two Bosses in 1992����������������������������������������������������������   80 Inviting Peter Drucker Back to GM ������������������������������������������������������   80 Time to Step Back and Think About the Future������������������������������������   81 Testing the Water with an External Review ������������������������������������������   84 The First Prototype: OnStar: Sometimes the Process of Creatively Gathering and Presenting Findings Reveals an Unarticulated Need, and the Possibility of Golden Brown Toast ��������������������������������   84 An Introduction to the Digital World ����������������������������������������������������   86 And the Ideas Began to Be Implemented����������������������������������������������   87

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Avoiding Burnt Toast ����������������������������������������������������������������������������   87 A Glimpse of Golden Brown Toast��������������������������������������������������������   88 The Second Prototype: MyProductAdvisor ����������������������������������������������   90 Applying Buck Weaver’s Principles in the Twenty-First Century ��������   91 Getting from Idea to Effective Implementation of the Idea Is Not Always Easy��������������������������������������������������������������������������������   91 Avoiding Burnt Toast: AutoChoiceAdvisor.com Becomes MyProductAdvisor.com ������������������������������������������������������������������������   93 Reflecting on the Results of an Interesting Career������������������������������������   94 Part II Based on those Experiences Here is What You Need to Design and Implement an Inquiry Center for Your Enterprise 9 Using Systems Thinking to Create an Experienced-Based Decision Process��������������������������������������������������������������������������������������������������������  97 The Benefit of a Broad View of Public and Private Experiences��������������   97 An Array of Possible Operating Designs Positioned Along a Continuum of the Past “Simple/Certain” Environment to a Future “Complex/Uncertain” Environment We Are Facing Today ����������������������   98 Make-and-Sell����������������������������������������������������������������������������������������   98 Sense-and-Respond��������������������������������������������������������������������������������   99 Anticipate-and-Lead������������������������������������������������������������������������������  100 It Is About Choosing the Right Combination of One Design and Another and Not Selecting One Design or Another����������������������������  100 Today’s Successful Business Design Could Fail for You Tomorrow ��������  101 10 Keep an Open Mind, Think Systemically, and Encourage Transparency���������������������������������������������������������������������������������������������� 103 The ABC Company: A Conceptual Story Of How An Enterprise Can Create Change������������������������������������������������������������������������������������  103 11 Encourage Learning���������������������������������������������������������������������������������� 113 Prior to Making a Decision, Surface and Make Explicit the Critical Assumptions����������������������������������������������������������������������������������������������  114 First, Identify the Stakeholders��������������������������������������������������������������  114 Next, Conduct a Session to Surface and Challenge the Importance and Plausibility of the Surfaced Assumption ����������������������������������������  114 After Making a Decision, Learn from your Decisions—Particularly the Mistakes—and Improve the Process������������������������������������������������  115 Addressing a Problem Systemically, Creating a Whole that Was Greater than the Sum of Its Parts by Identifying and Understanding the Positive and Negative Impact of the Interaction of the Parts����������������������������������������������������������������  115 It Had to Be a “Total” Team Effort��������������������������������������������������������  116

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Identifying What Was Thought to Be a Successful Sales Program Was Actually the Cause of the Problem����������������������������������  116 It Was a Functional Silo Problem��������������������������������������������������������������  117 12 The Relationship Between Data and Wisdom ���������������������������������������� 121 Thinking Systemically: Value Lies Not Solely in Developing and Understanding a Hierarchical Structure of the Elements but Also in Improving Their Interactions in an Attempt to Find Meaning Relative to the Issue Being Addressed ��������������������������  122 The Lens of Learning��������������������������������������������������������������������������������  126 13 Based on Good and Bad Experiences, A Beginning Discussion of the Potential Decision-Making Framework from Which Lessons Can Be Learned and Burnt Toast Can Be Avoided�������������������������������� 127 The Need to Insert Learning into the Decision-Making Process��������������  128 How Your Enterprise Can Make Better Decisions and Learn from Mistakes by Designing and Inquiry System��������������������  129 Decision Record����������������������������������������������������������������������������������������  131 Decision Makers����������������������������������������������������������������������������������������  131 Strategic Context����������������������������������������������������������������������������������������  131 Assumptions on Which Expected Outcomes Are Based ��������������������������  131 Environmental Scanning����������������������������������������������������������������������������  132 Implementation������������������������������������������������������������������������������������������  133 14 To Illustrate How a Decision Process Should Work, Let’s Examine How an Inquiry Center with a Learning and Adaptation Approach Might Have Helped Kodak Take Advantage of a Missed Opportunity and Avoid Its Eventual Fall into Bankruptcy������������������������������������������������������������ 135 Kodak’s Missed Opportunity ��������������������������������������������������������������������  135 Acquisition of Other Enterprises ��������������������������������������������������������������  138 Employee Acquisition and Promotions������������������������������������������������������  138 15 Developing the Design and Implementation of an Inquiry Center That Contributes to the Ability to Avoid Burnt Toast���������������� 141 The Design Elements of Learning and Adaptation Support System����������  142 Introducing the Decision Record to the Learning Process������������������������  144 Uses of a Decision Record That Led to Saving Lives�������������������������������  149 The Potential Benefits of an Inquiry Center����������������������������������������������  152 Not a Conclusion, but a Beginning������������������������������������������������������������  152 16 The Benefit of Leadership’s Improved Thinking and Decision-Making that Overcame the Desire of Some to Focus Exclusively on the Existing Business���������������������������������������� 155 GM Epilogue: An Opportunity That Was Delayed at Great Cost—A Retired Employee’s Perspective ������������������������������������������������  155 The Price of Not Positively Interacting with the Containing System��������  156

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Unfortunately, a Zone of Discomfort Delayed the Introduction of this Potentially New Form of Income����������������������������������������������������  157 Important Differences Between Ford’s Experience and Our Strategy����������������������������������������������������������������������������������������  158 A Very Early Warning Not About the GM as a Business, But the GM’s Public Perception����������������������������������������������������������������  159 “What Is GOOD for General Motors is Good for the Country”����������������  159 “What Is Good for the Country Is good for General Motors” ������������������  159 The Need to Overcome Misinformation About General Motors ��������������  160 A Suggestion for the “New GM”��������������������������������������������������������������  160 Sense and Respond������������������������������������������������������������������������������������  161 Anticipate and Lead ����������������������������������������������������������������������������������  161 The Need to Continue Developing a Positive Image ��������������������������������  162 Emerging into the New General Motors (Fig. 16.3)����������������������������������  162 A Reflection ����������������������������������������������������������������������������������������������  163 In Summary������������������������������������������������������������������������������������������������  164 Index�������������������������������������������������������������������������������������������������������������������� 165

About the Author

Vincent P. Barabba is the chairman of Market Insight Corporation, which created MyProductAdvisor. com—a consumer-facing website designed to provide shoppers with unbiased customized automotive product recommendations. He retired in 2003 as the general manager of corporate strategy and knowledge development at the General Motors Corporation where he played a critical role in the development of OnStar. He serves on the community board of Palo Alto Med Foundation Santa Cruz at Sutter Health. Mr. Barabba was a member of the 2010 California Citizens Redistricting Commission and twice served as director of the US Bureau of the Census—the only person to have been appointed to that position by US presidents of different political parties. He has been appointed to government positions by five presidents: Richard Nixon, Gerald Ford, and James Earl Carter to be Census Bureau Director, and Ronald Reagan and George Herbert Walker Bush to be the US Representative to the Population Commission of the United Nations. Between his government service and GM assignments, he served as the manager of market research for the Xerox Corporation and director of market intelligence for Eastman Kodak. Mr. Barabba was the co-founder of Decision Making Information where he provided electoral information to political campaigns from city hall to the presidency. He has also served on the board of directors for the Marketing Science Institute and the National Opinion Research Center at the University of Chicago. In recognition of his performance in the private and public sectors, he has received the following: • An Honorary Doctor of Laws degree from the Trustees of the California State University • The Distinguished Alumni Award from the California State University at Northridge • Induction into the Market Research Council Hall of Fame

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About the Author

• Certificate of Distinguished Service: For Outstanding Service and Contributions to the Federal Statistical System, 1976, from the Executive Office of the President, Statistical Policy Division • The American Marketing Association’s Parlin Award for leadership in the application of science to the discipline of marketing research • The MIT/GM Henry Grady Weaver Award for individuals who have contributed the most to the advancement of theory and practice in marketing science • The American Marketing Association’s EXPLOR Award (through the Market Insight Corporation) granted to organizations that have demonstrated the most innovative uses of technology in applications that advance research, online or otherwise • Selected to present the 2016 Deming Lecture by the American Statistical Association He received a Bachelor of Business Administration with a major in advertising from Woodbury University in 1954, a Bachelor of Science degree from California State University Northridge in 1962, and a Master of Business Administration from the University of California at Los Angeles in 1964. Mr. Barabba is a past president and a fellow of the American Statistical Association and is a fellow of the Society of Decision Professionals.

Part I How I Learned to Access the Right Information for Making the Best Decisions During Complex Conditions

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An Uncertain and More Complex Environment Requires You Learn from Your Decisions: Question the Known and Seek Answers to the Unknown

In Osvald Bjelland’s recently published book Our Hope for the Future, I provided the following comment: The future we all face will be more complicated and will change so fast that determining future solutions based on how we currently attempt to determine societal preferences can lead to missing promising opportunities. Instead, we need to understand the extent of the forthcoming changes and reinvent and adapt our approach to decision making. By doing so, my hope is that we can effectively address the issues of the rapidly changing world in which we will be living.1

This chapter provides background on the approach I will be suggesting and an example that points to the need to improve the manner in which knowledge is collected, designed, and presented, so that collected information will be effectively used to improve and learn from decisions made during our fast-changing and more complex environment.

 he Importance of Learning from the “Avoid Burnt Toast” T Thinking of Edwards Deming My first contact with the Avoid Burnt Toast thinking attributed to Edwards Deming occurred in 1973 when I served as director of the United States Census Bureau. The taking of the Census is an incredibly complex activity; from the making of the maps, developing the mailing lists, creating the Census form, the collection itself, to the publication of results. The bureau had traditionally built a back-up system in anticipation that in each step of the process something could go wrong. As the person who would likely be held accountable if something did go wrong, I had generally supported this position. Then one day in a discussion on the subject, one of our  OUR HOPE FOR THE FUTURE Osvald Bjelland, 2021 p. 26.

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senior members commented that if Deming were still at the bureau, he would describe our approach of ensuring quality by developing elaborate back-up systems with his very compelling metaphor, “You burn the toast and I’ll scrape it.” In essence, because your planning and decision process is not sufficiently comprehensive, you are likely to end up with a piece of burnt toast that after review changes are made, and everyone accepts the outcome. But you also have acknowledged that a problem with the decision could occur, and if it does happen, you have built a process to fix it—exactly what Deming had argued against rather than using a decision process that lessened the possibility of an unexpected problem with the outcome of the decision. Edwards Deming and I had a more personal, and for me more memorable, brief meeting during the taking of the 1980 Census. I gave a presentation at the Cosmos Club in Washington DC on our progress. At the end of the presentation, he came up and very nicely said, “You are doing a good job, keep it up.” The last time we met was at General Motors in the 1990s when he was advising us on improving the quality of our products and services by avoiding burnt toast decisions. However, it wasn’t until I gained a better understanding of his concept of Profound Knowledge by reading his works, combined with what I learned during 30 very beneficial years of consulting engagements and evolving friendships with Russ Ackoff and Peter Drucker that I came to more fully understand and appreciate the value of his thinking. What I appreciated most about Deming’s thinking was the fact that he railed against decision makers and those providing them information, who blindly asserted opinion as fact, out of convenience or ignorance. Instead, he challenged all involved to test their opinions, theories, hypotheses, hunches, and beliefs against reality to truly understand what is going on and learn what is necessary to improve the situation.

Addressing Edward Deming’s Concern About Burnt Toast Throughout the book, I will provide examples that demonstrate the need to improve the manner in which knowledge is collected, examined, and presented based on a wide range of learning experiences that occurred during my career. I will focus on how an enterprise should develop a process that can be effectively used to create an improved decision-making process from which learning can take place. To do so, I will provide what was learned from both positive and not so positive experiences. In some ways, I will also be discussing how we are now facing different types of questions than the type we addressed in the past. How to think about these evolving changes was eloquently stated by Peter Drucker in a Birthday letter to Ackoff that he asked me to present to Russ on his 80th birthday in March of 1999: My warmest thanks for the wonderful contributions you made to me, all of fifty years ago! I was then, as you may recall, one of the early ones who applied Operations Research and the new methods of Quantitative Analysis to specific BUSINESS PROBLEMS—rather

What Senator John Tower Learned From “Uncomfortable” Data that Contributed…

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than, as they had been originally developed for, to military or scientific problems. I had led teams applying the new methodology in two of the world’s largest companies—GE and AT&T. We had successfully solved several major production and technical problems for these companies—and my clients were highly satisfied. But I was not—we had solved TECHNICAL problems but our work had no impact on the organizations and on their mindsets. On the contrary: we had all but convinced the managements of these two big companies that QUANTITATIVE MANIPULATION was a substitute for THINKING. And then your work and your example showed us—or at least, it showed me—that the QUANTITATIVE ANALYSIS comes AFTER the THINKING—it validates the thinking; it shows up intellectual sloppiness and uncritical reliance on precedent, on untested assumptions and on the seemingly “obvious.” But it does not substitute for hard, rigorous, intellectually challenging THINKING. It demands it, though—but does not replace it. This is, of course, what YOU mean BY system. And your work in those far-away days thus saved me—as it saved countless others—from either descending into mindless “model building”—the disease that all but destroyed so many of the Business Schools in the last decades—or from sloppiness parading as “insight.”

In essence, Peter’s comments to Russ highlighted the changes those of us who provide information and those who make decisions have faced and are facing in a more complex world. We used to be asked; “How do we do what we currently do better?” Now we are also likely to be asked; “How do we do well what we haven’t ever done before?” The essence of what is in this book relative to knowledge use is clearly stated in this quote from Russ Ackoff’s colleague C. West Churchman whose thinking was also often recognized and appreciated by Deming. Knowledge resides in the user and not in the collection. It’s how the user reacts to the collection that matters.2

 hat Senator John Tower Learned From “Uncomfortable” Data W that Contributed to His Re-election The importance of providing information in terms the decision maker will understand and find relevant and eventually use to take action was vividly brought home to me in 1972, when my firm Datamatics was retained to conduct a series of political surveys related to the re-election campaign of Senator John Tower of Texas. The results of our first survey indicated that Senator Tower was running ahead of his likely democrat opponent Harold Barefoot Sanders, known by most Texans as Barefoot Sanders. At the time of this survey, Sanders was running in the Democratic Primary against Senator Ralph Yarborough whose voting record had caused many Texans to label him as a liberal. During the primary campaign, Sanders positioned himself as being more conservative than Yarborough and won the primary election. After the primary, we conducted a follow-up survey and saw a significant shift in voting behavior. Sander’s support had grown by 11 percentage point to 45% and Senator Tower’s support had dropped 17 percentage points to 36%.  The Design of Inquiring Systems, C. West Churchman, Basic Books, 1971 p. 10

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I quickly advised Tower’s campaign management team of the survey results. The senior advisor informed me that he was uncomfortable in delivering the results because Senator Tower, as the incumbent and a known conservative in a state like Texas, believed he was ahead of the more liberal candidate Sanders. At that point, given the senior adviser’s discomfort in delivering the results, I offered to present the information to the Senator without the staff present.

 ake Sure You Fully Understand the Problem Before You Try M to Fix It! In preparation for an expected difficult meeting, I reviewed an earlier post-election survey we had conducted in 1970 to find out what contributed to Lloyd Bentsen’s defeat of George H. W. Bush in the race for the US Senate. That study revealed that, at that time, in a Texas campaign where the Democrat candidate was perceived to be as conservative as the Republican candidate, the Democrat candidate generally wins. In June 1972, I had a private meeting with Senator Tower in the St. Anthony Hotel in San Antonio, Texas. Upon entering the room, Senator Tower who was already sitting down, said, “Sit down young man, I understand that you have some bad news for me, which I am also told is not correct.” I responded to the senator by stating that the information was accurate but it was only a measurement of voter preferences at the time the survey was conducted and not a prediction of the outcome of the race. I also made clear it was not bad news since it revealed how Sanders, because he had defeated the liberal Ralph Yarborough, led many voters to perceive him to be a conservative. Senator Tower interrupted me and said the survey indicating he was behind was not accurate because it was a well-­ known fact that Sanders was not a conservative. I pointed out that we should not be focusing on the numbers for and against him but on what the numbers reflected. I also made clear that it was the perception, not necessarily a fact, of a large portion of the respondents, influenced by Sanders defeating the very liberal Yarborough, that he was conservative. I smiled and told Senator Tower “that was the good news.” If the record showed that Sanders was indeed more liberal than Senator Tower, all he had to do during the campaign was demonstrate that in reality he was more conservative than Sanders. The senator quickly got over the numbers showing him losing, smiled and said, “You’re right, that will not be too difficult to do—that essential finding of this survey is good news!” He then asked me what he should direct his campaign staff to do now that he accepted the information. I suggested that, in any discussion where he was asked to compare himself to Sanders, he provide explicit examples that demonstrated his position was more conservative and to get as many known conservative Democrats to endorse his candidacy. In the months between June and a follow-up August survey, the Tower campaign was able to gain the endorsement of several well-known conservative Democrats. The positive results of this focused effort were reflected in the next survey results

Make Sure You Fully Understand the Problem Before You Try to Fix It!

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that showed, from June to August, the Texas electorate shifted back to Tower (45%) and away from Sanders (29%): Another study identified the relative worth of the endorsement by Former Attorney General Ramsey Clark who was a well-known liberal activist, who served under President Johnson. When the respondents were asked whether they would be “more likely” or “less likely” to vote for a candidate who was endorsed Ramsey Clark, 20% said “More Likely” and 80% said “Less Likely.” This information, in light of Sanders’ acceptance of a $2000 campaign contribution from Ramsey Clark, reinforced an earlier decision to tie Sanders, as directly as possible, to Ramsey Clark. In one of the best uses of survey knowledge to influence a specific target audience, the Tower campaign team created a bumper strip and billboard campaign with the following succinct and clear message that typified the manner in which the campaign tied Ramsey Clark to Barefoot Sanders: RAMSEY CLARK GOES BAREFOOT

I still have that bumper sticker hanging up in my office! In November, John Tower defeated Barefoot Sanders 55% to 45%. The experienced gained in that campaign and the broader understanding gained from providing information to local, state, and presidential campaigns across the entire country further convinced me that we needed to change how our firm did business. We needed to direct our attention and resources to make sure the emphasis on our activity was to engage eventual decision makers in a manner that allowed both of us to gain a sense of what knowledge needed to be acquired and what the acquired knowledge meant and how it could be used effectively.

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How the Journey to Improved Decision-­Making Started with My Introduction to the Silo Problem and the Importance of Understanding Both Sides of a Story

When an organization is arranged in functional silos, it is critical that the leadership of the organization ensures that the effect the decision made in one function is communicated and its effect is understood by all functions within the organization. My first encounter with the silo problem occurred in 1962 during my senior year at California State University at Northridge (then called San Fernando Valley State College). One of my professors had developed a computer-based business simulation game in which he divided students into teams that competed in making and selling a product. The year I took the class, instead of assigning students to teams at random, he organized the teams according to a student’s academic major. This led to each team developing strikingly different team outcomes: The marketing majors (my team) spent most of our time and money on sales and promotion. We acquired an impressive share of the total market, but at high cost, and were bankrupt before the game ended. The accounting majors aimed at maximizing profits by minimizing investments in products and promotion. With no new products and only meager promotion of existing ones, the accountants lost market share and slipped by degrees into bankruptcy. The operation majors spent all their money on product development and manufacturing processes. They ended up with great products at the right prices, but with no money to tell customers about them, they, too, went out of business. To the consternation of all concerned, the personnel majors won. The marketing majors ran out of money, the accountants ran out of products, and the production majors ran out of customers. The personnel majors occupied themselves with endless changes to the organization chart. Having spent no money, they simply ran out of time and won the game by default. The silo problem that was made evident by the business simulation game was partially a result of how business classes were taught at that time, with the overall © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 V. P. Barabba, A Systems Thinking Decision-Making Process, Management for Professionals, https://doi.org/10.1007/978-3-030-89960-8_2

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curriculum focused on specific functions. One of the most succinct descriptions of the problem associated with limiting the decision tools that are preferred by those involved in each of the participating silo was provided by psychologist Abraham Maslow: I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.1

This business case simulation provided context as I came to understand the ramifications of the silo mentality. With a greater appreciation of the importance of looking across functions throughout my career, I kept looking for something besides my functional hammer to improve my capacity to help decision-makers—even if I had to go outside the comfort zone of my own training and experience.

 earning to Question What Appeared to Be True by Hearing L Both Sides of the Story I was also taking two other classes that year: one in market research and the other in the history of philosophy. Both classes were taught by teachers who were tolerant of unusual requests. Toward the end of the semester, the class assignment in the market research class taught by Henry Munn was to define and show the relationship between philosophy, science, and market research. At the same time, the philosophy course taught by Jerome Richfield was discussing the 5th Century B.C. in Athens and Plato’s concern over the rise of sophistry which he used (as we frequently do now) as a term of disparagement. While preparing to write the paper for the marketing course, I was reading materials for my philosophy course, when I ran across a passage from the Dialogues of Plato in which he expressed his concern about the sophists by having Socrates point out: …knowledge is the food of the soul; and we must take care… that the Sophist does not deceive us when he praises what he sells, like the dealers wholesale or retail who sell the food of the body.2

After observing the differences between buying food or drink which you take home in some sort of a vessel and purchasing education (which he criticized the sophists for selling), Socrates drove home his main point: For there is far greater peril in buying knowledge than in buying meat and drink… you cannot buy the wares of knowledge and carry them away in another vessel; when you have paid for them you must receive them into the soul and go your way, either greatly harmed or

1   Maslow, Abraham H., The Psychology of Science: A Reconnaissance, New  York: HarperCollins, 1966. 2  Plato, The Dialogues of Plato, tr. B. Jowett, Chicago: William Benton, 1952.

Learning to Question What Appeared to Be True by Hearing Both Sides of the Story

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greatly benefited; and therefore, we should deliberate and take counsel with our elders; for we are still young—too young to determine such a matter.3

The passage caused me to think about what appeared to be a similarity between the behavior of the sophists and some of the practices involved in marketing goods and services. Since the basis of the similarities were found in the writings of no less a historically respected authority than Plato, I accepted what I read and began to think about writing one paper for both classes around the possible similarities between sophism and marketing. When I suggested to both professors that it might be interesting to write one paper for both classes, they, to their credit, did not laugh, even though each did crack a thin smile. Although skeptical, they were eventually persuaded to let me try when they saw the proposed title of the paper: SOPHISTS, INC. The Trivium Building Madison Avenue Athens, Greece I started the paper with this statement: If we are to find a common ground between Philosophy, Science and Marketing Research, I believe it, lies in the area of the search for truth. The difference being, the degree of truth that is obtained, or even desired, and the use to which it is put. The paper drew on the writings of Plato, who said that the sophists, rather than searching for truth, “were skilled at making the worse case appear the better.” I tied the marketers to the sophists, using the criticisms of marketing found in The Hidden Persuaders by Vance Packard. After 20 pages, I concluded that the sophists of both the 5th Century BC and 20th Century AD were happy to have information that advanced their arguments in ways that masses of people would believe and that they weren’t overly concerned with truth. Both professors accepted the paper. The philosophy professor gave me a passing grade with the side comment, “the title of the paper carried the day.” Although I met my initial goal of passing two classes with one paper, the paper’s conclusion—which limited the role of the marketing function to, as Plato suggested “…making the worse case appear the better” left me in a somewhat conflicted state. Given that marketing was to be my chosen profession, could I really be comfortable in a career where my goal was to “make the worse appear the better”?

 Plato “The Portable Plato”, p.38, Penguin 1977)

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An opportunity to revisit this question occurred a year later when I was enrolled in the MBA program at UCLA. One day I discussed my concern over the conclusion to my Sophists Inc. paper with one of my very thoughtful professors, Harold Kassarjian. He suggested that I revisit the paper, challenge the facts that I presented, and determine whether my earlier conclusion still held.

There Is, of Course, Another Side to Almost Any Story While at UCLA, I was also employed part-time as an instructor in the marketing department at my alma mater, California State University at Northridge. One day, while discussing my concern with my initial paper with Mal Sillars, who was in the speech department at the university, he said he would look over the paper and provide his observations. His review was quite direct: Vince, you have a very shallow understanding of the Sophist movement and what it actually contributed. You’ve based your understanding on what you have read from the philosophers who were being challenged by the Sophists. They were not historians, they were critics. You’ve taken Plato’s criticism of the Sophist Protagoras dictum, ‘Man is the measure of all things’ as meaning the Sophists taught others how to make the worse appear the better through the use of false reasoning.

Mal suggested several books and journal articles that would help me understand the other side of the story. For the next several months, I was ensconced in the UCLA college library and not the graduate business school library. I was both surprised and impressed by the suggested readings. There was overwhelming evidence that the sophists acquired a reputation for “making the worse appear the better through the use of false reasoning” from the writings of philosophers who were critical of them during that era. The readings suggested by Mal Sillars demonstrated that many distinguished historians concluded just the opposite. They documented the extent to which the sophists excelled in taking information that was known by only a few and providing it to the public at large. As it was summarized by the late 19th- and early 20th-­ century German philosopher Wilhelm Windleband: “Their work was first directed, with an eye to the people’s needs, to imparting to the mass of people the results of science.”4 The other side of the sophists’ story was compelling. In their endeavors to influence people through rhetoric, they were among the first to look at ideas and the development of those ideas. They were not the shallow purveyors of false reasoning portrayed by Plato. I also gained insight into the limitations of the critics of marketing by reviewing other books including Raymond Bauer’s well-documented challenge to Vance Packard, who insisted that consumers were powerless to resist advertising. Bauer, a social psychologist who applied the principles of behavioral sciences to the study of  Windelband, William, History of Ancient Philosophy, New York: Charles Scribner’s Sons, 1899.

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business administration and social policies, provided another perspective that questioned the amount of power I had attributed to the marketers in their ability to persuade citizens and customers: in his book, The Hidden Persuaders, Bauer says: One way of reading the history of the development of techniques of persuasion is that the persuaders have been in a race to keep abreast of the developing resistance of the people to be persuaded.5

My second paper, a major revision of the first, also noted a similarity between the sophists and the marketers. But this time, I approached the behavior of both parties with a more open mind. In this approach, the similarity I identified was in their desire to use what they had learned from their own experience or that of others to present an argument, product, or service in the most efficient and effective manner to those who would approve or benefit from what was being presented. Mal Sillars’ advice to review alternative points of view taught me that no matter how esteemed the provider of a point of view, you need to not only check their facts but also their motivations. That is true even for revered philosophers like Plato. I was starting to think better of my chosen profession. Those involved in marketing demonstrated neither all good nor all bad behavior by their actions. At 31 years old, I was ready to embark on a career in marketing. I was also enjoying my paper on sophism and marketing, the revision of which had now satisfied the requirements for a third class!

5  Bauer, R. A. (1958), “The Limits of Persuasion – The Hidden Persuaders are Made of Straw”, Harvard Business Review, September-October.

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What Was Learned by Supporting and Making Decisions During Local and National Political Campaigns

As I pointed out in the introduction to this book, I learned a lot about decision making while involved in political campaigns. My education made me aware of what was theoretically being discussed in academic social science. However, because of the nature of the many campaigns in which I was involved, I became more focused on learning from actual experience rather than on theory. From 1964 to 1972, I participated in more than 60 political campaigns across the United States and 1 in the United Kingdom. Although my first effort dealt with the Los Angeles city council campaign for Ernani Bernardi, a Democrat, and offered advice to Democratic Congresswoman Yvonne Braithwaite Burke in her primary campaign, all of the subsequent campaigns were for Republican candidates or independent initiatives. It became clear it was best to work for one party, to overcome the concern that what was learned in one campaign could be used against the sponsors in a subsequent campaign. Although I worked within one party, I was not identified with any political wing of the party. The candidates I represented spanned the entire spectrum from conservatives like Governor Ronald Reagan (later to be President) and Senator John Tower of Texas to moderates like Governor Nelson Rockefeller and Republican Congressman Donald Riegle who eventually became Democrat Senator Don Riegle of Michigan. I saw my role as not to solely determine whether the candidate’s views were right or wrong, but to make sure, when they were right that they were presented in the most effective manner possible.

I Gained Insight Even Though the Candidate in My First Political Campaign Lost In 1964, between the time I completed my MBA and was accepted into the PhD program at UCLA, I began working on political campaigns on a more full-time basis. My first major campaign was the Republican Presidential primary in California between Nelson Rockefeller and Barry Goldwater. Spencer-Roberts was © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 V. P. Barabba, A Systems Thinking Decision-Making Process, Management for Professionals, https://doi.org/10.1007/978-3-030-89960-8_3

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the firm that was managing the Rockefeller campaign, and Stu Spencer assigned me to an area in and around Pasadena, California. My introduction to the enormity of a major political campaign occurred when in 1964 when Stu Spencer directed me to organize a meeting for Governor Rockefeller and several hundred influential people in the area to which I was assigned. The governor’s schedule had him arriving at the Burbank Airport and being driven to the meeting place in Pasadena. Two days before the gathering, Stu Spencer called and said that an unanticipated meeting in Northern California meant the governor’s plane would arrive later than planned. Since traffic on the Pasadena Freeway would be too heavy at that hour, he would have to travel by helicopter. Stu instructed me to find a helicopter landing pad near the meeting place. Local officials agreed to let us use a landing pad on top of a nearby building. When I told Stu, he paused briefly (it seemed a lot longer) and said the governor was coming with a staff of people, plus a dozen or so members of the press. They would be transported by two large helicopters that wouldn’t fit on the roof. After conferring with local police and fire officials, I determined that the only place that could accommodate the two large helicopters was the Rose Bowl parking lot. The area would have to be cordoned off, and fire and police crews needed to be there. Stu was not available to discuss the costs associated with this approach, and time was running out, so I had to decide on my own whether to rent the Rose Bowl parking lot and hire a crew of police and firefighters. I signed the contracts. The next day, Governor Rockefeller and his entourage arrived, and he had a very successful meeting (Picture 3.1). This picture was taken at the event that followed the arrival of Governor Rockefeller’s helicopters at the Rose Bowl parking lot. He was probably not aware of the actions taken to get him to the meeting. In the upper left corner of the picture, I can be seen still managing the logistics of the event. Picture 3.1 Governor Rockefeller at Meeting with local influentials in Pasadena, California

The First Campaign Outside of California Using New Campaign Techniques

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Since I was not paying the bills, I’m not sure exactly how much it cost for the governor to land in Burbank 2 hours later than the original plan, but to my surprise no one questioned the decision to spend that much money without any approval. That would not always be the case, but it certainly provided a slightly open window into the wonderful world of political campaigns. Weeks before the election, according to most public polls, Rockefeller was leading Goldwater by 9%. A year before the campaign Governor Rockefeller had gone through a very public divorce and married the recently divorced Happy Murphy soon after. Just before Election Day, Happy Rockefeller gave birth to their child. Supporters of Senator Goldwater went on the airways and used the event to remind everyone of the earlier divorce. On election evening, I participated in a somber election night gathering as Senator Goldwater defeated Governor Rockefeller 51.4% to 48.6% with a margin of 60,000 votes out of the total of over two million votes cast. That experience provided an initial introduction to campaign management and the lesson that the campaign cannot control all aspects of the events that contribute to the final results. Although my first involvement with Governor Rockefeller was not successful, because of the relationship that was developed with his staff, I would find myself working on his behalf in his re-election as governor of New York and when I was director of the United States Census Bureau and he was seeking information about social and economic conditions in the United States as Vice-President of the United States, as will be more fully discussed in Chap. 4.

Decision Time In 1966, the administrators of the UCLA Graduate School of Business indicated it was time for me to return to school to re-enter the PhD program. I was in the middle of several Los Angeles City Council campaigns and working on some interesting ideas. Faced with the choice of continuing what I was learning from my on-the-job experience or stopping and entering the PhD program, I decided to drop out of the program. Although I left an academic career, as some of the following stories will show, part of me lingered in the academic mental model. I also continued to collaborate with academics, which many of the following stories will demonstrate was to their benefit and mine.

 he First Campaign Outside of California Using New T Campaign Techniques During 1996  in addition to working on the campaign to elect Ronald Reagan as governor of California, I was also engaged in the management of a congressional campaign in Michigan. A friend who was attending Harvard Business School had suggested that I contact Don Riegle, who was seeking his Doctor of Business Administration degree while also considering running for Congress as a Republican

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in Flint, Michigan. I contacted Riegle and we met in Flint, in the lobby of the then elegant, recently restored Durant Hotel, named after William C. Durant, the founder of General Motors. Flint, located seventy miles north of Detroit, at that time it was a blue-collar town that was home to GM’s Buick City, at that time the company’s largest manufacturing plant. Given the significant number of automotive assembly and parts plants, more than 100,000 members of the UAW lived within the traditionally Democratic Congressional District. The incumbent Congressman John Mackie and his supporters had no reason to expect a Republican challenger to present a serious threat, especially one from Harvard Business School. After meeting with him and sensing his enthusiasm, I felt Riegle could be a good candidate to use the tools we were developing at Spencer-Roberts. He also thought we could help, and so he hired us as consultants to his campaign. Survey data indicated that the incumbent, John Mackie, was not as well-known as he assumed. He was identified as the district’s Congressman by a lower percentage of constituents than we had seen in any other campaign. Since Mackie could be expected to anticipate little challenge from Riegle, he was unlikely to change his style and seek more publicity. He would assume people knew him and wanted to reelect him. Our first surveys in May indicated that Riegle, as might be expected, was trailing Mackie 63% to 26%, with 11% undecided. Our campaign approach was based on the “Deal to Strength” strategy developed by Stu Spencer, one of the most creative political consultants of his time, whose cutting-edge techniques changed the face of political campaigning. Dealing with strength required identifying the physical locations where our candidates were strongest. As I was to find out later, although I’m sure Stu Spencer came up with the Deal to Strength strategy based on his experiences in many campaigns, it was also a concept promoted by Abraham Lincoln during the 1840 Whig Convention: 1st. To divide their county into small districts, and to appoint in each a sub-committee, whose duty it shall be to make a perfect list of all the voters in their respective districts, and to ascertain with certainty for whom they will vote. If they meet with men who are doubtful as to the man they will support, such voters should be designated in separate lines, with the name of the man they will probably support. 2nd. It will be the duty of said sub-committee to keep a CONSTANT WATCH on the DOUBTFUL VOTERS, and from time to time have them TALKED TO by those IN WHOM THEY HAVE THE MOST CONFIDENCE, and also to place in their hands such documents that will enlighten and influence them. 3rd. It will also be their duty to report to you, at least once a month, the progress they are making and on election days see that every Whig is brought to the polls. 4th. The sub-committees should be appointed immediately; and by the last of April, at least, they should make their first report.

As I gained experience with this approach, it became clear that campaigns could be significantly improved if candidates and campaign managers better understood the different political behavior and preferences of smaller geographic areas within

When Attempting to Reach a Group of Very Influential People, Try Something Different!

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the larger area which the campaign was targeting. That got me interested in small-­ area data analysis of electoral data. It soon became clear that there was additional value in combining electoral data with demographic data, most of which was found in the U.S.  Census. At that point, I formed a company called Communication Associates and got to know electoral and Census data a lot better.

 hen Attempting to Reach a Group of Very Influential People, W Try Something Different! At our initial meeting with the Riegle campaign organization, Stu Spencer suggested that we build up Riegle’s recognition early and place the idea in the electorate’s mind that that this very bright young man could offer the type of representation a community like Flint needed in Washington. In the spirit of Lincoln’s suggested approach of 1840, Stu knew it would also be important for the most influential people in the community to get behind Riegle early. We held several meetings with small groups of “influentials,” as we called them, but not everyone was available for these gatherings. In one of the more creative and effective uses of television, Stu had the campaign staff buy a half-hour segment on the local Flint station. Given the campaign’s limited budget, Stu had them buy time on a Sunday afternoon—the cheapest available time slot, and said that the number of people who normally watch television at that time would not be important. Nearly everyone questioned Stu’s comment until he pointed out that we were using this time to reach selected influentials in the community. Since they did not have time to meet with Riegle personally, we would arrange to have Riegle meet with them on television. The influentials who were already supporting Riegle called those who had not met him and suggested they watch the television program. Don Riegle gave one of the best live TV presentations I had ever seen. Although he was on broadcast television, he knew exactly who he was talking to—a select group of influential citizens. It was at this time that I saw another important lesson in action: the value of information is in its use and not its collection. Our surveys and interviews with local officials had shown that one of the key issues at that time was inflation. Although Don, based on his graduate education, was certainly qualified to discuss the subject in detail, he took advantage of the medium that was available to him—live television and used the information we had collected creatively. After he introduced himself and laid out his credentials and desire to represent the district, he said that he knew there was one issue that all citizens of the district could agree on—inflation was making all their lives more difficult. He said that although he could discuss in detail what inflation was, instead he wanted to show inflation’s effect on the families of the district. At that point, he picked up a large piece of beefsteak and, with a cleaver, cut off about one-third. He picked up the smaller piece and threw it in a garbage can. That, he said, is what inflation is doing to our community. He then pointed out that it was drastically affecting the ability of workers to feed their families. The following week, the Riegle for Congress Volunteer Committee grew into a large and influential organization.

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By September, Riegle was narrowing the gap with his opponent, though many in the campaign felt the change was not happening quickly enough. Among a representative sample of all registered voters, Riegle trailed Mackie 51% to 31%, with 16% undecided. Many people were not aware, however, that we had combed Census data and past voting behavior to identify the areas most likely to contain registered voters who would support Riegle. This was the beginning of the development and use of the Precinct Index Priority System (PIPS) and the Political Analysis of Socio-Economic Tabulations (PAST). Following Abraham Lincoln’s earlier directive, we contacted registered voters in selected areas likely to support Riegle by phone and tried to determine their likelihood of voting for Riegle. For those that were identified as doubtful Riegle voters, candidate Riegle went door-to-door to gain their support. Based on his interaction with them, any voters who appeared likely to vote for him were also added to our list. On Election Day, we contacted everyone who was likely to vote for Riegle and encouraged them to vote. Those likely Riegle voters who needed assistance were given help getting to the polls. In November, during the party at the Biltmore Hotel in Los Angeles celebrating Ronald Reagan’s election as Governor of California, one of the more rewarding phone calls I received came from Don Riegle. He had defeated Congressman Mackie 54% to 46%.

An Interesting Insight into a Future President On a trip to Flint, while working on Congressman Riegle’s re-election campaign, I met up with Stu Spencer, Lynn Nofsziger (Governor Ronald Reagan’s campaign press manager), and Governor Reagan at the airport in Chicago. They were on a connecting flight to Detroit where Governor Reagan was scheduled to speak at the Detroit Economic Club. Although I had heard that Governor Reagan was uncomfortable flying, I got to observe that discomfort firsthand. The four of us were sitting together in the back lounge of a Lockheed Electra as we took off from Chicago, the governor’s nervousness was obvious and he seemed to keep it under control by telling a string of stories about Hollywood which seemed to take his mind off the fact that he was airborne. As we crossed Lake Michigan and flew over Michigan’s western shoreline, the governor’s nervousness seemed to ease and he stopped telling stories. Instead, he pointed to the vast number of trees located along the shoreline and pointed out that legend had it that when our country was founded a squirrel could climb a tree in Maine and run all the way to the Rocky Mountains without touching the ground. Nofsziger, who had patiently listened to the stories when we were over Lake Michigan, pondered the governor’s statement and, looking him right in the eye, said, “Yes Governor, I’m sure that is true, but today, with the help of airplanes, a ‘chicken’ can do the same thing!” After a moment of silence, Governor Reagan started laughing (as we all did). I recall thinking to myself, “Wow, now that’s a good sign—a politician who can laugh at a joke, even when it’s about him.”

Evolving from Datamatics to Decision-Making Information

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Evolving from Datamatics to Decision-Making Information Datamatics had become very good at conducting analysis of existing data for decision making. We always tried to say, “These are the facts,” upon which the decision maker should make the decision. In fact, the successor company to Datamatics was named with that in mind—Decision Making Information. We were focused on how do we get practical and how can we be relevant to the society which we, as providers of information wanted to improve decision making? Our experience had allowed us to move all over the country, where I used data from the 1960 census and a couple of academic analytic techniques. One of those was called “social area analysis,” developed by Wendell Bell and Eshref Shevky of Stanford University, which attempted to synthesize the whole-body of 1960 census data into two or three indexes. One was an economic index, one was a family relationship index, and the other was an ethnic index. This tool allowed us to go into a community and tell its political power structure a lot more about the community, at the small-area level, then they had ever seen before. They were used to looking at the aggregate of their community. So, at that point, I learned to appreciate the potential value of census data as a useful tool. Then in 1968, while working in the Nixon vs. Humphrey presidential campaign, we were asked by several Republican organizations to act as a purchasing agent for sample survey research for approximately 30 House races and 8 Senate races. At that time, this was the largest package of surveys ever packaged in one contract. We used three companies to conduct the surveys, after a very thorough bidding process and assessment of the companies’ quality. One of the companies at that time was called Merrill/Wirthlin; one of the principals was Dick Wirthlin. After the experience of applying the survey information to campaigns, Dick and I decided we should become partners, and so that’s when we formed Decision Making information. Decision Making Information was made up of an interesting blend of different skill sets: Vince Breglio was a social psychologist, Paul Newman, with whom I went to college was a speech major, in essence involved in understanding rhetoric and the development of communication philosophies. Dick had been an economist now with experience in designing and conducting survey, and my background was in marketing. There was also Patti Hawkins who was driven by a desire to uncover new approaches and get the rest of us to use these approaches to improve our capabilities. Over time we were able to attract very bright young people into our group from a variety of disciplines, none of which had anything to do with political science. Because of our deep involvement in the use of information for many political campaigns, we probably had as much impact on the electoral process as did political scientists. In essence, we applied what the scientists had been talking about and brought an understanding as to the value of the many theories these bright people had developed. Our job was to get that work effort applied to the reality of the actual political campaign process. Relative to my interest in improving decision making, there was a value in learning how to conduct and use research in a political campaign. In a political campaign, the dates are very certain; you must deliver things on time. That practice honed me

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for my later endeavors: You had to learn to be practical in what you agreed to do. You had to learn to deal with the presentation of information in a form that those unskilled in the acquisition and analysis of information would find believable. Having Dick Wirthlin join our group was a very helpful to me, because I knew very little about survey research at that point. I knew about market research studies, but only from what I learned in school, but I knew a lot about the analysis of the census, demographic data, and electoral data. We were able, by working together on real problems, Dick’s skills in the survey research area and my skills in the analysis of secondary data. As will be addressed in the next chapter, at that time, I did not know it, but it also prepared me for my appointment to be Census Bureau Director. Although I did not fully realize it at the time, I had entered into a decision-­ making domain that benefited from a more relevant and dynamic approach to addressing problems than I had been taught during my education. I also learned the importance of understanding the context of the problem I was asked to solve. The extent to which the problems I would be asked to address required new approaches to be set out by James Gunn following a presentation I made at the Ethics of Controversy: Politics and Protest symposium at the University of Kansas in 1968: We all know…the ultimate difficulty of transferring one thought to one other person. When one multiplies that by the number of persons with whom a candidate must communicate a thought, it becomes an incredibly difficult proposition. So that basically, it seems to me, a person like Mr. Barabba and his firm are trying to help someone communicate. And this we should all understand and appreciate because we do need to have candidates who communicate better and who get communicated with better, who understand more and who will act wisely on that understanding. Presumably if they communicate better, we will understand whether they are wise enough to act well upon what it is they understand.

As Professor Gunn suggested, candidates need to communicate with constituents and potential voters based on a deep understanding of those constituents. But if their information about their audience is limited or incomplete, effective communication suffers. The problem we faced was not the data itself, it was that the data was limited, due to outmoded assumptions and polling methods. Districts were changing quickly, becoming more diverse and heterogeneous; additionally, the current methods used to collect information about citizens had been developed at a time when districts were more homogenous with less diversity and variation among residents. In this changing environment, candidates now needed ways to communicate with multiple groups, sometimes in multiple ways, within the same district, and required tools that would apprise them of changes in their districts as they were occurring— not after the fact.

Practitioners and Academics: Benefits of a Shared Learning Experience in the Real…

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 ractitioners and Academics: Benefits of a Shared Learning P Experience in the Real World It would be relatively easy for me to claim that this book is about real-world experience and not about academic concepts and theories. But, in fact, many of the ideas set out here represent my own interpretations and applications of valuable theories developed by thoughtful academics who were as interested in seeing their ideas applied as they were in developing them. In some instances, the applications discussed will show a very close resemblance to the original theory. When I was only able to implement some elements of a theory, does not mean that I thought the other parts were wrong. Inevitably, what was implemented was generally governed by the context of the campaign’s or enterprise’s current situation and the willingness of its decision-makers to try something new. In 2007, MIT Professor Glen Urban and I discussed the value of this approach in a presentation entitled Stereotypes, Prototypes, and Keys to success in improving decision-making. Our presentation started by offering stereotypical perceptions of one another held by practitioners and academics. To reinforce the stereotype of academics held by practitioners, I said: The problem with the lack of implementation of marketing science to improve decision-­ making lies with the academics—they are irrelevant, interested in theory only; Willing to make any assumption, realistic or not, to allow their models to work. Goal is publication not improving practice, long-time horizon (assuming past is prologue), and to achieve tenure by specializing in a narrow niche.

Glen then countered with the stereotypical view of practitioners held by academics: I respectfully disagree. The lack of implementation is caused by business executives who do not use the results of research—particularly if it doesn’t fit their mental model of the world. Managers are interested in short-term results and deliverables, want immediate sales and profit results, seek proof that the methods proven will work, and want personal promotion and bonuses.

We then moved to a more balanced view of how Glen, as an academic, and I, as a practitioner, had developed our own cooperative efforts over a 25-year period. We tried to show the need for academics (theorists) and practitioners to work together so that if the theories they were working on were to bear fruit and if the practitioners benefited from the new ideas.1

1   Inform Society for Marketing Science, Practice Program, October 14-16,2007 Wharton Business School

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Electronic Hillsides When I started out helping candidates find more effective methods to communicate their messages in the 1960s, we developed tools that we believed would accomplish the task in the most positive and cost-effective way possible. If the opposition candidate was saying or doing something that was not true, the tools could be used to help determine what to say and how to deliver the counter-message in a persuasive and cost-effective manner. What we had in mind was reflected in one of our early brochures titled, New Hillsides: It is hardly surprising that democracy was born within a communication system that enabled the statesmen of ancient Athens to assemble the relevant body politic on one hillside so that great issues could be presented and decisions be made at a single sitting. In our own century, at a time when democracy faces its most rigorous test, it was at once our greatest challenge and our greatest opportunity to scientifically employ the far-reaching communicative innovations of the electronic age. Our team envisioned that once again it was possible to mass the entire body politic, now on “electronic hillsides,” so that great issues might be presented. Once again it was possible to achieve the proximity between statesman and citizen that has been missing for 2500 years.

 Glimpse of the Possibilities and a Hope for Future A Electronic Hillsides If the advent of mass media, particularly television, altered the traditional political campaigns of the last several decades, the introduction of the internet further increased a campaign’s ability to communicate on a more personal level. But as with any new medium, at that time, we knew its value would be determined by the manner to which it was used to achieve the proximity between statesman and citizen that has been missing since the Athenian statesmen were able to speak to a hillside of people.

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My First Government Job: Getting to the Census Bureau: An Important Personal Decision

In 1973, my name was placed on the list of possible candidates to be US Census Bureau Director. As part of the vetting process, after you go through all the interviews and are selected as the first choice, you receive a letter from the White House that had 19 questions you were required to answer. The last question was: Question 19. Please provide any other information which you regard as pertinent or which could be the source of embarrassment to you or to the President, if publicly known.

As it turned out, my letter was delivered in March of 1973, and it was signed by the President’s General Counsel John Dean. At the time the letter was received in our Los Angeles home, it was reported on the front page of the Los Angeles Times that John Dean was implicated in the Watergate scandal. My wife and I contemplated the irony of the situation and jokingly considered responding to the question regarding any embarrassing background experiences with the conditioning statement, “Compared to what?” With a less humorous attitude and even though I was 39 years old and had a lot of interesting “experiences,” I answered “none” to the question and, on a comparative basis to the person asking the question, I felt very confident in doing so.

The Confirmation Process The American Statistical Association, the American Psychological Society, the American Economic Association, and three or four other professional organizations—all with suspicions about Richard Nixon and much mis-information about me relative, my involvement in political campaigns, all decided that they should oppose my nomination.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 V. P. Barabba, A Systems Thinking Decision-Making Process, Management for Professionals, https://doi.org/10.1007/978-3-030-89960-8_4

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Prior to the appointment hearing, two of my past political experiences had a positive impact during the hearing. One of the experiences was the positive relationship that developed while conducting the campaign research for now Republican Senator Cliff Hansen of Wyoming. The chairman of the Census oversight committee was Senator Gale McGee, a Democrat also from Wyoming. In preparing for the hearing, I asked Senator Hansen if he would introduce me to Senator McGee which he quickly arranged. At the beginning of the meeting, I started to explain to Senator McGee the complexity of the confirmation and my qualifications, and I will never forget his comment. He said, “Mr. Barabba, you have to understand that your relationship with me peaked when you walked in the door with Senator Hansen. If Senator Hansen says you’re a good man, then you are a good man. Nothing else you can tell me is going to make it any better.” Being a little bit naive to the political process, I decided to pursue the subject further by attempting to point out how complex the confirmation process had become. He said, “Our relationship is a little bit lower than when you walked in the door. But you are going to learn a very important lesson here.” He then said, “You must remember that a United States Senator must have the last word. Whenever you appear at the hearing, please be benevolently brief.” And that was probably among some of the best advice I have ever received from anyone in government. Another previous political experience paid off when Senator Tower submitted a statement on my behalf, and I was reminded of our meeting the year before in the St. Anthony Hotel in San Antonio, when his staff had been reluctant to share some “uncomfortable” information they believed he would not want to hear. I know he is a man who, having gathered data and analyzed it, tells it to you the way it is, and not the way he thinks you would like to hear it.

At the hearing, Senator Proxmire was selected by those opposing my nomination as the primary witness. A very interesting thing happened when he arrived at the hearing. Senator Proxmire wanted to give his presentation before I gave my opening statement because he had to go to another hearing. Senator McGee, who was chairing the hearing, indicated that he appreciated how important it is where Senator Proxmire had to go but it would be inappropriate for him to speak at this time. He indicated that he knew Senator Proxmire would be opposing my nomination so it would be important for him to hear what I had to say first. Since I had time to prepare my opening statement, I was responsive to all the criticisms that had been published and I gave what I thought was an effective opening statement. As I was reading my testimony, since we were both sitting at the same table, I could see Senator Proxmire was scratching out sections of his testimony, because I had pretty much anticipated all of the claims he would make. Just as I finished, Senator Hansen walked into the hearing room. Senator McGee found time to acknowledge Senator Hansen, and then Senator Proxmire gave his testimony. Following his testimony, the rest of the hearing was relatively straightforward. There were two or three votes against the confirmation. Chairman McGee supported

An Introduction to a New Way of Thinking

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Picture 4.1 My Confirmation Hearing with Senator Proxmire who opposed my nomination

it, which always makes it a lot easier. On July 24, 1973, my nomination was confirmed by the U.S. Senate (Picture 4.1). Although my expression did not show it, Senators Hansen and McGee made my encounter with Senator Proxmire far less difficult than it could have been—but only after I took their advice.

An Introduction to a New Way of Thinking One of the first Census Bureau’s American Statistical Association’s Census Advisory Committee meetings occurred right after I was confirmed. Russell Ackoff was a member of the committee. I knew he was one of the pioneers in prospective planning practices. He also had very publicly opposed my nomination. During the meeting, he made a comment (it was not directed at me) that in his mind, the bureau had never demonstrated the ability to plan; they were primarily reactors to situations. Based on my initial discussions with some bureau personnel, I found his comment very interesting. Following the meeting, I asked him to stop by my office and I suggested that maybe he should help us learn how to plan. He took that well, but that was kind of a dilemma for him personally. As a member of the advisory committee, he couldn’t benefit from our hiring him. But took up our request for help seriously and said, “There is this fellow out at the University of Pittsburgh, Ian Mitroff, who studied with one of my original colleagues.” So, we sent the assistant chief of the Statistical Research Division on a mission to find out who this Mitroff was. He came back and said he sounded kind of interesting, so we then retained Ian to help us work on the Year 2000 Project. We picked the census in 2000, because one of the examples Russ gave us was the Paris 2000 project which he had worked on in 1970. An example he used to make his point was that if he had ever walked into a Parisian environment and said, “One of the reasons you are no longer the center of the universe is that your language gets in the way,” they would have thrown him out. But if you talked about the world in the year 2000—this is back in the late 1970s, looking 30 years ahead—it meant that people could at least

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think about it. The group could consider the many other things that could occur such as notions of a more universal language would be more tolerable, and you would not be attempting to change the French language overnight. That was the first of so many valuable pieces of advice Russ provided me over the years that followed. So, we said we should pick a date 20 years in advance, so it will be the 2000 census. Ian came in and helped us form the process, which was fundamentally trying to uncover the underlying assumptions of what it would take to improve how the Bureau developed its plans.

A Valuable Lesson Learned When we initiated the project, I took the position that the bureau’s executive staff would not participate, because I want to get younger people deeply involved in the project. I felt that if they want to be critical of the bureau, then they should be able to do that because they don’t have to worry about their boss being in the room. I thought that was pretty smart on my part. However, about 2 or 3  weeks into the activity, I began to get feedback that the participants were having a hard time getting out of their current view and were not as enthusiastic as I had anticipated. About that time, as part of the project, we retained the noted futurist Herman Kahn to provide his vision of what the future might be. He gave a very well thought-­ out presentation and after his discussion we took some time to review the Census 2000 project. Among other things, I mentioned that initial impression was that the participants were not fully engaged and seemed to be holding back. He asked whether I was actively participating in the project. I indicated that to ensure there would be minimum management influence that the executive team had chosen not actively participate. His response was quite direct. You are not the first executive who has made this mistake. Although your motivations were good, your employees have probably interpreted your actions to mean that this is not important enough for you and the executive team to participate.

Following our meeting, I met with some of the participants and they confirmed Kahn’s assessment of the problem. After a brief discussion, the executive team joined the program as participants and everyone appeared to be more energized. It was a lesson that was to prove beneficial in future phases of my career.

Addressing Racial Disparity During a review of past Census Bureau activities and issues, it became clear that the participation of minorities in the census would have to be significantly improved. To address this issue, I decided we needed to create minority advisory committees. My purpose in initiating the committee was to get them to appreciate the importance of being counted, and to go out to their communities and say, “It is important to be

Addressing Racial Disparity

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counted.” The only way that they would ever do that and be credible was to understand what the census did and what the value of an improved census would be to their community. So, it was very important that we would get a credible group. We started out with the Black1 community. Jack Ingram, a black member of the bureau, advised me, “This is going to be tough because a credible Black person would find it difficult to be a part of this and will not be not likely join.” In our discussion I said, on the other hand, if they are not ready to take some risk, then they are not going to be able to do anything for their population. Jack concurred that would be a good approach and said, “We should give it a try, but they won’t come unless you invite the right people.” When asked who would be right people, the name of Bobby Seale of the Black Panther Party was suggested. We contacted Seale and he replied “I will come, but you have to pay for my bodyguard,” so we had to figure a way of having Bobby Seale’s “special consultant” attend this meeting. With Seale as one of the participants we were able to bring together group of credible Black people together to meet with the Census Bureau and talk about the census and the Black population. The meeting did not start out well. Bobby Seale was not saying a word for most of the morning, but finally, he interjected, “I think we need to have a caucus.” I said, “What does that mean?” He said, “All you Census people have to get out of the room.” Then someone reminded me that this was a federally sponsored meeting, that you couldn’t have anything substantive done without somebody from the government there. I said, “We want to be cooperative, but I’ve got a little bit of a problem here.” He said, “Aren’t we allowed to have breaks?” and I said yes. He said, “Why don’t you guys break out there and we’ll break in here.” And I said, “That sounds reasonable.” They kept us cooling our heels for probably an hour and I don’t know exactly what happened in the room, but I did get some feedback on the discussions that took place. Fundamentally, as it was explained to me, Bobby Seale gave a fairly straightforward speech that said, “Either we are going to trust this guy or we’re not. Are the rewards worth the risk that we are going to take? We should build some checks on this guy, and if he delivers, then we stay with him. If he doesn’t, then we will embarrass him.” They apparently argued about that for some time, but his point of view prevailed. After their “break” was over, they invited us in and said, “We’ll work with you for now, but we are really going to watch you. The first signal will be who gets selected to be on this committee.2 We think all of us should be.” Of course, that would have been too many, and I said, “All of you will be considered, but I’m not sure I can get all of you on the committee. There may be some other people who weren’t able to come today, but we’ll do our best to give you a list that you will be proud to be associated with.” So, we went back to work, and we actually sent a list with Bobby Seale’s name on it to the Secretary of Commerce and got it approved. At the last minute, Bobby Seale called up and said, “I really appreciate what you have done but I have to go underground—for a variety of reasons. So, I can’t  The term African American was not used at that time. The term Black was generally used.  The demonstrated value of getting the right people on the Advisory Committee is discussed in Chap. 6 1 2

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4  My First Government Job: Getting to the Census Bureau: An Important Personal…

participate.” We also formed advisory committees of the Black, Asian, and Hispanic populations, which led to some very interesting and enlightening meetings. Some of which I will discuss later.

Another Interaction with Nelson Rockefeller After Richard Nixon resigned the presidency, his successor, Gerald Ford, appointed Nelson Rockefeller as Vice President. Among the people the Vice President brought with him to Washington was George Humphreys, with whom I had worked during Governor Rockefeller’s 1964 California Presidential Primary Campaign and Rockefeller’s re-election as New York Governor in 1970. In 1974, George called and invited me to his office in the Old Executive Office Building. After our usual pleasantries, he said Vice President Rockefeller had just attended a security briefing on a foreign country and had been impressed with the use of graphics. He told his staff he felt he now knew more about what was going on in that country than he did about what was going on in the United States. As Chairman of the Domestic Policy Committee, he wanted that situation corrected. I addressed Vice President Rockefeller’s request by contacting some officials at the Statistical Policy Office of the Office of Management and Budget, and they called a meeting of the statistical agencies. After much discussion, the Census Bureau was directed to develop a “Chart Book” that would illustrate the economic and social condition of the United States. Little did we know what we were getting into. First, a decision had to be made as to what information would be included and what would be left out. Then, arguments ensued about the form of the graphics (e.g., line trend charts, bar graphs or pie charts). Through trial and error, we developed a chartbook that eventually became good enough that we felt we could deliver to the Vice President. After he reviewed, he indicated he was very pleased. Somewhat later, Vice President Rockefeller used the chart book we had developed to illustrate a point to President Ford. Impressed, the president asked for his own copy. We made one. Then, both the president and the vice president referred to their chart books in a cabinet meeting. Several of the departments requested copies. Although the limited technology available at the time caused us some heartburn, we made those copies, too. When apprised of the increased circulation of the chart book, Vice President Rockefeller observed that the information should be more broadly distributed. That led to a directive to publish STATUS (short for Statistics U.S.), a Chart Book of Social and Economic Trends (Picture 4.2). On July 1, 1976, roughly 12 years after I had served as a field man for his presidential primary campaign in California, Vice President Rockefeller visited the Census Bureau to accept the first official copy of STATUS and serve as keynote speaker at a ceremony commemorating the 25th Anniversary of the Bureau’s installation of Univac I, the world’s first commercial electronic computer. Also in attendance (seen on the right side of the picture) were Dr. John W. Mauchly and J. Presper Eckert, inventors of Univac I.

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Picture 4.2  Vice President Rockefeller accepted the first official copy of STATUS . Also show are Dr. John W. Mauchly and J. Presper Eckert, inventors of Univac I

Among the artifacts on display was a memory-storage unit roughly 36 inches long and 8 inches in diameter. Vice President Rockefeller asked Mauchly and Eckert how big an equivalent storage device would be using current technology. The two inventors paused, then replied, “Mr. Vice President, it would be so small you could not see it.” It was fascinating to think about the improvement in just 25 years. Later that week, I received a letter from the Vice President that reflected his enthusiasm. In part the letter said: Thursday was particularly important to me because it marked the first issue of STATUS. This publication is magnificent—a tribute to the skill and dedication of you and your staff. The President and I are profoundly grateful for all you have done to make STATUS a reality. Thanks especially for the demonstration and sample of computer chart-drawing. It was worth the side-trip!

Vice President Rockefeller’s comments are best reflected in a picture taken during his earlier referenced visit to the Xynetics plotter we used to produce the charts for STATUS. That’s my wife, Sheryl, in the middle of the photo. To the right of her as shown in the picture are a fascinated Vice President and a happy Census Bureau Director (Picture 4.3).

Making Effective Use of Information In 1987, Robin Hogarth addressed the importance of the use of information by referring to what he called the second industrial revolution. To quote Hogarth, Indeed it has been said that we are now living in a second industrial revolution, but instead of steam, the new revolution is being propelled by information. And, as in the first r­ evolution, relative success will be determined by the ability to handle the propelling force. In the not

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4  My First Government Job: Getting to the Census Bureau: An Important Personal…

Picture 4.3  Showing Vice President Rockefeller the Xynetics plotter used to produce the charts for STATUS so distant past human survival and progress depended upon physical skills, e.g., for hunting, fighting, fishing and so on. There can be little doubt that the need today is for conceptual skills, that is, the ability to process information and make judgments.3

Out of Hogarth’s work comes the notion that the real problem is to design organizational information systems that compensate for or can be adapted to the fallibilities of human decision-making. I agree with Hogarth about this, particularly as it relates to the distortions that occur because of the fallibility in dealing with the collection, processing, and use of information relative to existing predispositions in the decision-making process. Hogarth reminds us that the effort required to develop information makes sense only if that information is accessible, relevant to the ultimate users, and is used. This point was more recently made by David Brooks where he stated: People only change after they’ve felt understood. The really good confidants—the people we go to for wisdom—are more like story editors than sages. They take in your story, accept it, but prod you to reconsider it so you can change your relationship to your past and future. They ask you to clarify what it is you really want, or what baggage you left out of your clean tale. They ask you to probe for the deep problem that underlies the convenient surface problem you’ve come to them with.4

These observations make it clear that to be successful in providing the right information requires that information providers acquaint themselves with the needs and practices of the users. In this case, the users are government policymakers,  Hogarth, Robin M. (1987). Judgement and Choice: The Psychology of Decision (second ed). Chichester UK: John Wiley & Sons. Page 3. 4  David Brooks, New York Times, April 16, 2021, Section A, Page 23 . 3

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business organizations, research institutes, public interest groups and interested citizens, and voters. It clear that the ability to improve the use of information is that we should first really get to know our users: not only who they are, but what it is they need to know and in what form they prefer to receive it. In essence, we need to be equally concerned that we have procedures that ensure we collect the “right data” as well as procedures that ensure we collect and present the “data right:” data that leads to information; that leads to knowledge; that leads to wisdom; that leads to meaningful policy development and decision-making. I first ran across this concept while studying the seminal work of Everett Rogers when, as a student, I was trying to understand why some innovations were adopted faster than others. Rogers defined an innovation as: An innovation is an idea perceived as new by an individual. It matters little, so far as human behavior is concerned, whether or not an idea is 'objectively' new as measure by the amount of time elapsed since its first use or discovery. It is the newness of the idea to the individual that determines his reaction to it.5

The important point is that innovation need not be truly new in the sense that it has never existed before in order for it to be perceived as new. In 1976, a little over 10 years after initially reading his works, I had the opportunity to provide Rogers the opportunity to test out his concepts on what I believed, according to his definition, was a real innovation—the Geographic Base File/Dual Independent Map Encoding System (better known, at the time, as GBF/DIME and the precursor of today’s TIGER geographic base system). When I called Rogers and introduced myself and asked if he would be willing to assist us, he paused for a moment and said, “You’re from the Government, and you also read my book! On that basis alone I’ll find a way to work with you.” We arranged a meeting, and I told him I’d have someone pick him up at the airport. He said, “You can tell the person picking me up that I wear a bandana and the rest of the clothes that go with it. Do you still want me to come?” I told him I could hardly wait to meet him. Let me quickly point out that this was not an academic exercise. Then, as now, a comprehensive and accurate geographic information system was at the heart of the conduct of a modern-day census. Also, it was the belief, as it is now, of the Bureau of the Census that the system should be designed to support public and private organizations at the local and national level as well as the conduct of the census. The reason the Census Bureau took this position was straightforward—the more value the public and private agencies at the local and national level saw in the GBF/DIME system, the more they would support it through the allocation of resources to keep it up to date. Therefore, we decided we needed to understand why the system was, or was not, being used. And, in those cases where it had not been adopted, we wanted to find out why it was, or was not, being fully utilized. 5  Rogers, Everett, The Diffusion of Innovations, New  York: The Free press of Glencoe,1962. Page 13.

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4  My First Government Job: Getting to the Census Bureau: An Important Personal…

With the support of the National Science Foundation, Rogers set out to find out how to understand what facilitated and what inhibited the diffusion of the GBF/ DIME system in state and local organizations. In the context of this study, the term diffusion referred to the spread of an innovation from one person to another, from one agency to another, or from one department in an agency to another. Basic to Rogers‘concept of adoption was a model that recognized four phases— knowledge, persuasion, decision, and confirmation. The knowledge phase is where the individual is exposed to the innovation's existence and gains some understanding of how it functions. The critical point here is that the innovation doesn't get any further unless the individual defines it as it relates to him or her. The innovation will get no further if the individual does not become adequately informed so that they can be persuaded. During the persuasion phase, the individual forms a favorable or unfavorable opinion about the innovation. He or she becomes more psychologically involved as their knowledge of the innovation increases. A key point is that both knowledge and persuasion can move only as fast and only as effectively as the channels of communication allow. And, as the risk of adopting the innovation grows more apparent as the individual gains knowledge, they may seek reinforcement of their own attitude from their peers. During the third phase, the decision stage, the individual undertakes activities that will ultimately lead to adoption—or rejection—of the innovation. The decision phase calls for a real commitment, and innovations that lend themselves to trial or test generally are adopted more readily. In the confirmation phase, the individual seeks reinforcement for the decision he or she has made by further direct application of the innovation. Because of the increasing complexity of some GISs, initial positive decisions to adopt might be reconsidered.

Rogers‘study was conducted in two parts. In the first phase of the study, Rogers carried out a general analysis based on a mail survey of the 257 agencies that had, at that time, been designated by the Census Bureau as coordinators for the GBF/ DIME system for their geographic areas. The first portion of the study identified that the Census Bureau was by far the most important source of information about this innovation for the 257 regional agencies that were surveyed. Additionally, it has found that there was very little communication between the agencies. The second part included a “tracer” study of the innovation process for GBF/ DIME in eight selected regions. These more qualitative data indicated that a wide range of applications of the innovation had taken place across a wide range of community functions. The tracer studies uncovered an understanding of the innovation process that was quite different from previous studies that had used cross-sectional, correlational analyses of survey data. In Rogers‘mind, a new model of the innovation process emerged. The model consisted of five stages in the innovation process: agenda-setting, matching, redefining, structuring, and interconnecting. As these decisions are made, the innovation is gradually specified; that is, its ambiguities are removed and its realm of possibilities is restricted. In this framework, an innovation is seen as a specific version of a general idea. It is these general ideas that are diffused, and

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each organization must define for itself exactly what the innovation is to mean in its own context.

Rogers and his colleagues came upon this finding in part because bureau had chosen to write very generalizable software package that could be run on many different types of hardware which, in essence, traded-off speed and efficiency for ease of use. So for those communities who adopted the process, it was easy to get started, but they soon found the software to be relatively slow and inefficient for their specific computers which led them to make their own improvements. In doing so, the application became, in their minds, much less the Federal Government’s software application and more their own. In later papers, Rogers and his colleagues identified their findings from this experience as reinvention, which they described as: Reinvention is the degree to which an innovation is changed by the adopter in the process of adoption and implementation after its original development. Reinvention may involve both the innovation as a tool and in its use. Thus, the same technological innovation may be put to a different use than originally intended; alternatively, a different innovation may be used to solve the same problem. In addition, the intended or potential consequences of an innovation may be changed through reinvention.

In later papers, Rogers and his colleagues further described the concept by pointing out, The concept of reinvention also recognizes that an innovation is often really a bundle of components; it is possible to adopt some components and change or reject others. Typically, diffusion studies assume the existence of technical experts who ultimately make the decision to adopt or reject a monolithic, prepackaged innovation. In fact, there may be a fair amount of groping for a solution by concerned individuals, leading to alterations of and later correction to, the original invention.

These observations by Rogers and his team had a significant impact on my thinking that has contributed in many ways to the manner in which I was able to more effectively collect information and ensure that it was used effectively.

Time to Move On… In 1976, President Elect James Earl Carter was about to assume office next year as our new president and would likely appoint a Democrat as Census Director, it became time to move on. At that time, I accepted the offer to become an employee of the Xerox Corporation.

5

My First Job in the Private Sector – Xerox

On May 25, 1978, 22 months after becoming Xerox’s Manager of Market Research for copiers and duplicators, I flew on the company plane from Rochester, NY, where the company’s copier division was headquartered to the corporate headquarters in Stamford, Connecticut, to make a presentation to the Xerox CEO and his leadership team. The presentation was based on a recently completed enterprise survey that found a big problem in the company’s forward-planning process. The survey showed that the number of copies for which Xerox copiers could be used was approximately 35% lower than the number used in the current long-range plan. In other words, the model had produced an estimate that because of its positive effect on future sales was readily accepted by management. But as the results of the survey which I was about to show, it was not realistic. When I finished the presentation, participants made several comments about changes that would have to be made to the long-range plan to reflect the new information. No one suggested that the numbers I presented might be wrong. The CEO, Peter McColough, thanked me for providing valuable information, and I was excused. I went to Westchester Airport and waited in the company hangar for Don Lennox to arrive for the flight back to Rochester. Don was the senior executive in charge of copier manufacturing and had stayed until the end of the meeting. As we flew home, Don told me he thought the presentation had gone well. I said I was pleased with the acceptance of what was obviously bad news but was a little surprised to have been asked so few questions. Don smiled and said, “That was because your group did a good job of preparing them, through a detailed review of the study with their staffs, who then brought forward to them the very bad news. Given those experiences they were prepared to discuss what to do about it rather than argue about whether the information was right or wrong.” He said it was high time that Xerox made some adjustment to the existing forecasting process. Several years earlier, based on the same overly optimistic long-­ range plan, he had been instructed to increase Xerox’s copier manufacturing base in © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 V. P. Barabba, A Systems Thinking Decision-Making Process, Management for Professionals, https://doi.org/10.1007/978-3-030-89960-8_5

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5  My First Job in the Private Sector – Xerox

Rochester. Now he was forced to convert one of his two new factories into a warehouse to store some of the equipment built in the other factory that had not been sold.

 ow We Got Senior Leadership to Focus on What to Do H with the Information Instead of Arguing Over the Accuracy of Something They Did Not Want to Hear When I arrived at Xerox in October 1976, the company held the number 1 position in the copier market and was one of the fastest-growing companies in the United States. I was hired because some of the management team sensed that the competition was getting better (existing customers were replacing large Xerox copiers with multiple, smaller copiers made in Japan), and certain patents had expired. Additionally, rumors were circulating that both IBM and Kodak were developing large copiers. Management needed to better understand the market. During my interview, I asked why management had waited so long. I was informed that Xerox felt it had a good sense of the market; all their copiers were leased, with pricing tied to the number of copies made, so they could just look at their records to see what was happening. Upon arriving in Rochester, I was pleased to find out that the market research staff were very competent and were excited that someone had been hired to make sure the information they were collecting would actually be used.

 ake Sure Those Who Will Allocate Resources Are Involved M in the Research Project’s Design Based on my experience working with them at the Census Bureau, I asked Ian Mitroff and his University of Pittsburgh colleague Ralph Kilmann, to help me organize an approach to address the complexity of this problem. We also included Jerry Zaltman who, like Ian Mitroff and Ralph Kilmann, have throughout my career continued to challenge me to extend my thinking. After reviewing existing studies and conversing with senior managers, we concluded that it would be necessary to design a knowledge-use system. We began on two tracks: • We created the Research Utilization Group to find out what decision-makers really wanted to know and in what form they wanted the information. • We designed a retrieval system that would give users easy access to the information they required from the same database as their colleagues in different functions. After several months, the group concluded that the changing market required a comprehensive study, and quickly. Considerable effort went into this study because it was not only complex, it was the first of its kind, and was likely to have important

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implications. We wanted to be sure that we could explain the results fully and that senior management would accept them. With that in mind, we did the following: • Determined what information we needed by involving relevant managers, with the understanding that senior management would review and approve the work. • Hired a research firm to help us design the survey in a rigorous manner. The firm, Westat, included several distinguished former Census Bureau employees and developed a geographic-based area probability sample. The basic design involved identifying a representative sample of physical areas and then canvassing those areas to develop a list of businesses. From that list, we used a random sampling process to select businesses to interview. Because so little information existed when we began, the study turned out to be one of those very accurate, not so fast, very expensive, and extremely useful projects. Before the results became available, the Research Utilization Group, using existing Xerox administrative records, prepared a report on the amount of Xerox copiers and reprographic activity which would be compared to the results of the survey. It was already clear that many assumptions about the size of the total market in the forecasting process had been overstated—in some segments by a factor of two. There was concern that the dramatic differences between the study results and the existing planning assumptions would lead to a confrontation over which was correct. Some members of the Research Utilization Group toyed with adjusting our findings. That would demonstrate that Xerox had a problem, but would hide the full extent of the problem. The notion was to get within the comfort zone of management, but, after some soul searching, that idea was discarded. Fortunately, because Xerox leased and did not sell its products, we had records showing not only the number of Xerox copiers in the market but also the number of copies each copier was making. The Research Utilization Group compared those records to the results from the Sample Survey and found them to be within a few percentage points of each other, adding credence to the remainder of the survey’s measurements. Armed with this evidence, the Research Utilization Group arranged meetings with management of the different organizations to provide preliminary results and allow sufficient time for review and questions. The information was formatted and presented carefully, to ensure the results would not be misunderstood or rejected. By the time I made the presentation to senior management, at the corporate headquarters, mentioned at the beginning of this chapter, each of their direct reports to senior managers had prepared them with background on the study and its possible implications. Management was almost wholly in agreement with the results. Senior managers were not only prepared to hear the facts but also had sufficient understanding to direct the product and market planning functions to alter existing plans.

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5  My First Job in the Private Sector – Xerox

An Introduction to Sophisticated (and Useful) Market Models One of the things that attracted me to Xerox was the company’s research activities in California at the Palo Alto Research Center (PARC). I met with a group who were developing advanced market research, analytics, and forecasting techniques. I wanted to see how the process they were developing could integrate the capabilities of the market research, modeling, and planning communities. As soon as I joined Xerox, I visited PARC when the group was working on a forecasting model for the Xerox 9700—a computer printer that eliminated the need to strike a typing font against a ribbon to make a mark. The new printer used technology found in the recently introduced Xerox 9200 copier. Aside from the technology, I was most impressed that the group had arranged the project so that their team was joined by the group planning the 9700 program and by the corporate market research group. I was told the initial meetings had all the hallmarks of the conflicts that arise when silos representing different functions try to do something together. Fortunately, the team found ways to address their differences. By the time they finished finding out what worked and what did not, the resulting forecasting model was owned by all participants. I was also impressed with their ability to build a separate model of the operations of each of the 22 companies that served as a sample of all potential customers. They accomplished this by visiting each company, determining their copy volume, they then asked company operating managers to check the model output against actual results. Once they confirmed the reliability of their models, they could forecast not only acceptance of the new, non-impact machine at the industry level but also how well it would be received by the different types of companies for which they had specific measurements. This information would prove beneficial to the sales division as they developed plans for selling across the industry. A later study found that they were right about Xerox placements of a new-to-the-market product to within 5%. During that initial visit, I asked if I could have a copy (Xerox Copy that is) of a presentation made by Dick Smallwood, a PARC market analyst. He said yes, hit a key on his computer, and then walked me into another room to retrieve the copy from a modified Xerox Copier. The ability to print a document from a computer is commonplace today, but back in 1976. I was impressed. The relationship with Dick Smallwood continued throughout the rest of my learning journey, as I continued to apply what I learned from Dick and his colleagues at Xerox PARC.

6

My Second Job in Government: Back to the Bureau

In 1979, it was pretty clear that my successor at the bureau, Manny Plotkin, was having some difficulty with the Administration and the Congress. At that point, I received a call from Pat Cadell who I knew from his political research activities. He was now serving as an advisor to President Carter. He started the conversation by saying “Vince, we are going to have to find another Census Director,” and I responded, “I will be happy to help you.” He then said, “We were thinking that you might want to consider it.” I explained to him that it would be very difficult to do, because I couldn’t possibly figure out how to leave Xerox without taking a real loss, not only monetarily but from a career point of view. In response, Pat said, “If we were able to handle that, would you consider it?” I said, “Well, I can’t imagine that it could be handled, but you are welcome to try.” I was not aware that C. Peter McColough, who was the CEO of Xerox, was a close personal friend of Vice-President Walter Mondale, when the vice-president called him. C.  Peter McColough met with David Kearns, who was the Xerox President, and said “We ought to find a way of working this out.” It was a lot more complex than either of them thought, because once you take a government job, you cannot have a relationship with an existing entity. To address the issue, Xerox management said they would give considerable interest to my return, and they would try to take into consideration what I had learned while I was in government with no promises, because making a promise would have been a violation of the law. So, in essence, that is how it all happened. Given my past experience at the bureau, it opened up the door for Pat Cadell to even consider bringing a Republican into a Democrat Administration. They knew they not only needed somebody who knew the bureau; but more importantly, they needed somebody whom the bureau knew and who would not have to come up to speed on the problems. At that point, there weren’t too many people around that met those criteria.

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6  My Second Job in Government: Back to the Bureau

Another Confirmation Hearing One of the most interesting parts of coming back to the Census Bureau was the Senate Confirmation hearing on my nomination. Senator John Glenn was the new chairman of the Senate Committee overseeing the nomination. Somebody wrote me a note after the hearing saying mine was the first nomination hearing where the discussion was about how we were going to conduct the census. Nothing to do with the person who has been nominated. The whole dialogue was on what the next steps would be. It was an interesting experience, in that I found out it was a lot easier coming in as a nominee of the president of the party that also controls the senate.

 he Benefits of Bobby Seale’s Advice to Make Sure Credible T People Were Selected to Our Advisory Committees Abdulalim Abdullah Shabazz was one of the first members of the Black Advisory Committee. He was a distinguished mathematician who, although subjected to discrimination since his birth in Bessemer, Alabama, went on to achieve advanced mathematical degrees from MIT and Cornell University. He had been the Director of Education and later Director of Adult Education for the Nation of Islam. When he became a member of the advisory committee, he was living in Detroit, where he was Imam of the Detroit Mosque. He also served as the Imam of the Islamic community for the State of Michigan and the 13 Midwest states. Dr. Shabazz participated actively on the advisory committee, but I remember him most for how intently he listened to both sides of the discussion. When he spoke, there was no question he had thought through every word. I would appreciate how well he was listening when I returned to the Census Bureau. He called one day and said he had arranged for the Census Bureau Midwest regional Field manager Stan Moore and I to visit with Wallace D. Muhammad, Chief Minister of the Black Separatist Nation of Islam at the Muslim Mosque on Stoney Island on Chicago’s south side. When Stan and I arrived, we were escorted into the Mosque, removed our shoes, and entered a small office. Within minutes, Minister Muhammad arrived. I had planned to present him the reasoning behind our request for the Muslim community to participate in the 1980 Census reversing their decision not to participate as they did in 1970. Before I could start, Minister Muhammad began the discussion by pointing out that he had received a very positive report on our procedures and our intent to protect respondent privacy from Dr. Shabazz and he had directed his leadership team to communicate to the membership that the Muslim Community should participate. He pointed out they would use the Muslim school system as the primary source of communication. The whole meeting took about five minutes, and when Minister Muhammad got up from behind his desk, Stan and I got up and left the Mosque. It was clear to us that Dr. Shabazz had not only listened well but had taken full measure of what was said and promised by the Census Bureau and conveyed his reasoned point of view to the Muslim leadership.

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Bobby Seale was right when he said it would be very important that we get people on the committee with “credible reputations.” At that time, he must have been thinking of people like Dr. Abdulalim Abdullah Shabazz.

A Little Help from a Junior High School Friend We had also arranged for a Spanish Origin Advisory Committee. One of their biggest concerns was that in previous Censuses, the bureau did not have a Spanish-­ language questionnaire, available to anyone who requested one. Based on what we considered a realistic concern for 1980 we retained Leobardo Estrada, a very highly respected demographer and urban planner at UCLA, to help us understand issues in creating a census form that would help the Hispanic Population in filling out the form. Leo had done an incredible job of looking into the many ways different words were spelled by the many populations (Puerto Rican, Cuban, Mexican, etc.). He came up with a draft of the questionnaire. As expected, each of the different groups raised objections. After much discussion, several members of the advisory group said it was impossible to come up with a single version of the Hispanic questionnaire, so we would have to come up with multiple versions. I knew my Census Bureau colleagues would push back, and hard. I also felt that adding to the complexity of counting the Hispanic population might lead to its being undercounted. But, as I started to respond, a member of the committee interrupted me and said I could not truly understand the issue because I’d never been a minority. The room became silent. Tensions were so high and I expected a squabble to break out any second. Although the man had a point, it occurred to me that many of my colleagues at the bureau were themselves from minority groups and that, even among those who were not, it was an overstatement that we could not appreciate the problem of being a minority. I looked around as I struggled to make this point, and I noticed Herman Sillas at the end of the table. Herman was appointed to the advisory committee based on his distinguished career as a lawyer, as the U.S. Attorney for the Eastern District of the State of California and as the Director of the California Department of Motor Vehicles. In addition to all those important experiences, Herman and I jointly went to Edison Junior High School in Los Angeles. In addition to being close friends it also happened that Herman and I were on the same school softball team—the Blue Devils, of which I was one of the few non-Hispanic players. I asked Herman to apprise the group of my “minority” status on our softball team. He did, with a hint of a smile, and enough of the tension dissipated that I could make my point: Although I would never equate being the only Anglo on a Hispanic softball team with being part of a minority group in the United States, we at the Census Bureau have an appreciation of the problems minorities faced.” I also pointed out, “…that anyone should be free to discuss our competency, but should be careful to question our motives.

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6  My Second Job in Government: Back to the Bureau

We then had a fairly constructive discussion of the limitations of using multiple census forms, and the group eventually settled on a single form. We eventually were able to also establish additional advisory committees for Asian and Pacific Island People.

Anticipating and Preparing for Legal arguments The legal problems facing the Census Bureau would prove to be complex and difficult. Although the official resident population count of 226,504,825 was transmitted to the president on December 31, 1980, and used for the allocation of Congressional Seats of each state, it took more than seven years before the 1980 Census count was finally clear of all legal challenges.

The Importance of Being Neither Arbitrary nor Capricious Because of some issues that had cropped up during the 1970 Census, we knew that some groups might claim an undercount of the population in 1980 and might challenge the Census count and request it be adjusted to account for people missed during the enumeration process. As an example, one 1970 case challenged the use of the mail to conduct the enumeration in metropolitan areas because it decreased the count of poor minority groups. Others claimed that the Census form was difficult for people of Hispanic origin to fill out and would undercount them. The court ruling drew on a principle in administrative law. They decided that the bureau, based on conditions at the time, had not acted in either an arbitrary or capricious manner and, therefore, upheld the results. This earlier position by the court resulted in the approach we used to develop the plan for the release of the 1980 Census results, it was clear that the courts would expect the bureau to be more cognizant of the changes taking place in society and to demonstrate that all of our actions were neither arbitrary nor capricious. But we would need to answer several important questions. Given the importance and complexity of the problem, I asked Ian Mitroff and Dick Mason to lead us through a Strategic Assumption Surfacing and Testing (SAST) process similar to the one they conducted at Xerox that helped us understand how many copiers were actually in existence and how many copies were truly being made. The SAST process would, I felt, make maximum use of the richness of the multiple perspectives that were held by the many people and organizations that would be affected by the outcome of the 1980 Census. In this case, the process focused on how to address the undercount issue in a way that would be accepted by those who had a stake in it. The first workshop was conducted in September 1979. The process required that we develop different teams to represent the different perspectives of individuals within and outside the Census Bureau. Each team was asked to defend its position but, to ensure that everyone felt comfortable in raising critical assumptions without

The Importance of Being Neither Arbitrary nor Capricious

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jeopardizing their careers, everyone was expected to role play. They were told to take as strong a position as they could in support of their team, whether or not they believed in that position. To encourage the role-playing, each team was asked to give itself a name that emphasized how different it was from the others. The teams described themselves like this: Convention A “The Headcounter from Missouri”: Under this plan, only the headcount itself would be used, without any adjustment other than imputation to a specific household based on explicit knowledge gained from an independent source (neighbors, lists, and so on), or in the case of administrative losses and equipment; malfunction, imputation based on supporting census records (such as address registers). The crucial issue for this convention was related to the credibility of the Census Bureau: an adjustment could set an unfortunate precedent. Convention B: “The Triple B Non-adjustment Company”: Under this plan, the headcount would be adjusted using all the imputation procedures used in the 1970 Census. This would involve not only imputations to a specific household based on knowledge gained from the census about that specific household but also adjustments to a particular class of households from information collected about that class from the census. This group felt that it was important that the latest state-of-the-art tools be used to assure credibility of the bureau and the census count. Convention C: “The Equalizers” Under this plan, census data would be adjusted for undercount by age, race (black/nonblack), and sex. Adjustments would be made utilizing a simple synthetic statistical approach. This group felt that the disparity of the undercount was important and should be corrected for,and that estimates of the relative undercount were available for age, race, and sex. Convention D: “All or Nothing at All” Under this plan, the headcount and other crucial variables would be modified by experts using statistical projections in light of all pertinent information. These other crucial variables include age, sex, ethnicity, relationships, income, race, and language. This group felt that if any adjustment was done to the actual counts, it should correct the undercount as completely as possible. An implicit assumption of this plan is that the bureau is the body best qualified to develop such an adjustment procedure and to perform this adjustment.

The following are limited examples of assumptions surfaced by a given team, with a comment on how the other teams thought it was most damaging to them. A portion of the assumptions is presented here to provide an indication of the type of assumptions that were surfaced. Convention A: ‘The Headcounters from Missouri’ The group assumed the Courts would support it as the least arbitrary and capricious. If true, this would be most damaging to Convention C and D; why would you go through such complex solutions only to have the courts say you were being either arbitrary or capricious in your changes? Convention B: ‘Triple B Non-adjustment Company’ This group assumed that, even if the more complex and complete adjustments could be made, they couldn’t occur until the end of 1983, well after the apportionment of the members of congress and most state redistricting would have taken place. If this was true, it would be most damaging to Convention D; why would you go through such complex solutions only to have all the decisions for which you made your changes already be decided prior to your ability to deliver the adjusted information? Convention C: ‘The Equalizers’

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6  My Second Job in Government: Back to the Bureau This group assumed that timely adjusted counts are wanted by major stakeholders for many purposes beyond redistricting. If true, this would be most damaging to Convention B because there were other important decisions to be made when the improved statistics were made available. Under this plan, Census data would be adjusted for undercount by age, race (black/non-­ black), and sex. Adjustments would be made utilizing a simple synthetic approach. The synthetic approach would take the percentage of African Americanswho are uncounted in all of the US population as a whole and distribute that number proportionately to the population of each of the states. Thus, each state would get its proportionate share of the uncounted or missed African Americans in the US population as a whole. Although the easiest to apply, one would have to assume that the undercount of African Americans was equally distributed across each state for this approach to be accepted. This approach also implies the preparation and existence of two complete count tabulations, one adjusted and one unadjusted. This group felt that the disparity of the undercount was important and should be corrected for and that estimates of the relative undercount were available for age, race, and sex. This group argued that, because no other characteristics have known amounts of undercount, adjustments should not be done on the basis of any other characteristics. Convention D: ‘All or Nothing at All’ Under this plan, the headcount and other crucial variables would be modified using as much pertinent information as possible. These crucial variables include age, sex, ethnicity, relationships, income, race, and language. There is the assumption in this instance that evaluations, results, and reliable estimates were available for the uncounted population at the state level. This group argued that, if any adjustment was done to the actual counts, it should correct the undercount as completely as possible. An implicit assumption was that the Census Bureau was the body best qualified to develop such an adjustment procedure and to perform this adjustment. To get at the underlying assumptions that would have to be true for their convention to prevail, the teams were directed to identify key stakeholders who could affect or be affected by that team’s convention.

More than 61 assumptions were surfaced. After the teams listed their assumptions, each team then identified the assumptions from the other teams that would be most damaging to their perspective On December 17, 1980, following an intensive review of all the assumptions, the Census Bureau placed a final notice in the Federal Register, evaluating each of our critical assumptions and explaining our decision, which was not to adjust. We wrote: Based on preliminary data for areas containing almost all of the nation’s population, we believe that the 1980 Census count will fall within the range of 225.7 to 226.0 million. The bureau’s preferred demographic analysis estimate of the ‘true’ population (exclusive of illegal residents) is near 226 million. Taken together, these figures indicate a tiny, or nonexistent measured undercount.

We acknowledged that we likely had undercounted legal residents, to a degree that was roughly offset by the fact that we included undocumented residents, but said we had “no sound statistical basis” for trying to adjust the numbers.

Sometimes It Takes a Long Time for the ‘Truth’ to Prevail

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 hanks to Justice Thurgood Marshall, the Count Was Finally T Delivered… and on Time! On December 31, 1980, Commerce Secretary Philip Klutznick and I forwarded the final Census count of 226,504,825 persons to President Jimmy Carter. The count was delivered following a decision the evening before by Supreme Court Justice Thurgood Marshall that stayed the ruling from Judge Henry Werker of New York City that had prevented the bureau from submitting the official count.

Sometimes It Takes a Long Time for the ‘Truth’ to Prevail It was not until December 8, 1987, more than seven years after the start of the 1980 Census (and after more than 50 lawsuits were filed) that United States District Judge John E. Sprizzo decided that “arbitrary and capricious” action was the appropriate standard for deciding whether the Census Bureau decision against adjusting the 1980 Census should be reversed. Judge Sprizzo went on to say: Indeed, the extensive testimony at trial overwhelmingly demonstrates that the determination as to whether the use of the currently available adjustment techniques will provide a more or less reliable estimate of the population than the unadjusted census is an extraordinarily technical one, about which reasonable statisticians and demographers can and do disagree. Certainly, the bureau, which has the necessary experience, expertise, and resources to collect and analyze the complex statistical data, is better equipped than the courts to decide whether, in view of this dispute among the experts, the census should be adjusted.

In a footnote to his position, the judge commented; The court rejects plaintiffs’ [City of New York] argument that the court should not defer to the bureau’s determination because the bureau’s decision not to adjust allegedly ‘rested on non-technical, political grounds.’ That claim is simply not supported by the evidence. The court finds as a matter of fact that while non-technical consideration played a minor role in the bureau’s decision not to adjust, the bureaus’ decision was primarily based on its determination that it was not feasible to develop and implement an adjustment methodology which would be more accurate than the census itself, a determination supported and confirmed by the evidence at trial.

7

My Second Job in the Private Sector: Getting to Kodak on My Way to General Motors

On February 26, 2002, in Syracuse, New York, my daughter gave birth to our grand-­ daughter Megan Elizabeth Buff. That evening I used an electronic camera belonging to a friend of my daughter to take the “official” picture and then used the Internet to send this digital picture to many of our relatives and friends and to a list of my daughter’s fellow teachers at the Skaneateles, New  York elementary school. The next morning, about eight hours after the birth, all the teachers and my daughter’s 4th grade class were able to see several full-color pictures of Megan Elizabeth Buff. This was a great application of electronic imaging technology and the Internet. The next day, after having tempered the excitement of becoming a grandfather, I realized that I had used an electronic camera, and that triggered a memory of having run into an electronic camera twenty years before.

 n Example That Shows the Real Value of Knowledge Creation A Is in Its Use and Not Its Collection Kodak, when I joined in 1981, was a successful company that was starting to feel the pressure from its competition, specifically Fuji Photo. Nearly all of its senior executives had come up through the company ranks. Each of them having a long history of working in a successful enterprise, which led to an attitude bias that what worked in the past would certainly be basis of what would work in the future. This more inward-looking environment required a lot of preparation by Phil Samper, who I met when I was living in Rochester while working at the Xerox Corporation to get the management to agree to hire me. Although he had 17 years of experience running Kodak companies abroad, he was somewhat newcomer to Kodak Corporate top management in Rochester and he had to do a lot of convincing of Kodak’s CEO, Walt Fallon, to gain approval to bring on board this outsider. An outsider who was not only being brought in to improve Kodak’s understanding of the market but also

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 V. P. Barabba, A Systems Thinking Decision-Making Process, Management for Professionals, https://doi.org/10.1007/978-3-030-89960-8_7

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would bring with him the decision process tools for analysis and market intelligence that he had developed. In particular, people wondered why I was requesting that the function I was to lead be named Market Intelligence and not Market Research. Based on my 14 years of experience in both the public and private sectors, I responded that my initial review of market research at Kodak had shown it to historically been “ad hoc… mostly reacting to management requests to deal with specific market problems, some of which were not well understood or defined prior to the expenditure of funds for data collection.” By renaming the group, I was underscoring that I wanted to “broaden the traditional concept of market research” so that requests for market information would be “explicitly stated” and would “become an integral part of the planning and decision-making process.”

Getting Behind the Silver Curtain The heart of Kodak’s technological advantage was a group of chemists and scientists who were extremely knowledgeable about what could and could not be done with silver halide chemistry, which was the key element in film’s ability to capture light. The people who worked on silver halide technology at Kodak did so under the strictest of confidentiality and privacy rules. Access to them was limited to “an as-­ needed basis, to be approved by senior management.” This intense focus on keeping their knowledge within Kodak led some to refer to their work as “behind the silver curtain.” During one of our studies, we asked customers to compare and express their preference for sets of color prints that were developed using Kodak technology with prints developed using Fuji technology. Although a majority preferred Kodak to Fuji, the percentage that preferred Fuji exceeded its current market share. The chemists and other scientists behind the silver curtain rejected the implication that the results suggested Fuji could gain market share. They cited technical evidence that Kodak prints came closer to “true color” than Fuji’s did and said we probably did not provide customers with properly developed prints. We agreed to replicate the study and asked them to produce the prints, as well as participate in the study’s implementation and analysis. The results of the new study replicated the findings of the first. This time, when the scientists couldn’t simply deny the results, one said he knew how to slightly modify Kodak’s existing film so that Kodak’s level of preference would match its market share. Importantly, because the scientists had been involved in our study and had seen for themselves what customers wanted, the change was made without going through the very expensive and time-consuming process of first testing a new film across Kodak global markets. The modified film, which used a new emulsion technology, was a breakthrough created by a combination of creativity and market knowledge. By getting behind the Silver Curtain, we had solved a problem before it became one.

The Genesis of Barabba’s Law: “Never Say, the Model Says”

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The Appropriate Use of Mathematically Based Models After I had been at Kodak for a while and our group’s efforts were becoming accepted, I started to be invited to product development meetings. At the time, Kodak had access to some very talented mathematical model builders who worked in product development and manufacturing. These model builders were able to offer very valuable insights into alternative strategies in the development and manufacture of photographic film and paper emulsions that could be produced and used in different conditions around the world. The positive experience with these models earned them a high degree of credibility with senior management. When I arrived, it became clear that the credibility of these models was being transferred to models being developed for more complex and uncertain business issues and decisions. My concern was initially related to how the models, developed for complex manufacturing issues, were being oversold to our management for use in equally complex but significantly different business issues. At that time, in an effort to get access to scarce resources, some of our model builders were over-promising, either by errors of commission by overstating the model’s capabilities or by errors of omission by not revealing the model’s limitations. Too often I was hearing, in response to whether these models could address some of the most complex and difficult of questions, “Of course, the model could answer that question—and it could do so at the push of a button!”

The Genesis of Barabba’s Law: “Never Say, the Model Says” During a meeting discussing a proposal for developing a new product, the proponent of an idea, when asked why the company should accept his idea, simply responded, “The model says it will be successful.” Knowing something about the limitations of the model he was referring to, I commented something to the effect, “Never say, the model says…tell us what you believe, based on your understanding of the model’s output— and limitations.” In 1987, after I had left Kodak, Herb Blitzer one of the very talented people that came to the Market Intelligence group from the operations research group, referred to this comment when he opened his commentary on a paper discussing a new mathematical model as follows: Before getting into a commentary on the substance of the paper, I feel compelled to comment on one specific aspect. Consider Barabba’s Law: Never say the model says. Any hint of such behavior could lead to the complete discrediting of the whole effort. Since no model can accurately capture the complexity of a real situation, anyone with an interest in the outcome of an analysis can always find at least one issue to stall even the best analytical work. Managers have a natural need to understand the logic of proposed actions, and logic is what they should be given… This paper frequently states ‘the model says…’1  Herb Blitzer, “Commentary”, Marketing Science Vol. 6 No. 2 Spring 1987

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7  My Second Job in the Private Sector: Getting to Kodak on My Way to General Motors

 onducting a Strategic Assessment of Possible Changes C to Customer Behavior and Market Conditions As a part of my Kodak “education,” I was sent to visit one of Kodak’s largest retail photo finishing customers. On the last day of my visit, I had dinner with the owners. The founder requested that I ask Kodak’s CEO the following question: “What is the time period over which silver halide technology will retain its superiority over digital technologies in capturing images and making prints?” When I returned from the trip, a meeting was held to discuss the question. By this time, I knew enough about the business to realize this was one of those questions for which the right answer starts out with “It depends.” It depends on who is taking the picture. Do they want a high-quality print? Would they be satisfied looking at an image on a television screen? Do they want a permanent record of the image? How quickly do they want to see the image? Et cetera. At the meeting, the CEO Walt Fallon said something to the effect: “Well, since we brought you in because of your reputation as an expert in information and decision-­making, how would you suggest we go about answering this question from this very important customer?” Fortunately, having a clear recollection of the advantages of the Strategic Assumption Surfacing and Testing (SAST) process we used in determining whether or not to adjust the 1980 Census, as was described in Chapter 6, I had prepared a description of how the process might work. I informed the group that the quality of the effort would reflect the extent to which senior executives participated in the process.2

 ow Strongly Held Positions Can Affect Response to a Survey’s H Findings The process of sharing the studies finding began by gathering input from people throughout the company who had diverse backgrounds in imaging technologies— including members of the research and technical functions who were familiar with the capabilities of digital and silver halide technologies. Using the SAST process, teams were formed to take strong positions on whether silver halide or digital electronics would dominate capturing images by 1990. Each team debated their positions with the purpose of uncovering and assessing the most important assumptions that would have to be true for a particular point of view to be accepted. Out of this debate grew a list of critical assumptions upon which Kodak would develop its longer term strategy. To ensure that assumptions would stand up to internal and external review, not only the information that supported each assumption but also the rebuttal for each assumption was made available. 2  I gratefully acknowledge permission received from Eastman Kodak Company to discuss the results of the approach used to reveal underlying assumptions found in this section.

An Unexpected Request Led to My Joining General Motors

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With this insight as background, several key members of Kodak’s management team, with a strong predisposition of the value of Silver Halide, based on a lengthy and profitable history of using silver halide technology, determined that traditional still photography would continue to grow and remain the predominant form of amateur picture-taking throughout the 1980s. Furthermore, it would be at least into the next decade before an acceptable all-electronic still camera would become available to the market. The process, influenced by a deep belief in the value of usefulness of silver halide, took the position that although an electronic camera would happen, such a camera faced significant and formidable obstacles before it would appeal to a mass market. It also took the position that technical capability does not necessarily mean mass-market practicability. All of this led to a 1981 management document, which made the following claim: 1. Technological innovation will enhance the growth of personal picture-taking, and today’s photographic industry participants [Kodak and its business partners using silver-halide technology] will share in that growth in the foreseeable future… 2. The foreseeable future was defined as a period ending in 1990. In essence, the study we conducted alerted the management team that change in the capturing of images through digital technologies was coming and that they had a decade to prepare for the change that would require a significantly different approach to capturing and printing images As it turned out, as the study determined, silver-halide-based photography held its own throughout most of the 1980s, and digital cameras and display technologies did not come into their full force until the 1990s. I had left Kodak to work for General Motors in 1985. How Kodak could have avoided the missed opportunity of digital photography by having access to an Inquiry Center is more fully discussed in Chap. 14.

An Unexpected Request Led to My Joining General Motors In 1984, I was attending the major photographic conference in Cologne Germany. Just before leaving, I received a call from Kodak’s CEO Walt Fallon’s secretary indicating that as soon as I returned to Rochester Mr. Fallon, who had returned from a General Motors Board Meeting, wanted to meet with me. When I asked what the topic might be, she indicated she did not know, but that he made it very clear he wanted to see me as soon as I returned. Upon my return, I showed up at his office and he informed me that at a recent General Motors Board of Director’s meeting, one of the GM senior executives made the comment that you could not use market research to determine what customers wanted in the automotive business because customers did not know what was available. Walt said he raised an objection to that observation and when the GM executive pushed back, Walt told him that his director of market intelligence knew how to

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7  My Second Job in the Private Sector: Getting to Kodak on My Way to General Motors

deal with that issue. Before I could thank him for his confidence in me, he then said that based on his comments, GM wanted me to go to Detroit and discuss with them how GM could accomplish the task. I suggested to Walt that although I was reasonably well experienced in solving similar problems for the photographic business, I had no experience with the auto industry. Walt informed me that he had made it clear that I would show up and give a presentation. Given the inevitability of going to Detroit, I indicated to Walt that I could talk about the principles of how to accomplish the task, but would have to use a photographic example. At that point, I suggested to Walt that I give a presentation similar to one I had just made to the Kodak Board of Directors. Walt said that would be difficult to accomplish given the sensitivity of the subject. I suggested to Walt that I assumed he drew his conclusion of what we could do based on how favorably the Kodak Board of Directors reacted to the presentation. Interestingly, the Kodak Board included John Smale the Chairman of P&G who was also on the GM Board. Walt finally agreed and I went to Detroit for the presentation. In the audience was (in the right-hand corner of the picture) Howard Kehrl who was on the GM Board when Walt discussed the use of market research. Jack Smith (at the left corner of the back of the table with his hand on his chin) was also there when he was then president of GM Europe and Head of International Operations and would eventually become chairman and CEO of GM. Little did I know how important this presentation was and that I would soon be meeting many of these individuals under quite different circumstances on my journey to improved decision-making. And as I will point on in the next chapter, I think my presentation gave Jack Smith an indication of the value of using consumer information (Picture 7.1).

Picture 7.1  GM Executives in attendance at my discussion on the use of market research

8

My Final Job in the Private Sector: How Earlier Involvement in the GM Decision-­Making Process Led to More Effective Use of Market Research

Traveling 70 Miles from Flint, Michigan, to Detroit, in 24 Years In 1990, I was in the boardroom of the historic former GM Building on Grand Boulevard in Detroit as a GM employee with my former partner, Richard Wirthlin, by then a noted political and strategic researcher who had helped guide Ronald Reagan’s successful Presidential elections. We were there to present the results of a study, which I had asked Richard to conduct, to GM’s Market Planning Council about a very complex problem. For years, GM’s leadership role in the auto industry had been slipping, yet management had denied that this trend would persist. Finally emerging from denial, some members of the management team wanted to understand what had happened and what it would take to bring GM back from the brink of financial disaster. I considered the irony of having met Don Riegle at the Durant Hotel (named after GM’s founder) and the political activity in which we had participated 24 years earlier, in Flint, Michigan, then the home of GM’s Buick City. As described more fully in Chap. 2, Richard and I had helped 28-year-old Don Riegle upset an incumbent Democratic Congressman and began a nearly 20-year career in the US House and Senate. As pointed out in Chap. 3, in 1966 the incumbent congressman, confident because of past successes, hadn’t worried much about the young Republican with his Harvard Business School background, thinking Riegle was not a good fit for the blue-collar district where the election was being held. Yet auto workers’ social values were changing, and with our help, Riegle figured out how to tailor his positions on issues to take advantage of those changes and win the election. Now, GM was in a fix like the one that Riegle’s opponent had created for himself. GM had counted too much on past successes and hadn’t noticed how much the world in which it operated was changing. Before the meeting in the GM boardroom began, I leaned over to Richard and commented that although it had taken 24 years, we had come a long way from the back room of the political campaign in Flint, just 70 miles away, to the board room of the General Motors Corporation. We both smiled. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 V. P. Barabba, A Systems Thinking Decision-Making Process, Management for Professionals, https://doi.org/10.1007/978-3-030-89960-8_8

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8  My Final Job in the Private Sector: How Earlier Involvement in the GM…

How I Got from Kodak to GM In late 1984, I was contacted by a recruiting firm. They said a large manufacturing company, whose name they could not reveal, was looking for someone to head up their market research group. I responded that I was very happy with my job at Kodak and had no interest in leaving. The calls continued, and I repeated my intention to stay at Kodak. Later, the recruiter contacted me again and stated that the firm, General Motors, had allowed them to reveal its name and that GM was very interested in having me visit Detroit for an interview. Knowing something about how GM was organized, I asked which division. The recruiter replied, “Not a division— the Corporation.” I assumed this request grew out of the presentation that Walt Fallon arranged for me to give at General Motors and agreed to the interview. A meeting was arranged with Bob O’Connell, Vice President of World-Wide Product and Market Planning. I quickly called Bob Breedon, with whom I had worked and become a good friend on the Riegle campaign when Breedon was general manager of GM’s Buick City manufacturing plant in Flint. I asked Bob what he knew about the person who would be interviewing me. Bob informed me that O’Connell came out of the finance organization and had a good relationship with GM’s CEO Roger Smith. He suggested that I prepare for an intense interrogation; O’Connell was a stickler for details and was a hard negotiator. With that background, I flew to Detroit to spend a day at General Motors. The day started with a meeting with Bob O’Connell, who provided a list of people I would be meeting with and said we would reconvene at the end of the day. He also indicated that depending on how the interviews went, we would discuss possible next steps. I participated in a series of interviews, and, based on my experience at Xerox and Kodak, answered most of the questions asked. I also questioned the interviewers about how market information was being used at GM and if they could provide examples of products that were introduced that benefited from the use of market information. At the end of the day, I met again with Bob O’Connell, who started our conversation by asking what it would take to get me to leave Kodak and join GM. Having prepared for a tough discussion about why GM should hire me, I asked what had occurred that caused him to skip the negotiations and move directly to a job offer. He smiled and indicated that they had interviewed many qualified people for this assignment, but the feedback he received from my interviewers was that I spent as much time interviewing them as they did interviewing me. They were impressed because I had asked questions they had not thought of. Bob was most interested in my desire to determine whether I would have access to GM’s equivalent of the Kodak employees behind the “Silver Curtain.” Most of the negotiation was focused on positioning the job to ensure I would have access to the right people so I could ensure that they could use market information to perform their assignments. During the compensation discussion, I pointed out that as a Kodak executive I had had access to free film and processing. Bob smiled and indicated that he could

An Indication of Predisposed Positions That Would Have to Be Addressed

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not provide free film and processing, but asked, “Would access to a new car and free fuel serve as a reasonable substitute?” After a brief period of negotiation and discussions at Kodak, I accepted GM’s offer and began work in October of 1985. I’ve been driving GM cars ever since.

Getting Started and Uncovering Some Startling History When I joined GM, my impression, which was shared by many people I talked to, was that it was primarily a manufacturing-based company with an incredibly powerful position in the marketplace. The power of the organization structure developed by Alfred Sloan, the dominance of its brands, and its financial resources had contributed to its being listed among the top of the Fortune 100 companies. However, doubts were being raised over the future of the enterprise.

 n Indication of Predisposed Positions That Would Have A to Be Addressed As I was settling in my new job, a GM Group Vice President brought to my attention two articles which not only questioned the value of the marketing concept but attempted to identify this approach as the cause of poor economic performance. The articles tended to attack “market/customer” driven business strategies and promoted a “product /technology” driven strategy. Since I was somewhat involved in the market/customer side of the equation, the Group Vice President asked me to comment on the articles. At that time, my response was swift and defensive. In part, I advised the Group Vice President that The problem with this type of article is that it fans the flames in the hearts of the “inventors” and “entrepreneurs” to just get on with producing new products without considering their impact on the eventual profits of the company. This leads to “either/or” arguments, rather than how do we integrate both points of view.

Subsequent conversation with colleagues in and out of GM started some fundamental rethinking on my part. I read the articles again and started recalling books, articles, and speeches that dealt with the subject. It became obvious that the issue was not as clear as the claims of the two articles in question or the position of my swift and defensive response, actually implied. As a person who at that time had spent 25 years as part of a business practice that thought it was solving problems by improving decisions makers understanding of their markets, I began asking myself a different set of questions: What if the authors of the articles were right? Why were those that we trying to help so critical of our efforts? Once I started looking deeper into the problem from different perspectives, I gained considerable insight into the limitations of my own activities. Surprisingly,

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a solution to making sure the information acquired was actually used was addressed in this portion of a poem by Edna St. Vincent Malloy written in 1934 about the time I was born. Upon this gifted age, in its dark hour, Rains from the Sky a meteoric shower of facts…they lie unquestioned, uncombined. Wisdom enough to leech us of our ill is daily spun, but there exists no loom to weave it into fabric.

Thinking About a GM Decision Loom As I was settling into my new job, several of my new colleagues suggested I review the archived reports in the market research library. I wandered through the stacks and, on the very top shelf, almost out of reach, I found a series of bound annual reports from when the department was under the direction of Henry Grady “Buck” Weaver. One covered 1934, again the year of my birth, so I decided to thumb through it before moving on to the more current documents. Much to my surprise, it quickly became clear that Buck Weaver had taken a similar approach that I had just been hired to implement 50  years later. It is humbling to discover that principles you thought you helped develop were, in fact, well-understood and used by your predecessors at the time of your birth. The discovery also made me wonder what caused GM to discontinue the path-breaking process that Weaver developed and what that decision said about the prospects for my plans. A pioneer in market research and market-based decision-making, Weaver wrote: Successful manufacturing rests upon a knowledge of natural laws, on the one hand, and a knowledge of human needs, on the other hand.

I found out later, during discussions with Peter Drucker, that he had worked closely with Weaver while conducting the research on GM that led to the publication of Drucker’s book, Concept of the Corporation. Drucker said Weaver’s contributions to GM went beyond market research. He recalled that Alfred Sloan, the early chairman and president of GM, had a very small group of what he referred to as “Brains,” and Weaver was a member. He was such an influential person in his day, Time magazine even placed him on its cover in 1938 (Fig. 8.1).1 Buck Weaver was an early master at finding out what people were thinking. He addressed the issue of those making decisions about new vehicles that customers may know what their needs are but they often define those needs in terms of existing products, processes, markets, technology, and price. One of Weaver’s techniques for helping people imagine future vehicles is particularly interesting. He would provide a simple worksheet and ask individuals to sketch suggestions for design changes (Fig. 8.2).  Time Magazine, November, 1938

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Fig. 8.1  Buck Weaver on the Cover of Time Magazine

Fig. 8.2  Worksheet to sketch suggestions for design changes

He was generally looking for ideas to enhance or change the current design, but what he got often went far beyond that (Fig. 8.3). This customer sketch shows a request for pneumatic bumper, an item that later technology developments allowed GM to introduce in 1973 designed to absorb low-­ speed impact, over 40 years after this person imagined it (Fig. 8.4).

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Fig. 8.3  Customer’s ideas shown in worksheet

Fig. 8.4  Customer sketch showing items that were not yet available

Another customer sketch shows a request for glass sunroof, and sunroofs weren’t even available until the late 1960s.

 eaver’s 1932 Customers Drawing and the Mid-1950s W Volkswagen Transporter And finally, my favorite, the first drawing we’ve found of the concept of the minivan, back in 1932. We do not know whether the person who drew this was telling us “Build this car.” It is just as possible he was simply describing his needs through a picture. First, better vision. See how the driver’s position is far forward? Second, a rear engine, because in those days, the engine produced a great deal of heat and odor. And finally, “French doors,” which would improve entry and access (Fig. 8.5). GM did not translate this customer’s drawings into a Volkswagen-type vehicle because of a concern that the minivan would impact the sales of a very successful station wagon program. GM did, however, introduce a minivan 1985 with many improvements on existing minivans based on customer feedback.

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Fig. 8.5  Customer sketch showing concept of the minivan

Weaver had a chart in his office that showed all the features GM added to vehicles, as well as things that were changed or improved, based on customer feedback. Things like air conditioning, automatic transmissions, longer bumpers, rubber pads on pedals, greater emphasis on safety. In the years from 1932 to 1937, Weaver identified 170 such improvements, all in the name of serving the customer in ways in which the customer wanted to be served.

The Need to Regain Weaver’s Lost Legacy How did Weaver’s path-breaking approach fall into such obscurity? How did his incredible contribution to market research and GM end up hidden away on the top shelf of a small market research library in the same building where he made his valuable contributions? And why was GM attempting to discover what it apparently already knew, 50 years later? Market factors tell much of the story. For the duration of World War II, GM stopped producing personal vehicles. In the period following the war, the American economy and the movement to the suburbs led to unprecedented demand for new vehicles. GM and other manufacturers could sell everything they made. This practice, coupled with beliefs in their success, led to GM’s attitude that “we know what the consumer wants, better than the consumer knows—and we have the sales records to prove it!” This, of course, was the same attitude that existed at Xerox and Kodak. However, as the decades progressed, supply began to exceed demand in the American automobile market. As new competitors from overseas entered the

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market, many with more fuel-efficient vehicles, customers suddenly had more options, and GM suffered. To get back on the road to recovery, GM once again had to return to basics—as Weaver put it, “finding out what people like, doing more of it; finding out what people don’t like, doing less of it.” After I retired from GM, I wrote an article on Weaver and his legacy.2

 eeting Harvey Bell: Getting Behind GM’s Version of Kodak’s M Silver Curtain Based on my experience with the silver halide chemists at Kodak, I appreciated the importance of allowing people who design and make things to listen directly to customers, as a supplement to the information gathered by market research personnel. This approach proved to be important in 1988, as we were conducting a study aimed at understanding customer requirements for the Pontiac Firebird and Chevrolet Camaro. An engineer working on the program named Harvey Bell asked to observe our interviews, so we took him along. Among other things, we were recording specific answers to questions regarding “stopping distance”—that is, how long it takes the car to stop after the driver steps on the brakes when going 60 mph. During dinner after the first day of interviews, Harvey asked me what I had learned from the customers. I indicated that a certain stopping distance seemed more acceptable than others. Harvey then politely informed me that what he heard was that customers of the Firebird and Camaro were more interested in their ability to control the vehicle while braking, which was critical to overall satisfaction and confidence with the vehicle. Customers didn’t just want to stop quickly; they wanted to feel that the car was under their control while doing so. With Harvey’s insight, we began to understand that the traditional parameter of stopping distance was an insufficient measure for the potential buyers of these vehicles. Employing his knowledge of hydraulics and braking systems, Harvey took the customer’s need to feel calm and assured and translated it into appropriate design requirements. In addition, his team created new measures for braking performance that were incorporated into subsequent GM brake testing and evaluation. The value of his efforts was publicly recognized when the newly designed braking systems were introduced. Following a test drive, a reviewer for the Pennsylvania Times Leader wrote, “The brakes, which provide terrific road feel and stopped the Z28 like an egg hitting the sidewalk, were helpful in New York’s rush hour, but I appreciated them the most when a deer decided to say hello while I was on the interstate heading toward Virginia.” The writer closed his story by saying, “See what

2  “Henry Grady Weaver Hero, Thinker, Innovator, Practitioner or… Your Car as You Would Build It … Trust Me!” 11th Conference on Historical Analysis & Research in Marketing (CHARM) Michigan State University, May 15, 2003

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happens when a car company listens to the people who buy their products.”3 Buck Weaver would have been proud. The value of engaging engineers as team members was clear. The problem was that although GM engineers were not short on interest they were short on time. Over time, based on the obvious benefits, the engineers demonstrated a willingness to find the time.

 ecision-Makers and Those Responsible for Innovation D and Design Must Engage in Active Listening Because engineers are like anyone else with a strong point of view, they also have built-in biases and are likely to hear what they want to hear. That is why you don’t want people involved in operations conducting their own market research. On the other hand, you don’t want market researchers gathering information that is not relevant to the people (like designers and engineers) who seek to incorporate customer input with their deep functional knowledge, as they seek to satisfy the customer. You must find a balance between the insights of the operational groups and the market research organization. When market research is driven by functional interests, it is more likely to focus on confirming existing assumptions based on the long-held biases of those in that function. In other words, they want to demonstrate their expertise and show that they’re right. However, listening like that limits the chances of hearing something valuable outside the existing perspective. That is where active listening comes in. Both focused listening (not providing feedback, and primarily recording the respondent’s input) and active listening (reflecting, engaging, and probing) are valuable, but neither is sufficient on its own. By listening in both ways, decision-makers find out if their strongly held biases can be supported, keep up with what is happening in their area of specialization, and gather new information that might reinforce, contradict, or challenge what they think they know.

 aying the Groundwork: Changing How GM Developed L and Introduced New Products In 1992, GM reported huge losses, and there was little evidence that enough was being done to reverse the problems facing the enterprise. The Board of Directors replaced the chairman and CEO, along with several other senior executives. Jack Smith, who was in the room when I gave my presentation to GM at Walt Fallon’s request and who had been running GM’s international operations, became CEO, and John Smale, former chairman and CEO of Procter & Gamble and who I had met when he was a former member of the Kodak Board of Directors, became the non-­ executive chairman of the board. The two men knew they had to take immediate,  Wasser, Scott, “Simply Z Best,” Pennsylvania Times Leader, April 26, 1993

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decisive action to change direction or risk going out of business. As Jack said, “Our problems had been building for decades, not overnight, as the North American market fragmented, and more and more competitors entered the arena. And we were still blind to the significance of the change.” Jack now had a straightforward task: He had to stop the bleeding before he could even begin to think about positioning the company to grow once again. He took four main steps: 1. United the functionally structured organization. 2. Changed product development, segmenting the market based on a clearer definition of customers’ preferences. 3. Moved to common processes. 4. Integrated the enterprise globally. This also led to changes in my world, because GM had to change the way decisions were made across the organization. We had to respond better to the voice of the market, integrate the deep knowledge in the functional groups (such as design and engineering), and reduce cycle time if we wanted to reverse the worrisome plunge in the stock price. Now that he was CEO, Smith announced the formation of the Strategic Decision Group to, as he said, “Avoid the tyranny of ‘OR’ and seek the opportunity of ‘AND’.” Jack appointed me as director of this new group and I was instructed to develop research, devoid of GM bias. Research that would improve management’s understanding of how the market was developing and to help GM engineers and designers look for and bring forward innovative ideas. To change how GM went about developing its vehicle programs, we identified the following five specific actions for our group: 1. Better align strategic and operational business plans. 2. Improve management’s understanding of complexity, uncertainty, and opportunity in the market. 3. Determine the required resources for knowledge development and clarify roles and responsibilities. 4. Effectively capture ideas for innovative products and services. 5. Develop organizational learning as a system. Jack asked what I needed to ensure the success of the new group. My answer, based on the early advice I received as Census Director from the futurist Herman Kahn, as well as my experiences at Xerox and Kodak was: “Those who will implement the Strategy must be involved in developing the strategy.” I took this position because, since joining GM in 1985, I had seen too many talented strategy teams work hard to develop good plans, and then present them to a management team that was experienced and comfortable in the old ways of doing things. The result was that not many of the strategic plans were implemented.

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This new assignment provided the opportunity to participate in the use of the information I was collecting, which gave me additional insight into what I could do to improve the collection and use of information for decision-making. I was also able to capture what was learned so we could apply that learning to other relevant decisions.

The First Strategic Initiative: Vehicle Development To improve our market position, we realized that we would have to take on the difficult task of creating the right range of vehicles to meet the needs of each of our customers, at the right time, at the right price. After reviewing the limitations of past processes in addressing cross-functional and cross-marketing brand issues, it became clear that we needed a new way of looking at the problem and its potential solutions. In Russ Ackoff’s terms, we had a very “messy” problem, the solution to which would require significant improvements in getting agreement across the enterprise about what we knew and did not know. Given that it was clear that GM would have to transform its abundant and scattered mental models and functional resources into a unified, coherent course of action, our group worked with very talented people from the Strategic Decision Group (SDG), who were experts in decision analysis. After better understanding the process and taking into consideration how GM wanted to operate, we “reinvented” the SDG process for GM.

The Dialogue Decision Process We ended up calling it the Dialogue Decision Process (DDP). The DDP involved a series of structured dialogues between two groups. First, those responsible for reaching a decision, and second, those who would be implementing the associated course of action. It also dealt explicitly with the uncertainty and ambiguity that go together with decision-making. I made sure that our group would, in part, deal with the uncertainty to ensure we were using relevant information and were keeping track of the underlying assumptions supporting the decision being made (Fig. 8.6). In the DDP process, the first of the two groups was the set of decision-makers that constituted the Decision Review Board. GM top leadership selected these senior executives. What they had in common was their authority to allocate resources: people, capital, materials, time, and equipment. In this case, the Decision Review Board was made up of executives representing finance, engineering, manufacturing, design, and marketing. To make sure each of them believed their functional perspectives would be fairly considered in the day-to-day activities, we asked them to identify the personnel they wanted to appoint to the Cross-Functional Decision Team that would be handling the development and analysis of the specific alternatives.

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Fig. 8.6  Illustration of dialogue decision process

Once appointed to the decision team, the functional managers and specialists were asked to apply their functional expertise to ensure the problem we were working on was comprehensively framed, in turn ensuring that all the functional perspectives would be considered in the identification of alternatives and guarantee a fair analysis of those alternatives that were selected. Although each member of the second group embodied the essence of what their functions knew, they were encouraged to work together and share their knowledge to create an improved level of mutual understanding. This initial effort led to a strategic decision that GM would benefit most by improving its line-up of mid-sized vehicles which were positioned between small and large luxury vehicles. As we began to implement that strategy, it soon became clear that we would need to improve the way in which GM targeted its customers relative to its multiple brands in that part of the market. The initial review made it clear that the number of vehicles that GM was producing for the four vehicle divisions that sold cars in this segment had led to a significant overlap of GM vehicles that were competing with each other rather than with the competition. The extent of this internal competition will be addressed later in this chapter.

Present Findings in the Form Preferred by Decision-Makers One of the things I learned right away from my discussions with designers at that time was that you cannot get a true sense of what a vehicle will look like when completed by looking at a two-dimensional drawing; you need to see it in three dimensions. This realization initially led designers to create wooden three-­ dimensional models, then sculpted clay models and eventually dense Styrofoam

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Fig. 8.7  Employees reviewing prototype of physical display of the market segmentation scheme

models carved by computer-directed cutting wheels. The experience of looking at three-dimensional models led many GM executives to feel comfortable with such visual models. In an attempt to capitalize on this successful method for modeling new ideas, Mike DiGiovanni, director of our Market Research group, built a physical model of the newly developed needs-based segmentation scheme using large Lego-type blocks (Fig. 8.7). Here’s a picture of GM employees engaged in a discussion using a prototype of the eventual larger and colorful physical display of the segmentation scheme. The final segmentation model was shown in two rows and within each of the needs segments we displayed the age distribution using three colors to describe the baby boom generation and the generations that preceded and followed them. The first row displayed the segments and GM’s distribution across the segments as they were at that time. The second row displayed our estimate of how the segments would look in 10 years. This 3D model allowed the executives to walk into and around the segments (just as they would when reviewing a new vehicle design) so they could see how GM’s strength in the older pre-boomer generation could become a problem when that generation of buyers was displaced by the baby boomers (who were less likely to choose GM) and the generation following them.

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Single and Double-Loop Learning I served on all the Dialogue Decision Process Review Boards to observe and learn how to improve the process and make sure the content that was needed for future activities would be available, while also making sure that what we learned would be available to the next activity. Without knowing it at the time, we were practicing what the business theorist and leader in organizational learning, Chris Argyris called “double-loop learning” (which was mentioned earlier). To Argyris, conducting one DDP well would be equivalent to “single-loop learning.” The DDP would help us detect and correct errors in thinking and practices, then make changes and implement the program in question in an improved manner. In essence, while single-loop learning is very important, it doesn’t help transfer learning across the organization. Only those involved in the original problem gain anything. And so, we also need double-loop learning. In addition to detecting and correcting errors, double-loop learning encourages the organization to actively question and modify existing values, norms, procedures, policies, and objectives. The Kodak discussion in Chap. 13 will demonstrate how double loop learning could have been implemented. The midsize vehicle project was designed to accomplish two important objectives: 1. To assure that the vehicles GM develops satisfy the specific needs of our customers. 2. To reduce our vehicle overlap by having each vehicle target a different need segment. The goal was to use one vehicle platform to produce cars for multiple brands: Pontiac Grand Prix, Buick Century and Regal, Oldsmobile Intrigue, and Chevrolet Impala and Monte Carlo. Given the success and what we had already learned from using the Dialogue Decision Process, we decided to apply both the process and prior findings to this program as well. These cars replaced vehicles that were not as well received by targeted customers, who often purchased the Ford Taurus, Toyota Camry, and Honda Accord. Each of the vehicles in the MS2000 program was to be more highly targeted at a group of customers who had expressed their needs in such a manner as to separate them from other customers in the midsize market. The vehicles introduced in 1997–1999 were targeted to needs-based categories of customers as follows: Segment Mid 1—Family Affordability: Buick Century—consumers looking for value in a practical vehicle. Open, roomy interior with seating for six and conservative, classic styling. Segment Mid 2—Basic Transportation: Chevrolet Malibu—which was to be introduced later and off a different platform. Segment Mid 3—Family Fun: (1) Buick Regal—consumers looking for a roomy car that didn’t compromise on appearance, with the security of a more performance-oriented sedan. It had to provide the power to pass and merge with confidence. (2) Oldsmobile Intrigue—consumers wanting elegant, sophisticated styling (not too sporty) with com-

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mensurate performance (premium powertrain). They were willing to pay for the right luxury options. Segment Mid 4—Upscale sports: Pontiac Grand Prix—consumers who were car enthusiasts in the mid-size market who wanted sporty styling, power, and the feel of the road (a driver-oriented car). They recognized the need for a sedan (easier entry for the occasional extra passenger) but preferred a coupe.

Each of the vehicle development teams immersed themselves in the information GM had collected on each of the segments and went into the field to get a better feel for how existing GM and competitive vehicles were meeting the needs expressed by the consumers for whom they were designing their vehicles. The intense involvement of the vehicle teams in marketplace settings with targeted customers also revealed several unarticulated needs that were heard by the vehicle engineers. During other on-site discussions with customers, the Grand Prix team was able to determine what the customers in their segment meant by the term performance. Within their segment, it was primarily about how the vehicle felt when starting out, or, as the engineers described it, “launch feel.” The engineers rode with customers to understand the feel that customers wanted, instead of trying to attempt to translate customers’ words into performance characteristics.

What the Midsized Car Program Did for GM In 1990, prior to the implementation of MS2000, GM had a 31.3% share of the market for mid-size cars. That was the good news. The bad news was that the costs required for the 20 different models to achieve that share made the entire segment unprofitable. GM was violating an important automotive industry rule of thumb. That rule says that a company’s percentage share of a market segment should at least equal the percentage of the product entries the company has in that segment. But, in 1990, GM’s 20 mid-size cars represented 42% of the mid-size cars on sale in the United States, far exceeding its 31.3% share of sales. In essence, GM was not making effective use of capital and human resources, because it was developing GM cars that competed with other GM cars rather than just competitor vehicles. By 2001, because of changes relating to the MS2000 program, GM reduced its mid-size product entries from 20 to 7, resulting in GM having just 21.1% of the cars on sale in the US market. As expected, GM’s market share dropped—from 31.3% to 23.4%. But GM’s ratio of vehicle entries to market share effectiveness had improved dramatically from 0.75 (31.3% market share divided by 42% of entries) to 1.1 (23.4% market share divided by 21.1% of entries). The change to highly differentiated cars targeted at specific customer needs not only helped GM operate more efficiently but also had a negative impact on competitors that pursued a “one car fits all” approach, as the following chart shows (Fig. 8.8). Tradeoffs needed to be made here. No single division wanted to cede that much of their market share, but it was so important at the time to cut costs that the focus on efficiency was appropriate, and cutting to seven mid-sized models produced other important benefits. The models, by focusing on customer needs, were more

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Fig. 8.8 Market-share-­ effectiveness ratios (market share/share of entries)

attractive than their predecessors and helped produce major improvements in productivity and quality. I am not sharing these stories to demonstrate that understanding customer segmentation or preferences leads to improved sales and greater profitability. Instead, they demonstrate that the value of the information was in its use. Information about customer needs, combined with creative minds, helped decision-makers determine what a future product and service portfolio should be across a full range of possible operating environments.

Double Loop Learning The 2002 Truck Program Right after completing the design for the car portfolio, GM set out to revamp its full-size pickup truck program. The truck portfolio issues were far less complex than the car portfolio issues, with two truck-selling divisions (Chevrolet and GMC) rather than six car-selling divisions. The biggest problem, as pointed out earlier, was that GM was in the midst of digging itself out of financial disaster. The GM trucks, which had not been refreshed since their introduction in 1987, were targeted for a 1998 rollout. Given that GM did not have enough capital for all the investments that would be required throughout the rest of the decade, a difficult decision had been made. Instead of introducing a new truck, we would refresh (re-skin) the aging CK truck platform. Such updates are not uncommon, but, in this case, the Chevy Silverado and the GMC Sierra were already 6 years old, and the competition, including Ford, Dodge, Nissan, and Toyota were all scheduled to launch brand-new full-size trucks of their own in the coming years. While the constrained capital-based decision to not build an all-new truck satisfied the requirement to reducing capital spending, a review of the decision would soon make it clear that the proposed solution would create many more problems in the long run, namely, a dramatic reduction in GM’s truck market share and an even greater loss in long-term revenue and profits. The truck management team agreed to use the same decision process used successfully in the development of the car product portfolio because it allowed them to test the mainstream view—all that was needed was a re-skin—against other alternatives that some members of the team were less comfortable considering. The group decided to consider five alternatives:

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Option 1: Do nothing (simply modify the truck in accordance with future emissions standards). Option 2: Update the front-end sheet metal. Option 3: Re-skin the entire truck (the “momentum” strategy). Option 4: Create an all-new truck. Option 5: Establish a two-truck strategy, as Ford was expected to do with their new models.

Options one and two would have cost less than the proposed re-skin, while options four and five represented risky, costly investments. As was the case in the car program, the benefit of the process was that by weighing all five options equally, the group could consider a whole range of possibilities without discounting any of them out of hand. It is important to recognize that at the time the development began, GM’s current trucks were doing extremely well in the marketplace, with approximately half of U.S. truck sales. At the time, GM was perceived by many as having better trucks than the competition. This was about to change. Dodge, Ford, and Toyota were all known to be creating new, innovative trucks, which were certain to give GM a run for its money. While a 50% market share could not be expected when other manufacturers introduced their own innovative new models, many within GM still felt secure that even with a simple re-skin, they couldn’t possibly lose too much market share. And furthermore, the company was strapped for cash. Even if they wanted to do more, how could they possibly afford it? This group still felt that a re-skin was a good choice. On the other hand, the future was uncertain. What if a re-skinned version of the old truck couldn’t hold its own against the competition? And there were other factors at work in the containing system within which these pick-ups would be designed, developed, manufactured, and sold. Regardless of the competitive changes, the company would have to update the truck’s engines to meet more stringent emissions standards for 1998, the year the truck was slated to hit the market. GM market analysts had also observed another important trend: The newly introduced “extended cab” trucks were becoming extremely popular. In these models, the truck box was still long enough to hold an eight-foot length of wood, but the cab had extra space, either for people or gear. This lengthened cab led to an important new question—would a third door, located behind the driver’s door, be a valuable addition? Would extended cab owners appreciate a third door or was the present design sufficient? If a third door did matter, the extended cab version of the truck would require more than a re-skin. To produce such a dramatic change, you can’t just cut a new door in the sheet metal—you need to revamp the underlying architecture. Realizing the importance of the eventual decision, the truck planning organization worked closely with the market research group to ensure that whatever the results, they would be accepted as credible by GM management. After a significant review, and based on some preliminary experimentation, the team decided to conduct a major study, using full-size scale model vehicles. For the research, GM designers developed realistic dense foam models of several alternative designs and illustrated alternative features that could be made available,

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depending on which of the five strategies GM pursued. The models and the questionnaires were designed to test regular and extended cabs of various sizes; trucks with two, three, or four doors; and longer and shorter pickup boxes. The foam models were also designed so that the pick-up box could be removed and replaced with the rear elements of a sport utility vehicle (SUV). In this way, the team gained insight into how the different versions would perform both as pick-up trucks and sports utility vehicles, a step that eventually proved to be extremely valuable. The analysis of the information collected indicated a high level of interest and value in the Dodge Ram’s combination of styling and interior cab roominess. The assessment indicated that a simply refreshed CK truck pitted against the expected ‘94 Dodge Ram introduction would drop GM’s share from 51% to 35%. Renowned for outstanding quality in all its vehicles, Toyota was certain to steal a significant portion of the truck market from GM, which was, at that time, perceived as having lower quality than Toyota Trucks. The assessment indicated that although GM would save investment costs, the resulting re-skinned CK truck program would lead to a reduction of the company’s full-size truck share from about 50% of the market to roughly 25%. As the results of the research began to unfold, cab configuration proved to be a particularly important factor. The research confirmed early results indicating that regular cab users wished they had more room to recline their seats and store their belongings, such as briefcases or toolboxes. Adding four or five inches behind the seat would solve that problem. In addition, people were beginning to see trucks more as personal use vehicles. In the past, trucks had been considered almost entirely utilitarian—vehicles for contractors and trades people. They weren’t usually viewed as personal or family vehicles. In the early 1990s, as GM was conducting its research, this was beginning to change. This understanding of the value consumers placed on a range of features and attributes was then used by the truck development team to assess the impact of expanding the program beyond a re-skin to include attributes consumers valued quite highly, including larger cabs, improved powertrains, and better brakes. The market research results indicated that these additional investments would help GM avoid devastating share losses in this critical segment, resulting in a 35% to 40% market share even with the advent of newly revised programs from the domestic competitors and two new vehicles introduced by Toyota and Nissan. Some results were surprising. The extended cab models were being used to move people just as much as additional features. At the time the research was conducted, most, but not all, of those who used their trucks as personal vehicles also indicated that from a design perspective, they did not want a more “car-like” vehicle. They wanted trucks that looked like trucks, but that drove more like cars. The results from this market research-based assessment were instrumental in assisting the truck organization management team to persuade GM management to significantly increase the investment and scope of the truck program, including specified processes to improve quality, beyond the re-skinned CK truck to the level required to significantly change cab size and powertrain.

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This experience provides an excellent example of a highly focused team that understood customer requirements and incorporated the input into the product. Based on an extensive effort to better understand the consumer, the truck team identified and prioritized seven key customer focus areas; one of the key areas was comfort and convenience, which included cab size and roominess. Based on the strength of this customer input, the team, and the entire GM organization, was convinced to spend the additional $1 billion required to increase the cab size for the new pickups. With this information in hand, management moved to build an entirely new truck which, although increasing the planned investment, provided GM with products that have led to maintaining over a 30% market share and improved profits well beyond the incremental investment. The insights the team developed from the market research accurately predicted consumer behavior in this market.

The Best Corvette Yet The value of double-loop learning was also exemplified when Joe Spielman was put in charge of developing the 1997 model year Corvette with the added management challenge to build the “Best Corvette Yet.” In this case, Joe was faced with resolving differences between three groups. One group (the engineers) wanted a vehicle that in their terms “had the right stuff.” They wanted a Corvette that would perform as well as any other sports car—even those that cost considerably more. Another group (the marketing organization) thought that they would be able to sell more of a “kinder, gentler” Corvette, like one that had a trunk to carry things and was easy to get in and out of. A third group (the finance organization) wanted to keep the costs down so that GM could continue to make a profit on each Corvette sold as it had been doing for some time. In this example, Joe’s experience with the DDP midsize vehicle program, led him to adapt the process to allow the three perspectives to demonstrate the value of their position. The discussion that ensued, when each party better understood why the other two groups took the position they did, produced a solution that was far greater than the sum of each of the initial strongly held individual perspectives. Making full use of their previous experience with the process, the team met the challenge placed on them of building “the best Corvette yet.” In March 2000, the Society of Automotive Engineers selected the C4 Corvette “the best engineered car of the 20th Century.” Incidentally, GM also made a profit on the program.

Beginning to Align Imagination and Knowledge During my career, I learned over and over how important it is to avoid limiting my choices to one thing or the other—in this case, valuing imagination or knowledge, and instead valuing one and the other, while seeking an innovative approach to future opportunities. This more systemic problem-solving approach brings together

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imaginative ideas and the abundance of knowledge currently overwhelming society, into an approach to understanding and decision-making that supports innovative thinking. In 1992, after I had been working at General Motors for 7 years, Wayne Cherry, then Vice President of GM’s Design Center, surprised me with a question. He wanted to know if I would be willing to physically move the market research group from the corporate headquarters in down town Detroit to the Design Center in the Detroit suburb of Warren. Though surprising, the request was insightful. We had developed strong working relationships with many other functions within GM, but Design still presented a challenge. Before Wayne took over, I always needed special permission to enter the Design Center studios to review new vehicle programs. Wayne knew that we didn’t really understand what he and his staff did every day. He realized that if we understood the design function better, we could provide his staff with more useful information. Without hesitation, I accepted his offer, and, much to the surprise of most everyone in the corporation, our group became residents of GM’s Design Center.

 nderstand the Thinking Process of Those Who Use U Your Information After we moved in one floor above his office, Wayne made another request. This time, he asked if I would be willing to transfer Jeff Hartley, one of GM’s more creative market researchers, to the design function so he could work on a day-to-day basis with the designers to better understand their information needs. It was another easy decision. With a PhD in Cognitive Psychology from Arizona State University, Jeff’s academic interests ranged from the nature of styles in the drawings of young children to the evolution of abstract concepts. He was very interested in learning more about the design process and how we could be of assistance. Jeff would focus on uncovering how designers thought about their jobs, how they viewed market research, and what they thought retail customers could tell them—all in the context of what influenced their designs. He quickly found that, whereas market researchers thought in terms of PowerPoint presentations, designers thought in terms of 20-foot display boards covered in drawings and illustrations. Their knowledge of customers was based on popular magazines like Car and Driver; but the average car owner doesn’t read Car and Driver. Designers were more likely to treat these publications as the truth, just as they accepted input from other designers. It was quite common to see a 20-foot board covered with sketches and Car and Driver excerpts. To Jeff’s dismay, market research was nowhere to be found on the 20-foot boards. Jeff also discovered that the only impressions most designers had about market research came from their experiences with customer clinics, in which customers were asked for their reactions to concept vehicles that represented nearly finished ideas. Since clinics were conducted late in the product development process,

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designers had little time to apply what they learned; in their experience, clinics only caused aggravation. As a result, designers tended to ignore findings that didn’t fit their chosen direction. They did not conduct research earlier in the process, because designers believed strongly that customers couldn’t tell them what they would want in 5 years, and hence were not a good source of input. Additionally, he found that designers had trouble digesting market research because reports tended to be quantitative; designers generally think in images, not numbers. In addition, market research didn’t operate at the right level for designers. Research might conclude that exterior styling is important to a certain type of customer, but that wouldn’t help a designer answer questions about what personality a car should have. When Jeff joined the Design staff, market research could not offer a satisfying answer to that type of question. Based on his experience, and with the trust he had established by becoming a part of the Design team, he learned that designers were inclined to “shoot ahead of the target,” producing cars that might not quite fit where the market was at the time of their introduction. Jeff characterized such designs as having high reach but perhaps lower current appeal. He described the conflict by pointing out that a designer would be pleased to have achieved a high reach score for the more progressive customers, but because the design went beyond the comfort zone of most customers, the low average score would be interpreted as the design being unappealing. To get out of the “this or that” dilemma, Andy Norton, now head of GM’s Global Market Research, developed “Reach-Appeal” charts to show how reach and appeal interacted, leading to a decision based on the right balance of reach and appeal. As Jeff was gaining a deeper appreciation of the designers’ needs, the market research function was moving toward working with decision-makers to support decisions, rather than just reporting on their effect after the decisions were made. Many market researchers felt their job was to write the perfect research report, statistically sound and methodologically rigorous, elegant, and well-presented. Generally, this resulted in researchers spending 2 weeks after the completion of a study, fine-tuning the report. But in the more dynamic world, we found ourselves in, while the market research group was writing the report, designers had moved on, based on their intuition and direction from their management. The marketing function was also forming its position, after viewing the focus groups that the research group conducted. When the report was finally released, depending on how the results were communicated to all the parties, two very different results could occur: In the first situation, those involved in the decision would differ in their interpretations of what to do about the study’s findings. The resulting dialogue about how the alternative positions addressed the accepted findings tended to be more constructive—helping the decision process because they sharpened ideas of how to address the “agreed to” problem and often encouraged the use of the intuitive and experiential strengths of the participants. In the second situation, those involved would have failed to establish a common set of facts to interpret. Usually power, not merit, dictated the final decision—if a timely decision was made at all. This practice tended to be more destructive and ended up being both time-consuming and costly.

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Jeff’s experience led to a profound change that would make the second outcome less likely. Researchers were instructed to share results with people in marketing and design prior to the first product review, rather than waiting until a “perfect” report could be prepared. This approach allowed designers to evaluate the data at a time when it was still fully relevant. In essence, Jeff had learned that it was market research’s job to assist the designers’ intuition by working with them—not to publish “report card” research reports. Our job was to help designers (and others) make the thousands of decisions they faced daily. The eventual goal was to get consumer research onto the 20-foot boards, to complement the insights gained from Car and Driver. Jeff’s foray into the world of designers led to the development of new kinds of research that involved direct interaction between customers and designers, engineers, marketers, and planners—early enough in the vehicle development process to influence their efforts. He wrote about his experience in 2009, in a chapter entitled “Improving Intuition in Product Development Decisions,” that was included in the book Product Research: The Art and Science Behind Successful Product Launches, edited by Raghavan and Cafeo.4

 n Example of a Design Process Influenced by an Involved A Market-Based Decision-Making Process In the 2017 Spring Issue of Luxury Magazine, Cadillac’s Executive Director of Global Design Andrew Smith was asked “How would you describe your job?” It is a team sport, and I see my role as chief storyteller and a communications advocate. My role has become more creative in that I feel I have moved from being a soloist to a conductor.

His response reflected the change that had been brought about by the initial activities of Jeff Hartley, which were encouraged by Wayne Cherry and Ed Welburn, Vice President of Global Design, and Michael Simcoe. It is also reflected in the discussion of Thinking Metaphorically in the next section of this chapter. Andrew Smith’s “team” has benefited from this collaborative approach as is demonstrated in the development of a concept car designed as a statement of Cadillac’s Dare Greatly design philosophy (Fig. 8.9).

Cadillac Escala Concept Vehicle This was one of the more meaningful experiences in my career that demonstrates the value of being imaginative while also listening to customers, constituents, and communities. From my years as a political consultant through two appointments as 4  The Art and Science Behind Successful Product Launches, Editors: Raghavan, N. R. Srinivasa, Cafeo, John A. (Eds.) Springer Science + Media, 2009

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Fig. 8.9  Illustration of vehicles that illustrated Cadillac’s Dare Greatly design philosophy

Director of the Census, to years at Xerox, Kodak, and then GM, I learned the value of embracing both imagination and knowledge again and again (Fig. 8.9).

Thinking Metaphorically A Visualization of a Book What follows is drawn from Meeting of the Minds5 a book I wrote in 1991. It is presented here as an example of the approach to decision-making I had been working on based with Jerry Zaltman on my previous experiences During the late stages of developing this book, I had the good fortune to be asked by my friend Jerry Zaltman of the Harvard Business School to participate in a pilot interview using his pioneering method of understanding people's beliefs and values by having them select and then discuss their choice of visual symbols representing a particular subject. The method itself is described in Chap. 5. Jerry asked me to bring some visual material of my choosing that would represent how I would go about dealing with "messy problems.” Jerry and I, along with Ian Mitroff of  Barabba. Vincent, Meeting of the Minds, President and Fellows of Harvard College, 1995. Page 15

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8  My Final Job in the Private Sector: How Earlier Involvement in the GM… the University of Southern California, had been thinking about messy problems for some time and had described them as problems that are generally poorly defined, ambiguous, and complex. A high degree of uncertainty around their solutions, and there are usually multiple solutions to one such problem. Russ reminded us of his understanding of these problems in The Democratic Corporation: Problems are abstractions extracted from experience by analysis. They are related to experience as atoms are to tables. Tables are experienced, not atoms. Managers are not confronted with separate problems but with situations that consist of complex systems of strongly interacting problems. I call such situations messes.6 In any case, dealing with messy situations was on my mind as I gathered visual images for my interview with Jerry Zaltman. As we went through the interview process, which involved in-depth discussion of each visual, it became clear that, in a serendipitous way, Jerry had asked me a question that went to the heart of this book. As he probed deeper and deeper into my understanding and experience in dealing with messy situations, it became clear that the essence of this book was really driven by my experience with messy situations in private enterprises, public agencies, and political campaign management. At the end of the discussion of the individual images, Jerry and his staff supported me in scanning several images into a collage which is shown in Fig. 8.10. The graphic in the upper-left corner represents the exact opposite of what this book is about. This book rejects the notion that decision-making takes place in an enterprise represented as a simple mechanical cog wheel with a single decision maker. It also rejects the notion that the decision maker and the enterprise are enclosed by impermeable boundaries. The image in the upper-right corner captures the idea that the resolution of messy problems requires two groups of people: the decision makers, the people who ultimately make the decisions as to how resources will be allocated and those who aid them with ideas, analysis, and feedback. Between the two groups is a dynamic "process" that connects them. In the book, we call this the dialogue decision process. This process makes certain that the organization describes (or frames) its messy problems correctly, that it considers alternative solutions based on a fair appraisal of their merits, that appropriate analysis is conducted, and that there is a connection between the decision at hand and the other initiatives of the enterprise. In the upper-middle position of the collage is a map, a symbolic reminder that there are usually alternative routes to objectives. In messy problems, there is seldom a single solution. The loosely arranged pile of books is meant to suggest that knowledge, the ultimate asset of the enterprise, cannot be neatly packaged or stacked like books on library shelves. Instead, knowledge resides in the nooks and crannies of organizations and our own minds; these fragments of knowledge must be brought together in a way that truly informs us as we make decisions and take actions. Superimposed across the lower portion of the collage is an image of distant lines of trees. The fact that the trees form a pattern tells us that we are standing far back, taking them all in. But we do so at the expense of seeing the rich detail of branches or leaves that could be seen were we to move in closer. Of course, by moving closer we could get lost in the details and fail to appreciate the broader view—"missing the forest for the trees," as the saying goes. This is a serious issue that must be addressed by decision makers at all levels of an enterprise. Which do we need more, the larger picture or the details? Can we have both? Finally, in the lower right corner and the left center of the graph we have the images of a group of people and a musical conductor’s hands and baton. The people represent the many voices that exist in every organization. Often, these people represent the enterprise's different functional areas. Like the strings section, percussionists, horns, and so

 Russell Ackoff, The Democratic Corporation, Oxford University Press, 1994, page 211

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Fig. 8.10  Illustration showing elements of messy situations forth, people in finance, marketing, engineering, and other functional areas of the ­enterprise need a conductor to bring out their best—to bring them together in a harmonious union in which all play from the same score with the shared goal of pleasing the audience. The conductor is the ideal executive. He or she recognizes and respects the unique capabilities of each function. The ideal executive encourages the development of each employee’s capabilities—just as the conductor encourages greater skill in each member of the orchestra. Without the specialized skills of the orchestra members, the score cannot be executed. But the conductor also recognizes that these skills are not an end in themselves—their purpose is to contribute to an audience-pleasing performance. Notice also

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Working for Two Bosses in 1992 In 1992, Harry Pearce, Executive Vice President, and Ron Zarella, Vice President North American Vehicle Sales, made the following announcement We are pleased to announce the formation of the Corporate Strategy and Knowledge Development organization under the direction of Vincent P.  Barabba, General Manager. The objective of this activity is to develop a core competency in knowledge-based strategic decision-making that enhances GM’s ability to out-think and out-perform our competition in the development of market-based strategies. In this role, Vince will report to Harry Pearce on issues related to corporate strategy development and Ron Zarrella on issues related to North American Business Decision Support and Knowledge Network Development and Integration. Additionally, Vince will work with the President’s Council and the leadership of the GM University to implement strategy development teams to work on specific strategic issues.

Inviting Peter Drucker Back to GM Before I started my new assignment, on June 18, 1991, in the Wall Street Journal, Peter Drucker published an article which stated, among other things, that: Detroit still operates on the assumption that the U.S. car market is homogeneous in its values and expectation but sharply segregated by income into four or five ‘socioeconomic’ groups. This theory of the market shapes how Detroit sees the market, how it organizes itself, and how it designs, makes, merchandises and distributes its products. But this theory became obsolete at least 15 years ago.7

I responded to the article with a letter: “I think you’ll be pleased to hear that your article caused quite a stir here at General Motors. Comments here ranged from ‘Drucker’s right on target’ to, ‘He’s out of touch with what really going on in GM today.’” I then pointed out the many actions we had taken to move away from socioeconomic market segmentation. I closed the letter with this suggestion: “We would be most eager to discuss this subject with you in greater depth. Given your historic relationship with GM, I hope this offer might prove attractive to you.” Drucker responded positively to the request. It was the beginning of a valuable 14-year relationship that continued until his death in 2005.

7  Drucker, Peter. “The Big Three Miss Japan’s Crucial Lessons,” The Wall Street Journal, June 18, 1991.

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Time to Step Back and Think About the Future As GM was working itself through the “Stop the Bleeding” process, we created an organization within the Corporate Strategy and Knowledge Development called the Envisioning Network. We did so because of what we had been seeing and hearing about the emergence of the “digital economy” while attending and participating in conferences like TED (Technology, Entertainment, and Design) and the Diamond Exchange (now the PWC Exchange). In discussions with Jack Smith and his leadership team, we decided we needed to consider changes in society at large, including customer needs, political realities, global economics, and many other factors. Given that GM had made a partial recovery, based on cost containment and a more focused vehicle development process, we would consider the implications of what an uncertain and quite different future might mean to GM. The process started with the development of four future scenarios that represented a wide range of possible external environments that could affect GM. The eventual goal of the process was to evaluate the extent to which GM’s long-term plans were sufficiently robust and flexible to let it operate profitably in any of the scenarios. Management would determine the extent to which current long-term plans were sufficient and would identify actions to strengthen any weak spots. The four scenarios GM developed in 1994 were: Momentum—The key assumption was that the market would stay unchanged for 30 years; only incremental changes would have value. The basis for this assumption was that historically the future has been evolutionary. Only occasionally is it revolutionary. Technology Reigns—The key assumption was that society would come to expect all problems to be solved by technical innovations. “Highest Tech” products would be valued by customers, who would expect any limitations of existing products to be overcome. This scenario further assumed environmentally friendly innovations and decreased travel time, despite having more vehicles on the road. Environmental Domination—The key assumption was that CO2 emissions would be socially unacceptable and that alternatives to fossil fuels would not prove to be feasible. It was further assumed that scientists would demonstrate that CO2 was causing the environment to deteriorate and that pollution reduces human longevity. Geopolitical Realignment—The key assumption was that economic factors would drive the formation of new geopolitical trading groups throughout the world and that, in general, business and trade considerations would increasingly drive the actions of national governments.

To help maintain an external perspective, in 1995, GM invited five outside experts to participate in a discussion around the four future scenarios that we had developed earlier. The outside experts represented a wide range of external interest and points of view: Neil Goldschmidt, former Governor of Oregon and Secretary of Transportation; Professor Lester Lave, director of Green Design Initiative, Carnegie-­ Mellon University; Amory Lovins, Rocky Mountain Institute; Professor Ian Mitroff, University of Southern California (who served as moderator); and Sara Little Turnbull, Director, The Process of Change Innovation and Design Laboratory, Stanford University Graduate School of Business. The discussion among the

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panelists was designed to reveal what would have to be true for each of the scenarios to be realistic. The outside experts then reported their personal observations of the discussion to GM’s main policy board, the President’s Council. Given the economic and social conditions of 1995, the management team raised the most questions around the viability of the Environmental Domination Scenario, questioning whether it could actually occur. One of the leadership team members, then Executive Vice-President Harry Pearce, in the spirit of the process, suggested his colleagues should, for the purposes of the strategic thinking process, assume that one of GM’s most respected scientists had conducted experiments that proved conclusively that CO2 emissions from vehicles was the primary cause of global warming. With that assumption, there would be no question that GM would act on the information. Once everyone caught the spirit of the process, they looked just as hard at the Environmental Domination Scenario as at the others and found that if that scenario occurred, the current long-term plan would leave GM vulnerable to competitors who were working on alternative solutions to internal combustion engines, as well as the implications of strong government intervention. During this assessment period, GM prepared and introduced an environmentally friendly electric vehicle—the EV1. Ken Baker was selected to lead the effort. Baker, who had been chief engineer of GM’s short-lived early 1980s Electrovette (the converted Chevy Chevette EV) program, was reluctant at first. “I’d been to the electric-car show before, and didn’t know that I wanted to go back.” But when he learned how serious GM leadership was about the Environmental Domination Scenario, he became more confident of this new EV program’s chances for success and changed his mind (Fig. 8.11).

Fig. 8.11  My wife Sheryl with Ev1 prototype

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Here is a picture of my wife, Sheryl, with one of the early test models of the EV1, which we were given the privilege to test drive. Introduced in the fall of 1996, this vehicle proved to be a technological marvel in addressing the emerging societal concerns about the environment. It was described on GM’s website as follows: The EV1 had no engine because it didn’t need one. No tailpipe because it had no exhaust. It had no valves. No pistons. No timing belts. No crankshaft. What did the EV1 have? Some remarkable electronics and a revolutionary new propulsion system. The most aerodynamic body shape of any production car ever. One of the lightest, stiffest structures for a car its size. Super-low-rolling resistance 50 psi Michelin tires with wheels that weigh only 8.5 pounds. In addition to these innovations, the electric car also had an intelligent braking system that could regenerate energy and send it back to the batteries, a heat pump like the one used in some homes, and seven sophisticated on-board computers that control everything from the interior temperature to charging the battery pack.

The GM experience with the EV1 is a story of how GM anticipated and led a societal demand for an environmentally friendly vehicle. Although there were some customers who wanted a purpose-built environmentally friendly vehicle, GM could not, at the time, produce the vehicle with the driving range and functional characteristics that enough customers wanted and at the price they were willing to pay. As a result, the EV1, as presented, proved to be more of an important learning experience than a profitable and sustainable commercial endeavor. The purpose of including a “Momentum” strategy (or, as some described it, the status quo) was that it forced the group to make an explicit documentation of the assumptions underlying the current strategy. Based on the scenarios and considerable follow-up work, particularly on the “least likely” environmental domination scenario, GM established some long-term priorities, including working on improving and developing successors to the internal-­combustion engine, which helped prepare GM for the higher gas prices that came later. It also helped management consider circumstances they wouldn’t have otherwise considered likely and encouraged them to invest in research that would not otherwise have been approved, such as low-cost hybrid propulsion, fuel cells, and clean fuels. GM engineers and product developers say the initial work, started at the end of the twentieth century, contributed to the development of the Chevrolet Volt, an extended-range electric car in 1996 that put GM at the forefront of environmentally friendly vehicle transportation. It is also interesting to note that in 2017 GM introduced the all-electric Chevrolet Bolt. This time with much longer range and at a price many people could afford. Much of this early effort contributed to GM’s current long-term strategy of moving to position itself to strategically move to all-electric vehicles.

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Testing the Water with an External Review To test the value of our proposed strategy we shared it with Peter Drucker, who, after spending some time with our management and reviewing our product concepts, provided an analysis of a new operating business he called “GM the Merchant.” Several important trends were highlighted in his 26-page response which described what he saw as the value of migrating from manufacturing to services: The steady decline in terms of trade for manufacturing. Manufacturing is now where Agriculture was around 1950…The trend is clear. It means that manufacturing is producing less and less wealth. As I read your memorandum, it proposes to complement GM the Manufacturing Company with GM the Merchant. A Manufacturing Company makes products and then sells them. A Merchant is a buyer for the customer. The Realities strongly support your proposal to add to GM the Manufacturer the new business of GM the Merchant. In fact, the Realities imply that this is one way in which GM can convert the demographic trends, the trend in the terms of trade for manufacturing, and the saturation of the market, into sources of profitability and in fact into sources of growth.

Drucker concluded with some ideas about how to get started: In fact, I would say the uncertainties of the new venture are so great—and so unprecedented—that further “studies” would be futile. Only the actual experience of a number of pilots can show what the real problems are, where the real decisions have to be made, which specific structures, procedures, and policies are likely to be most successful, and which, no matter how intelligent they look, do not meet the test of reality.

Overall, Drucker emphasized the importance of being customer relationship-­ centric, focusing on the consumer experience, and establishing a dialogue with the consumer and communities of interest. The creation of OnStar and MyProductAdvisor were our first two actions.

 he First Prototype: OnStar: Sometimes the Process of Creatively T Gathering and Presenting Findings Reveals an Unarticulated Need, and the Possibility of Golden Brown Toast While the scenario effort was going on, as a member of the Quest Futures Group, GM participated in a consortium research project study led by Patricia Hawkins, a long-time friend who joined me when Communication Associates was formed in 1965 and was now working in her own consultancy. In this study, she identified the key factors that drove buying decisions. The study measured both the importance consumers placed on these factors and their current level of satisfaction with how these factors were being addressed in the marketplace (Fig. 8.12). Mobility, the ability to go where you want to go, when you want to go—a factor at the heart of GM’s traditional business—was in the lower right corner. Consumers

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Fig. 8.12  Developing a hypothesis from seemingly unrelated facts

rated it an important need that was being well met. When presented with this type of information, the traditional response at GM—and probably many other companies—would have been, “We have done a very good job in meeting customer requirements. Let’s stay focused on what we are currently doing, because it works. If it’s not broke don’t fix it!” However, there were four other interesting factors located in the upper right corner, meaning they were also among the most important, but not well-served. They were: • Personal attention (being able to get friendly and helpful attention from companies and stores). • Time and energy (being able to find the time and energy needed to meet all the demands in your life). • Privacy (being able to keep information about your life and affairs private). • Fears for personal safety (being able to walk alone at night in your neighborhood without feeling afraid). These observations reinforced by Drucker’s earlier suggestion, about increasing GM’s relationship with its customers, led us to infer that GM could benefit greatly if, in addition to continuing to improve the manner in which it was satisfying the need for mobility, it could also provide customers with Personal Attention, saving

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Time and Energy while guarding Privacy and Personal Safety. Following discussions with colleagues, both in and out of GM, we started to hypothesize that GM could create a relationship with customers that would not only increase GM’s share of the vehicle market but also its share of the disposable income of these customers. With the concept of an extended customer relationship in mind, we then conducted an analysis of total spending in the acquisition and use of a vehicle. The analysis indicated that there was almost twice as much total revenue and profit opportunity in moving downstream after the vehicle was sold than there was in staying where GM currently did most of its business. Rick Wagoner (who was COO at the time), made it clear that this new direction should in no way relieve anyone from improving the conduct of core business. This point was highlighted in a presentation he made which included the statement, “The worst thing that could happen is have a potential customer say, I want the services, but do I have to buy your car to get them?” In all, we now had four strands that we were trying to weave together into a loom to create more meaningful fabric to present to potential customers: 1. The four scenarios (Momentum, etc.) that had prompted us to think about alternative investment opportunities. 2. The knowledge that showed what customers valued but weren’t receiving from car companies, which led us to think abductively about opportunities for mobile services. 3. The model of an extended business design, which was helping us sort through new opportunities, especially for services closely tied to our core automotive business. 4. Recognition of the possibilities for easy sharing of information and for collaboration with other enterprises, as well as the growing power of information. Having been introduced to the concept of creating digital strategies for market dominance by Chunka Mui in his book Unleashing the Killer App, it was now time to implement a GM digital strategy.8

An Introduction to the Digital World In 1996, Ron Zarella and I gave a presentation on OnStar at Richard Wurman’s Technology Entertainment and Design (TED) conference in Monterey, California. The presentation was described by Todd Lappin9 to make the point that “OnStar embodied GM’s broader shift from a company that mechanically built “a car for every purse and purpose” (as Sloan had decreed in 1920) into a more nimble

 Larry Downes and Chunka Mui, Unleashing the Killer App, Harvard Business School Press, 1998  Todd Lappin, The New Road Rage, GM’s WIRELESS DATA SERVICE IS ABOUT TO TURN YOUR CAR INTO A FOUR-WHEELED VERTICAL PORTAL. WIRED, July, 1999. 8 9

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company that would produce “a car for every purpose, functionality, need, want, attitude—you name it. Following our presentation, then Adobe CEO John Warnock asked us whether OnStar would be an open or closed system. As Lappin points out, “Caught off guard, Zarrella and Barabba admitted they had not thought that through yet. Afterword, however, they started asking around and their inquiry crystallized a reassessment of what OnStar would become.” Lappin summarized his review by quoting me saying: We finally realized we don’t have all the ideas, Once we get people thinking about the car as an information platform, then ideas that we never dreamed about will start to surface.

And the Ideas Began to Be Implemented Under the basic strategy of extending GM’s relationship with the customer, the OnStar customer service was the most successful of the initial steps taken by GM in implementing its downstream revenue strategy. In its final form, OnStar has provided Personal Attention, while Saving Time and Energy, reducing Fears for Personal Safety, and operating within customers’ comfort zone on Privacy. Today, it is addressing many of the needs of GM’s customers and the challenges identified by our external consultants.

Avoiding Burnt Toast The history of OnStar can be traced back to 1993, when EDS and PacBell proposed that GM build a land-based, microwave mobile communication system that would partner GM with an information services company and a cellular company. We put together an evaluation team headed by Steve Carlisle, who joined our team from GM of Canada. Steve and his team evaluated the opportunity, and their initial analysis found customers to be interested, even though they weren’t quite sure exactly how the system would benefit them. They also determined that the capital costs of installing the necessary micro-wave towers would be so high that we decided not to proceed. In other words, this analysis led to a decision that avoided Burnt Toast. But the reason for the potential of Burnt Toast was the cost of the microwave towers. The other aspects of the analysis indicated a potential market if we could get the price down. In 1994, EDS came back; this time with GM’s other subsidiary, the Hughes Corporation. The new idea was to provide a space-based infrastructure that required significantly less capital to get started because the necessary satellites were already in orbit. We decided to proceed on a limited basis. The initial OnStar prototype was introduced on the 1997 Model Year Cadillac Seville and Deville as a dealer-installed product that connected the vehicle to a live advisor at a call center. From the very beginning, the OnStar customer benefit was focused on safety and security, one of

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the four factors identified as being important but not well served. OnStar automatically alerted emergency services if an airbag deployed, indicating an accident. GM’s externally mounted and larger antenna, as well as the higher power output of the OnStar system, allowed the driver to connect to distant cell towers in areas where normal handheld phones could not get service. The factor of personal attention would be addressed by other services like finding and making reservations at hotels and restaurants.

A Glimpse of Golden Brown Toast With some innovative ideas, it is sometimes better to ask, “What will it take to make this product successful?” than, “Given what I can ‘estimate,’ what are the chances this product will be successful?” I learned this again during my discussions about OnStar with Peter Drucker, when he reminded me of an observation he had made in his book, Managing in a Time of Great Change: One cannot make decisions for the future. Decisions are commitments to action. And actions are always in the present, and in the present only. But actions in the present are also the one and only way to make the future.

By the same token, we decided that OnStar had the potential to be a success— perhaps even a great success—but we would have to put the service in place and let customers use it to determine its true potential. Knowing that consumers would have little or no experience with the OnStar concept, it was clear we would have to develop prototypes. We weren’t going to know enough if we just interviewed potential customers, describing OnStar to them in ways they seemed to be having trouble understanding. I suggested to Rick Wagoner that he would need to expend some resources to obtain an “option” on a future activity that had the possibility of becoming quite valuable. Rick accepted the option rationale and directed us to determine the most efficient and effective way to get OnStar into our future vehicles. To ensure OnStar kept both an internal and external perspective, GM selected Chet Huber from the GM locomotive division to head OnStar. OnStar established the following objectives: • To provide these new services at prices low enough to attract a large subscriber base, GM would factory-install the hardware in many of its vehicles, rather than making OnStar an option that dealers could add (resulting in much higher installation costs). We made this decision knowing that many who bought cars equipped with the OnStar capability would not subscribe to the service. • GM would create within OnStar the resources to encourage and develop alliances with third parties. • To maximize the use of the OnStar call centers and to maintain consistency in the way mobile services were being provided through- out the industry, GM would encourage other companies to install OnStar in their vehicles.

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• GM and Toyota would work together to build a consortium that would ensure that there were industry-wide standards for telematics hardware, software, and communications. With basic objectives identified, Nick Pudar was given the assignment to put together a team to develop a Factory Installation strategy that would meet the objectives and create a basis for the option on the “future” business model I had discussed with Rick Wagoner. Pudar, with Ackoff’s teachings as background, began the process by getting multiple functions within GM and OnStar to describe the idealized design of what a factory-installed execution should be. In addition to the elements listed above, Pudar also focused on the implementation timing as a factor in the idealized design. We aimed to have OnStar fully factory-installed on all GM vehicles for the 2000 Model Year lineup. This seemed unrealistic as the product development community could not imagine how they could possibly meet the timing requirement. Experience led them to believe that one vehicle model might be ready for factory installation for the 2005 model year; the product development cycle was too intensive, and the OnStar electrical architecture integration made this a much more challenging problem. All this led to the beginning of a possible zone of discomfort that could delay OnStar’s introduction. However, as appreciation of OnStar’s value to GM increased, almost everyone felt compelled to bring it to market as soon as possible. The team came to appreciate that the OnStar service could serve as the basis for a platform of extended services that could improve our return on the capital already invested in the vehicle. As one of the engineers described it, “It’s like having a cash register in the car. Every time someone uses the service the cash register rings and GM gets an incremental return on its investment.” Not only was it a great customer service capability and provided a significant financial return but it also provided an important capability to save lives as reflected in this story: On March 30, 2003 OnStar helped save two lives in Rockingham County, N.C. It all started when the driver fell asleep and drove off the road with their 2001 Chevrolet Tahoe. The vehicle traveled off U.S. 220 on the grass median, hit a guardrail, ran into a bridge, plummeted down an embankment and landed upside down on railroad tracks. The crash trapped the driver and 1-year-old grandson, killing the driver’s wife. After the vehicle’s airbags deployed, OnStar answered the emergency call and notified Rockingham County 911 of the vehicle’s location. When the 911 crew arrived at the location they could not find the vehicle and notified OnStar. The OnStar advisor honked the horn and flashed the lights so the rescue team could easily find the vehicle. Emergency personnel contacted a Norfolk Southern Railroad dispatcher, who was able to stop a train before it crossed the accident site. Rockingham County 911 said that OnStar was the only one to report the crash. “OnStar gave us the general location,” said 911 Supervisor Frank Moore. “They have helped us a number of times before.”10

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 Reported by WRAL-TV5 (Raleigh-Durham-Fayetteville) on March 31, 2003

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If GM had limited itself to traditional capital-based budgeting in the development of OnStar, it never would have been able to justify the 1.5-million-dollar investment in OnStar that made it such a success. Taking an option on the future visualized through the principles of Ackoff’s concept of idealized design produced a very successful business. Since OnStar’s inception over 20  years ago, OnStar Advisors have responded from its over seven million customers and one billion customer interactions in the United States, Canada, Mexico, and China, to over two billion cumulative interactions, including on a per month basis approximately: • • • • • • •

2600 Automatic Crash Responses 365 Stolen Vehicle Assistance Actions 1,700,000 Turn-by-Turn Navigation Routes 6000 Emergency Services 53,000 Remote Door Unlocks 2600,000 Vehicle Diagnostic Emails 400,000 Calls Received Per Day.

With this level of interaction with their customers, it appears that GM’s OnStar is doing an excellent job of addressing those respondents from Patricia Hawkin’s 1996 study who were seeking improvement in saving time and energy, seeking more personal attention, and reducing their fear of personal safety. Depending who you talk to, OnStar’s market value can be estimated at between 4 billion and 9 billion. Not a bad return on the approximately $1.5 million option that GM’s executives placed in 1996.11 For anyone interested in more information or how it works, visit www.onstar.com

The Second Prototype: MyProductAdvisor As noted earlier, GM’s participation in conferences like TED and the Diamond Exchange (now the PWC Exchange) provided insights into the emergence of the digital economy. But in addition to generating ideas about creating new opportunities like OnStar, we also learned how to improve our approach to determining customer preferences. In 2000, I attended a Diamond (now PWC) Exchange where Mohan Sawhney, of the Kellogg Business School at Northwestern University, introduced the concept of a Metamarket. He described these “markets in our minds” as clusters of related activities that consumers engage in to satisfy a distinct set of needs. He said the internet, by decreasing the need for buyers and sellers to have close physical proximity, was creating the opportunity for metamarkets like Web MD and Edmunds.

 Barabba, Vince, Chet Huber, Fred Cooke, Nick Pudar, Jim Smith and Mark Paich, “A Multimethod Approach for Creating New Business Models: The General Motors OnStar Project,” Interfaces, Vol. 32, No. 1, January– February 2002, pp. 20–34.

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com, which, at the time, were quite new. He laid out some characteristics of metamarkets: • They derive from activities that are closely related in the minds of customers. • They are not created by firms in related industries because firms are not always organized to provide joint services and figure out who receives what percent of the profits. • They can be organized around major assets, major interests, major life events, or major business processes. There could be a metamarket for weddings that would include the clothes for the wedding couple, reception arrangements, the trip and hotel accommodations for the honeymoon, etc. Edmunds.com serves as a metamarket for automobile sales and after-sales activities. He also offered a keen observation about why businesses often miss the opportunities in metamarkets: “Consumers think in terms of activities, while firms think in terms of product.” It was encouraging that Sawhney’s observations were congruent with GM’s thinking about new businesses. What was different and quite challenging, however, was that Sawhney took the position that the best way to gain the consumer’s trust— to fully engage the consumer—was to have a third-party act as an intermediary between GM and the customer—firms like Edmunds and Kelly Blue Book. He referred to that intermediary as a “Metamediary.” This raised some profound questions, given that GM believed it could be a trusted agent making the lives of our customers easier. Sawhney’s insistence on a “Metamediary” eventually led us to ask the fundamental question: What would it take for GM to be a trusted metamediary?

Applying Buck Weaver’s Principles in the Twenty-First Century To move GM to a position where we would be perceived as a trusted advisor, in this case for the purchase of the vehicle itself, we took a radical conceptual step: As Drucker suggested, we began to think like a merchant company. Rather than setting up a selling proposition just for GM vehicles, we would help the customer buy what they wanted—even if it wasn’t a GM vehicle. Because even if it wasn’t a GM purchase, we’d learn a lot about what customers wanted and why some weren’t buying from us. We would know more than our competitors did and be able to fix problems and spot trends sooner than they could.

 etting from Idea to Effective Implementation of the Idea Is Not G Always Easy After some discussion, we recommended that a “Trusted Advisor” group develop a solution that directly challenged the assumption that an independent party is required to achieve a level of trust in the acquisition of a vehicle.

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In addition to our own research on what it would take to develop a method that would be trusted by consumers, we also supported Glen Urban at MIT in his development of a system called Truck Town. Truck Town was an internet-based system in which a customer could call up a virtual advisor and discuss with the advisor their preferences and, based on the information, the advisor would recommend a particular truck. One of the key findings in Glen’s work was participants’ reaction to interacting with the virtual advisors. More than 75% of Truck Town’s visitors said that they trusted these virtual advisors more than the traditional communication methods. This finding was instrumental in GM reaching the conclusion that honesty implied recommendations by the unbiased conduct of the virtual advisors would be a critical component in any internet trust-building program. In a later article,12 Glen pointed to the benefits of “listening in” as customers communicated their preferences for certain attributes with the virtual advisor. This reinforced an evolving concept that was being developed internally within GM. The eventual recommendation technology was developed by Dick Smallwood, whom I met when working at Xerox, where he developed very useful models. Our goal was to model shoppers’ values. Once some of the customer’s basic questions had been answered, the advisor asked the user to rank their priorities. For example, do they care most about price range, or are other attributes most important? Is body style an important consideration, or would they prefer better fuel economy? To guarantee an unbiased response to the shopper’s answers, the measurable characteristics of each vehicle in the system came from an independent company that provides these services to the automotive industry. Furthermore, the information on vehicle quality came from J.  D. Power & Associates, a market research company specializing in measuring customer satisfaction. Because our studies showed that trust was so important, when we put AutoChoiceAdvisor on the GM website, we made it clear that the information consumers provide will remain confidential. No representative would contact them about their responses unless they asked for the contact. The individual information was aggregated so that personal information remained anonymous; the site had no persistent cookies and required no registration. The site would recommend either GM or competitor vehicles depending on the customer’s preferences. If a GM vehicle would not meet the preferences better than the competition a window off to the side of the vehicles to consider would show the GM vehicle that came closest to meeting the customer’s preferences. As expected, one of the benefits to GM’s product planners was that we would get an early warning about customer preferences that were more effectively met by competitive vehicles than GM vehicles before we found out about it when vehicles were already in the market and sales reports were released.

 Urban, Glen and John Hauser, “Listening In to Find and Explore New Combinations of Customer Needs,” Journal of Marketing, vol. 68, April 2004.

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 voiding Burnt Toast: AutoChoiceAdvisor.com Becomes A MyProductAdvisor.com There were lingering issues relative to our service (AutoChoiceAdvisor) using the GM website to endorse a competing vehicle. There was much discussion which pitted the concern over endorsing a competitive vehicle versus the value of the information that was being collected. To address the problem of a GM endorsement of a competitive vehicle management of the website was transferred to the Market Insight Corporation, and the platform was renamed MyProductAdvisor.com, which allowed GM to continue to gather the valuable market information. In September 2008, the American Marketing Association presented the EXPLOR award for “the best research application that leverages technology in the most innovative fashion” to GM and the Market Insight Corporation because of MyProductAdvisor.com. Harvey Bell, who had been promoted to be executive director, Global Advanced Vehicle Development at GM, commented: The system provides the Advanced Vehicle Development group at GM with an unprecedented and timely view of consumer preferences as well as accurate market performance simulations for projected new products. It has guided many major product design and development decisions by allowing us to move directly from consumer research to product design. It is now widely used throughout the corporation.

Those of us who developed MyProductAdvisor made sure we learned from the principles employed by Buck Weaver when he developed Your Car as You Would Build It in 1932. First, we had to focus on questions that were important to the customer in making a choice on their next car (rather than questions that were of interest to those who might be designing or building it). We eventually expanded the site’s application beyond the U.S. market, to China and Germany. Given the impact of a global economy, it is important to understand not only what people want, but to identify the differences that exist in various markets around the world. The MyProductAdvisor concept started out using vehicle attributes, such as size, body style, etc., as a basis for allowing customers to determine what they wanted in their next vehicle. But we soon learned that features (safety, entertainment, connectivity, driver assistance) were growing in importance as well. Today, the approach used in MyProductAdvisor has in-market, shopping intenders participating in significant volume and unprecedented depth. Nearly four million shoppers to date have engaged “the advisor,” leaving a powerful footprint of preference ratings across 120+ attributes & features. The consumer sample is “self-­ recruited and genuine,” motivated by a desire to receive the “best fit” recommendations for their purchase. The US market generates about 10,000 participating shoppers per month, and China’s market participation is even higher. The suite of solutions fueled by the MyProductAdvisor consumer portal platform is remarkably enhanced over time. Applications address current product portfolio business intelligence and predictive market simulation dynamics, particularly within future mobility. Market Insight Corporation’s CEO, Rich Falcone, puts it this way; “We imagine & discover, through a window into the minds of consumers…

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ours is an advanced approach to real-time shopper engagement, machine learning, and intender preference insights. For anyone interested in more information or how it works, visit www.marketinsightcorp.com

Reflecting on the Results of an Interesting Career During a visit to Washington DC in 2001, Dick Wirthlin arranged for me to visit with him at the White House where he reintroduced me to now President Ronald Reagan by reminding him of my involvement in his first campaign for governor. After the meeting, Dick and I found it interesting that at the time and place where the meeting was held, we had all come a long way (Fig. 8.13).

Fig. 8.13  Meeting with President Ronald Reagan and Richard Wirthlin at the White house

Part II Based on those Experiences Here is What You Need to Design and Implement an Inquiry Center for Your Enterprise

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Using Systems Thinking to Create an Experienced-Based Decision Process

Up to this point, this book has provided examples that have led to the development of an experienced-based approach to decision-making. Additionally, I have attempted to demonstrate its value by providing examples of how decisions have been made and now, based on what was learned while those decisions were being made, we will discuss how the existing processes can be improved. The following chapters discuss the concept of a decision-making process that has the potential to help business and public sector leaders use information while facing an uncertain future in a world that will soon be further dominated by digital technologies. I will present these thoughts in the context of the wisdom found in this statement by Peter Drucker: One cannot make decisions for the future. Decisions are commitments to action. And actions are always in the present, and in the present only. But actions in the present are also the one and only way to make the future..1

The Benefit of a Broad View of Public and Private Experiences Given that I have had the opportunity to work in both public and private institutions, what follows is an introduction to a decision process that demonstrates not only how a private firm would conduct its business but also how public agencies at the local and national level should be conducting their activities. Some of what follows were originally developed in preparation for when I had the opportunity to deliver the Deming Lecture to the American Statistical Association.2 The range of possible organizational operating designs is almost infinite. This is a brief general classification of possible ways of thinking that I have found useful in  Managing in a Time of Great Change, Preface viii.  “Profound Knowledge from a Knowledge Use Perspective” Deming Lecture, American Statistical Association, Vincent P. Barabba August 2, 2016. 1 2

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Fig. 9.1  Illustration of alternative business designs

discussing this subject. Much of the following is not a comprehensive list of operating designs but is illustrative of the potential range of opportunities (Fig. 9.1).3

 n Array of Possible Operating Designs Positioned Along A a Continuum of the Past “Simple/Certain” Environment to a Future “Complex/Uncertain” Environment We Are Facing Today Make-and-Sell In a make-and-sell design, the enterprise seeks to predict, based on its experience and research, what the audience they want to reach will desire. Early developers of train services between large cities with common interests understood this business design quite well. Based on the number of people living in different areas and estimating the number of people who would need to travel from one point to another for personal or business reasons they would be able to determine the return on the estimated cost of building the rail line between these two points. In this design, it is an accepted belief that customers/citizens know what they want and have the means to acquire it. The key to success is to correctly predict demand, usually based on past behavior and the predicted level of acceptance of the end products or services. The make-and-sell enterprise or activity relies on economies of scale: finding a large market/audience and then setting up a capability to provide what is wanted in an economical way. Performance measurements are gathered through benchmarking and best practice evaluation and the extensive use of causal modeling. The difficulty in bringing forward information that indicates change is taking place is because often the leadership of the make-and-sell enterprise or activity is more likely to challenge claims of forthcoming change and has developed the interpersonal skills, based on strongly held predispositions, to persuade others the enterprise is already on the right path. Overcoming this mindset requires the provider of information to make sure the individuals who will allocate resources are involved in the design of the research  Barabba, Vincent, Surviving Transformation, Oxford University Press, 2005, pp.  17-27 has a more detailed description. 3

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project —including development of measures to confirm whether the findings are relevant and realistic. For example, as was described in Chapter 5, when I was working at Xerox, we created a research utilization group to help us design a study to measure future demand for Xerox Copiers that would be accepted by senior management. When completed, the study clearly pointed out that existing model-based forecasts of copier sales and copies made had been significantly over-stated to support existing future production commitments. When I presented the survey’s volume results to Xerox’s Senior Executives, rather the ignoring the results because they did not fit an earlier positive predisposition, management accepted the results and made painful significant changes to the inflated forecasts. In the public sector, a make-and-sell design could be described as “assess-and-­ provide.” This design can be found in government agencies that have been providing services over a long period, particularly to public constituencies that are characterized by relatively slow and evolutionary change. Given that sometimes there is little direct contact between those being served and those serving, the ability to sense the possibility of change can be somewhat hampered. I am not saying that these agencies are failing to perform at an accepted level of service. The essential point is that when change is evolutionary and predictable, it matters not whether you are in the public or private sector.

Sense-and-Respond A sense-and-respond design starts with the enterprise believing the future is not easily predicted nor controlled. A taxi management system realizes that the people that were going from point A to point B yesterday may or may not be doing the same things today or tomorrow. Therefore, they need a communication system among taxis that provides them an indication of where the business for the rest of the day is likely to be. Given that there are some innovative competitors, like Uber and Lyft, that enter the market that are also sensing and responding, causal modeling based on past experience is less valuable. In this changing environment, the leadership of the enterprise or activity organizes itself to respond to an understanding of what is actually happening, as opposed to what is forecast to happen. The sense-and-respond approach requires innovative businesses like what Uber and Lyft did in providing products or services that satisfy customer needs or desires that were not being satisfied by traditional taxi services. In this situation, the provider of market information faces an audience that wants information that indicates the likelihood or potential of market change, hopefully before they actually occur. With that in mind, the data collection process starts by reaching out to selected audiences and saying, “Help me to identify your needs, and let’s work together to satisfy them.” The people in a sense-and-respond environment are empowered and accountable and spend their time producing customized outcomes in accordance with an adaptive business design.

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The leadership of a sense-and-respond enterprise tends to encourage managers to recognize that the unpredictable environment requires giving up control of procedures and processes. Generally, the leadership designs the organization to empower people to improvise and adapt. Government agencies have found that technology has provided them with improved methods of sensing changes in the preferences of the population they serve. Many agencies of government have developed websites that not only describe the current capabilities of their agencies but also provide their constituencies with the ability to identify limitations and suggest alternative solutions that can be effectively implemented.

Anticipate-and-Lead An anticipate-and-lead design assumes the future is largely determined by what the enterprise or activity purposefully does to change things. An indication of this design is probably best illustrated by the efforts of Steve Jobs and Apple when they brought to the market the iPhone. The mindset is different, in that the enterprise focuses on the future it wants to create and uses temporary models that are designed to help make near-term decisions. Once that expected future is determined, the enterprise attempts to lead the consumer to new ideas based on identifying both articulated and unarticulated consumer future needs. A deeper understanding of these needs is sometimes gleaned from direct observation of consumer or constituent behavior, including what the individual would prefer that is not now available. The ability to anticipate and lead is facilitated by emerging digital technologies, which allow decision-makers to observe real-time behavior by markets and consumers. As I discussed in Chapter 8, the anticipate-and-lead approach contributed to the development of GM’s OnStar in-vehicle communication system, as well as MyProductAdvisor.

I t Is About Choosing the Right Combination of One Design and Another and Not Selecting One Design or Another In a world of increased complexity and accelerated change, there is great peril in choosing one business design or the other. Serious consideration needs to be given to using traits of one strategy and the traits of the other. At the TED Conference in 1995, Nicholas Negroponte of MIT made a strong and thought-provoking case for how we would move from an industrial world of products made up of atoms to a knowledge-based world of products made up of bits of information. Since that time, the remarkable growth, decline, and current expansion of purely bits-based business have given way to the belief that the opportunity is not a future world of products solely made from atoms or bits but a future world of atoms and bits. The future of autonomous driving is a great example of the need for both atoms and bits.

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 oday’s Successful Business Design Could Fail T for You Tomorrow In the face of the unprecedented speed of change in the business environment, it is essential that businesses learn to approach transformation in a different way. Lacking a crystal ball, we can only assume that the future will be different from the present. The degree of difference is, of course, what every enterprise would like to know. Pursuit of a single answer to this question, however, has led to approaches that require a significant amount of simplification of the future’s true complexity, such as traditional point estimates of the expected growth of GNP, price indices, population estimates, and the cost of raw materials. The inherent futility of these point estimates is that the more items one includes to create the estimate, the higher the probability that one or more of the assumptions underlying the point estimate will be wrong. Yet, in spite of such faulty logic, this is one of the approaches that underlie the long-range planning and thinking of many enterprises and governments. A more realistic approach is to accept that we cannot know with precision what the future holds and to learn how to design business plans and strategies to deal with that uncertainty—strategies that allow the enterprise to adapt when the unexpected occurs. In The Decision Loom,4 a book I wrote in 2011, I attempted to show the value of a learning process that is based on an interactive decision support system. At the heart of this approach is the belief that any enterprise’s approach to decision-making needs to be a network of interactive decisions that encourages and rewards the sharing and application of information. This systemic approach requires an open dialogue and a focus on learning that is based on accepting that we cannot be as certain about what might happen in the future as we once thought we could.

 The Decision Loom, Triarchy Press, United Kingdom, 2011.

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Traditionally there have been two primary approaches used by an enterprise in attempting to grow and increase their business or service: (1) improving the manner in which the enterprise is currently doing business or (2) moving into promising areas of new business. What follows focuses on the interaction between the two traditional approaches and describes demonstrated processes for addressing the interactions of both—doing one and the other versus doing one or the other. The following conceptual story also identifies the manner in which strategic thinking procedures, including creating an idealized design of what you want to be, can assist leaders interested in transforming the enterprise—without destroying it in the process. It also serves as an illustration of what was required for GM’s evolution into a more idealized business design discussed in Chapter 16. It is presented in this form so that the names of the individuals at GM involved in the process are not shown.

 he ABC Company: A Conceptual Story Of How An Enterprise T Can Create Change1 The chief executive officer of the ABC Company has called a meeting of his senior management team. A respected market analyst from Smith & Jones Investment Company has just issued the following summary of ABC. Investment in the ABC Company appears less than exciting. Their prospects for revenue and profit growth seem adequate at best. They operate in an extremely competitive industry where the pricing environment offers little or no opportunities for generating acceptable levels of growth or even significant improvement in their profit situation. They are the best managed company in an uninspired market and are expected—at best—to increase their rate of growth incrementally. Assuming, of course, that they do not simply hold to their current level or worse yet, actually  Originally published in Barabba, Vincent. Surviving Transformation, 1994 Page 3.

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ABC Company COMPANY

Company B Company C OK

OK

INDUSTRY

GREAT

Fig. 10.1  Financial assessment of stocks in which to invest

suffer a decline. The CEO generally agrees with this assessment and has been considering transforming ABC into some new and potentially promising areas of business. At the beginning of the meeting with his leadership team, he draws the following chart to describe why he feels the financial markets do not see ABC as a stock in which to invest (Fig. 10.1). He points out that by just doing competitive assessments and benchmarking of the best practices in their industry, ABC has fallen into the trap of being the best of a dying breed. That its industry is not growing implies that the only way for ABC to grow is to gain a greater share of a pie that although large is not getting any bigger. Traditionally, this strategy has led to very competitive industry actions which result in inevitable diminishing profit margins. The CEO states he believes that the existing business design for their industry is not sufficient to warrant continued investment. He also states he does not want to wait until it is too late to take constructive action. To drive home his concerns, he begins drawing another chart (Fig. 10.2). Before he can finish drawing the curve, he senses deep apprehension in the room and decides to open the topic up for discussion. The chief financial officer (CFO) starts out. “Your curve is too optimistic!” she says. “If we do not immediately get costs under control, you can expect your chart to look quite different.” She goes to the board and modifies it (Fig. 10.3). The Vice President of Marketing scoffs. “It is not solely about costs! If you could acquire operating capital—at the right price—and let the company develop and deliver the product portfolio we’ve been asking for—at the right price—we can really turn this thing around!” He strides to the board and makes his own modification (Fig. 10.4). The Vice President of Engineering stands up and grabs his own marker. He crosses out the words “Marketing and Sales” and replaces them in Fig. 10.5 with “Engineering.” “I agree with your chart,” he says to the marketing vice president, “but your belief that we can sell our way out of this problem is all wrong. If we

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Fig. 10.2  Initial drawing of investment chart

Stock Value

Stock Value

CEO

CEO CFO

Time Fig. 10.3  Chief Financial Officer’s assessment of investment

Marketing Stock Value

and Sales CEO CFO

Time Fig. 10.4  Chief Marketing Officer’s assessment of investment

could just make fewer products and make them very well we wouldn’t need to spend so much on marketing. Engineering fewer, but really great products—that’s where we need to invest our limited resources.”

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Engineering Stock Value

Marketing and Sales CEO CFO

Time Fig. 10.5  Chief Engineer’s assessment of investment

The chief information officer (CIO), sensing an opportunity, stands up and says, “You’re both right! But the solution is to invest in information technology and systems. That way we can reduce the cost of marketing by creating an improved customer relationship management system, and reduce engineering costs by updating and automating all of our current processes to speed up development. The director of a new division, that is moving into a new market, smiles at the traditional combatants, each trying to increase their allocation of the existing resources and calmly walks to the board. “We have to think out of the box,” she says. The operating managers glance at each other and smile as if to say here we go again with that “out-of-the-box stuff.” Undaunted by the operating management’s reaction, she continues, “Let’s face it, the market analysts are right. We are in a terrible industry. We cannot make a sufficient return on the capital we ask our shareholders to provide us. That’s why our stock has not appreciated at the same level as companies in other industries. We need to get into a new business!” She modifies the chart (Fig. 10.6) Exasperated, the senior chief operating manager of the existing business jumps out of his chair and exclaims, “What box is it that you want to get out of? Who is going to fund the development of the new business? If you take resources from the existing business, you will make the situation worse than it already is! If you want to think out of the box…then get out of my box. And, if your idea is so good…go get your own money…don’t mess with mine. I need all of it to stay alive! Just remember, if I don’t exist…neither will you!” As tensions mount, a senior advisor senses the CEO’s frustration at how the meeting is disintegrating. She walks up to the chart and adds a circle, which she labels “Zone of Discomfort” (Fig. 10.7). “We’re all approaching this problem from the narrow perspectives of our functional responsibilities. This type of discussion has been going on for over five years and our situation is not any better than when we started. We need to step back and look at the problem from a broader company perspective.” After a moment, the senior advisor continues: “In that Peter Drucker article that our CEO distributed last

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Stock Value

Time

Fig. 10.6  Senior chief operating manager’s assessment of investment

Stock Value

New Business

Zone of Discomfort

Existing Business

Time

Fig. 10.7  Highlighting Zone of Discomfort

year, Drucker took the position that every enterprise has three essential dimensions: The traditional business, in our case the one for which we are all concerned; the transitional business, the one that our CEO has decided we should look into; and the transformational business, which we never get to because we can’t get past our own parochial interests! This is a classic problem that occurs when companies try to move into new areas of business. Naturally, no one is comfortable while ‘switching gears,’ but we have to trust one another and begin moving in the right direction for the entire company.” The CEO thanks the advisor and suggests they start over, and the team reflects on what has occurred. In the ensuing dialogue, the CEO asks the team if anyone has any suggestions on how to get around their inability to think about the business in a more holistic way. The vice president of engineering had just attended an executive seminar at the University of Pennsylvania Wharton School that introduced him to Russell L. Ackoff’s concept of systems thinking and idealized design. At the time, he was intrigued with the approach but was having a hard time determining how he

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might implement it at ABC since the approach was not limited to improving the engineering department but called for re-creating the entire enterprise. “Today’s ‘discussion,’” he points out to the group, “was the beginning of what Ackoff would describe as ‘formulating the mess.’ That is, if we would all step back and consider what each of us was saying we would see that we revealed three issues: (1) what problems and opportunities we face individually; (2) an indication of the extent to which they interact; and (3) the obstructions to and constraints on our ability to do something about them. I now appreciate the reality and implications of what Ackoff said to our seminar; “there are as many realities as there are minds contemplating them.” Each of the problems that we have described from our functional vantage points co-produce the mess that the company is currently experiencing. I also started to better understand an analogy he used to bring home the meaning of the mess; “Problems are to reality what atoms are to tables. We experience tables, not atoms. Problems are abstracted from experience by analysis. We do not experience individual problems but complete systems of those that are strongly interacting. I call them messes.” As I think about what was going on today, including my own comments, it becomes clear that what we are experiencing is a dynamic situation that consists of a complex system of problems. The weakness of our approach is that we are thinking of them as individual or isolated problems (atoms), when in systems thinking terminology, what we are really experiencing is a “mess,” that is, the interaction of the problems leading to how others see our enterprise. The VP of engineering goes back to the chart where he “corrected” the VP of marketing, “What we’ve been doing is using a reference projection, that is, extrapolating the past into the future. We in essence have been arguing over projections based upon the false assumption that what was ‘past will be prologue.’ Who in this room believes that the environment in which we have done business will be the environment in which we will do our business? The VP of Marketing and I were trying to make the current business better. Our differences were primarily based on different views of the business. Based on his experience and where he would like to see the company going, he really believes we need more products. Based on my experience and where I would like to see the company going, I think it would be better to have fewer products that are made really well. Instead of arguing from our functional point of view, we should have asked questions like: How could we resolve our differences in the context of what’s in the best interest of the customer and the company? Is there a way we can develop a product portfolio process that produces more products that are designed in a manner that allows me to make them with fewer problems? Perhaps the CIO has a partial answer through the use of new technologies that we need to find the time to better understand and make the determination of whether they can actually help. The Director of New Business Development went further and gave her impression of what would happen if we were to get into an entirely new business.” “Instead of projecting what each of our individual approaches could accomplish, we, as a team, need to look at these historical trends and combine them with

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approximations of what external trends—trends over which we have little to no control—are likely to do. I would bet that if we did that we would see, as the CEO started to point out at the beginning of this session, that the mess that we are in will result in a continued decline leading to disastrous consequences for the company— no matter whether anyone of us improves the conduct of his or her functional performance. The CFO was also right in her assessment that our income and cash flow are likely to continue to drop. If that does occur, it will further erode the company’s value and negatively affect the company’s ability to provide a proper return on investment to the shareholders. We need to understand and come to agreement on the ramifications of our current behavior and the mess we are in so that we can focus on the changes necessary to avoid the mess.” The engineering vice president then retrieves copies of his seminar notes and shares with his colleagues the section on developing an idealized business design: A bounded idealized design of a system… begins with the assumption that the system involved was destroyed last night. It no longer exists, but its environment is assumed to remain as it was, untouched…participants design the system… they would ideally have right now if they could have whatever organization they wanted. This design should be subject to only three requirements. First, the design must be technologically feasible. The intent of this requirement is to prevent the design from being a work of science fiction… It is important to note that this requirement does not preclude technological innovation—for example, invention of the fax machine or the videophone. There is no requirement that the design or any of its parts be economically feasible. Second, the design must be operationally viable, capable of working and surviving in the current environment if it were brought into existence. However, it need not be capable of being implemented. This removes the need to consider its practicality but it does require that the system designed obeys relevant laws and regulations currently enforced. Third, because any design is unintentionally but inevitably constrained by the designers’ lack of at least some relevant information, knowledge, understanding and wisdom, the system designed should be capable of learning from its own experience and adapting to internal and external changes. It should also be subject to change by internal and external agents. In other words, it should be ready, willing, and able continuously to improve itself and be improved by others. An idealized design is neither ideal nor utopian because it is capable of improvement. It is the best (virtually unconstrained) design its designers can prepare now but its design, unlike that of a utopia, is based on the assumption that nothing real can remain even approximately ideal for long. Therefore, the term “idealized” means the design is the best ideal-­ seeking system its designers can produce now. In an unbounded idealized design of a system, the designers are permitted to change any of the containing systems, but only in ways that affect the performance of the system involved.

Having listened intently and having observed the positive body language of his team members in response to the Ackoff’s ideas, the CEO speaks up: “The VP of Engineering has made clear that we have become accustomed to incrementalism, to tinkering with our business and usually from our individual functional perspectives. Instead we should consider the prospects of large-scale reform and determine if we are missing great opportunities. We always try to improve the current systems by

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continued analysis of what we know, normally ignoring the fact that there is much we do not know. We need to develop the attitude and skills to consider the whole system and how the parts interact. If I can borrow from what we have learned about systems thinking, we need to design a business system that is greater than the sum of its parts. We must think big, and this requires discontinuous and creative thinking. We need to remember the major advances in our company's history have usually resulted not from tinkering at the margins of existing operations but, rather, from bold new ideas.” The CEO and the group discuss the merits of the idealized design approach and decide to give it a try and conduct an unbounded idealized design session. They take the position that to get to the idealized design approach, they need to start with the assumption of a nearly clean sheet, that is, the business as they know it no longer exists, but its containing environment is assumed to remain as it was. Based on that agreement, the CEO states to the group: A conglomerate headed up by a corporate raider had just completed a hostile takeover of the ABC Company. The CEO has just returned from a meeting with the new owner who directed him to have the existing management team to come up with a plan that creates a dramatically new ABC—not just a plan that is focused on improving the existing company. If he is not satisfied with the creativity and aggressiveness of the plan, the current management team will all be fired and a new team brought in. The new owner has assured the CEO he will have access to sufficient resources to implement whatever plan the team develops, so long as the expected return on the investment is 50 percent great than ABC’s current return. He wants to see a documented plan, and the supporting information and knowledge, in one week. With the takeover story, the CEO set the stage for the transition from the earlier arguments to the idealized design activity by creating a “discontinuity” in the thinking process of the participants. The senior advisor who earlier introduced the notion of the zone of discomfort offers a description of a “destination” in which the “new” businesses provide growth not only by taking advantage of the existing customer base but also by meeting the needs of new ABC customers, possibly enabling the growth of the traditional business and if done properly, resulting in a transformation business greater than the sum of A+B. To illustrate her point, in Fig. 10.8, she adds another curve to the earlier chart and adds the concepts of Drucker in the article she mentioned earlier. The VP of engineering comments that the senior advisor’s idea, based on his seminar experience, could serve as an initial description of a possible idealized design from which the team’s goals, objective and ideals could be developed. It could also serve as a starting point from which the team can compare where the enterprise is now, so that gaps could be identified and closed by the new plan. Within hours, the team envisions a series of new businesses that make full use of the existing ABC customer base and also provide the new services to people who are not ABC customers. The new businesses they develop are designed to create a customer experience that is so well received that the new enterprise eventually gains the customer’s confidence. By gaining their confidence, the team will improve its chances of encouraging customers to try other current and future ABC products and services. They

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...Transformational (C) C>A+B New Business ...Transitional (B)

Stock Value

Existing Business ...Traditional (A)

Time Fig. 10.8  Demonstration of relating existing customer base and meeting the needs of new customers

embark on an intensive series of discussions, in an effort to establish a vision of what its members want their company to be, and the gaps they must close in order to get there. Once they have completed the gap analysis, they then create viable alternative strategies, to realize the idealized vision through successive approximations. With these alternatives clearly on the table, they perform a side-by-side comparison of risk and return for each alternative. The approach is designed not to pick the best alternative, but to develop insight into the value embedded in each. As they begin to understand the alternatives, they gain additional insight into the situation as a whole. Before the final review of each of the alternatives, the group goes through an exercise to identify any possible “disruptive” ideas—that is, ideas that may address the consumer problems in an economically less expensive way. With the situation more thoroughly understood, all the shared insights come together in the form of a new, hybrid alternative, which systematically combines the best elements of each of the initial alternatives, the underlying rationale for the new alternative, and the commitment to allocate resources to implement the hybrid strategy. By articulating the rationale for its decision, the group establishes a unifying vision that integrates the original conflicting points of view. The CEO closes the final meeting with the following observation; “In our previous approach to planning, final decisions and implementation were limited by future estimates of future revenues and costs based on past experience—most of which many of us believed to be good guesses—at best. In this idealized design approach, we have enhanced our chances of success by engaging all the parts of the system and ensured that in addition to knowing what to do, the team also understands why we are doing it! The revenue and profit targets we have set for ourselves are realistic and the assumptions upon which they are based are understood by all and they will be tracked to make sure we are not surprised by unforeseen changes.”

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“After reading more of Ackoff’s publications we have come to epitomize what he describes as reaching a consensus, that is, ‘complete agreement, not in principle, but in practice.’ Based on what we as an interdependent enterprise value, this is clearly the best strategy for us to implement. While it may not have optimized the situation for any one of the areas we each represent, we were able—once we were forced to think in an idealized way—to identify a solution that was best for the enterprise. We now need to implement the plan with the same energy and spirit with which we developed it. To do so will ensure that our company and our stockholders will benefit—which, ultimately, is in the best interest of each and every one of us.”

Encourage Learning

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I have been involved for nearly sixty years in either providing information to support a decision or in actually making the decision. As important as some of those decisions were, their value was enhanced by what was learned by observing what happened after the decisions were implemented. This chapter serves as a positive example of an approach designed to help an enterprise public or private to systemically understand what was learned from the actions that it has taken, particularly when the decision was proven to be a mistake. At the heart of this learning process is an open decision support system that pumps a free flow of information among employees and across functions in the support of a full range of decision processes. The enterprise’s nervous system needs to be a network of decisions that encourage and rewards the sharing and application of information. This systemic approach requires an open dialogue and a focus on learning that is based on the acceptance that in the 21st century we cannot be as certain about what might happen in the future as we once were (or thought we were) in the 20th century. Like a cardiologist with an angiogram, management must examine the enterprise to find blockages to the free flow of information. Internally, these blockages may exist in any number of forms: • Inadequate or passive market understanding capabilities; where decision-makers and information providers operate in separate functional worlds, and information is used only when it is determined, it is needed during a specific decision-making activity. • Intermediaries that stand between the market and the entire enterprise; A process that relies exclusively on third parties to provide “unbiased” reports that are relevant to the enterprise. • Lack of direct feedback mechanisms between customers, suppliers, distributors, and the enterprise.

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• Information systems that fail to detect and properly classify data coming from the marketplace and the community. • Managers who bring forth only the information that supports their decision and withholding evidence that exists and would likely challenge the wisdom of moving forward.

 rior to Making a Decision, Surface and Make Explicit P the Critical Assumptions First, Identify the Stakeholders There is a relatively straightforward method to ensure that the critical assumptions each of the enterprise’s key strategic and operating decisions are surfaced. Stakeholders can be identified by asking questions like the following to identify the key stakeholders, both within the organization and outside it. This activity should also address the assumptions that should be made about these stakeholders. • Who or what is affected by the decision? Who or what has an interest in the decision? • Who or what is in a position to affect its adoption or execution? Who has expressed an opinion? • Who or what ought to care about the outcome? The purpose of using stakeholders as the basis of identifying critical assumptions was clearly stated by Richard Mason and Ian Mitroff: 1 There is a strong theoretical reason derived from the concept of teleological (i.e., the use of ultimate purpose or design as a means of explaining phenomena) systems for surfacing assumption by means of a stakeholder analysis. A business firm may be conceived of as the embodiment of a series of transactions among all of its constituent purposeful entities, that is, its stakeholders. The final outcome of an organization’s plan will be the collective result of the effects of the individual actions taken by its stakeholders. Thus, a strategy may always be thought of as a set of assumptions about the current and future behavior of an organization’s stakeholders.

 ext, Conduct a Session to Surface and Challenge the Importance N and Plausibility of the Surfaced Assumption After the list of assumptions has been developed and comprehensively tested, the extent to which they should be monitored is based on two criteria:

1  Richard O. Mason and Ian I. Mitroff, Challenging Strategic Planning Assumptions, John Wiley & Sons, NY, 1981, P 43.

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1. The assumption should have a significant bearing on the outcome of the decision. 2. The assumption should be as “self-evident” and “certain to be true” as possible—but as C. West Churchman has noted—not all assumptions will be certain.

 fter Making a Decision, Learn from your Decisions—Particularly A the Mistakes—and Improve the Process As stated by Ray Dalio: Create a Culture in Which It Is Okay to Make Mistakes and Unacceptable Not to Learn from Them2

 ddressing a Problem Systemically, Creating a Whole that A Was Greater than the Sum of Its Parts by Identifying and Understanding the Positive and Negative Impact of the Interaction of the Parts During the early 1990s, the Decision Support Group I led at General Motors was being called on to address significant problems and opportunities facing the enterprise. In addition to developing the group’s reputation for doing good work, our group had also developed a reputation for taking a long time to complete an activity. Although we were able to demonstrate that although we took more time to provide the right information to making the decision, we had entered an era where the speed at which the decisions needed to be implemented needed to be significantly quicker—because of this, the mantra of “really good but slow” hung over our group’s head. An opportunity to overcome the “but slow” perception was provided when our group was directed to take on a very important assignment—under the condition that it would complete it in a very short time. The problem was the impact that the used car superstores like AutoNation and CarMax could have on GM. These stores offered a large selection of nearly new low mileage cars with warranties, roadside assistance plans, and services normally available to new car buyers. Sales for these new stores, only six years old, grew to $13 billion in 1998. GM management was being asked to respond to press and market analysts’ queries to the validity of the claims being made by the superstores and Internet companies, all intending to alter the relationship between the automotive producer and the customer. GM, like most of the automotive manufacturers, considered itself in the new vehicle businesses and the sale of used cars was an activity addressed by others. This attitude was based on the historical fact that most buyers of new vehicles, up to that time, were keeping their cars an average of more than six years, and given that most used cars offered for sale were over six years old, they were poor substitutes for new cars.  Ray Dalio, Principles, Simon and Schuster, New York, 2017. Page 348.

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It Had to Be a “Total” Team Effort Our group agreed to take on the assignment, but we made it very clear that since we were required to complete it in a short time span, we required continuous access to the key managers working on the problem. With that commitment from both sides of the process, the project started and was referred to as the “20 Day” project. The group put together a team that gathered all the previous information and knowledge that was available and, based on his work with John Sterman at MIT and with the assistance of Mark Paich and Lyle Wallace from, at that time, Decision Consulting, both now with PWC Consulting, and Nick Pudar, now a Senior Lecturer at the MIT Sloan School of Management, developed a simple working Systems Dynamic Model—including the ability to observe the interactions of new and used cars. The model also tracked vehicles from production through initial sale or lease, trade-in, the used car market and, ultimately, scrapping. It also tracked customers moving into and out of the market and included a simple consumer choice model for the new/used purchase decision.3

I dentifying What Was Thought to Be a Successful Sales Program Was Actually the Cause of the Problem As the initial model findings were being reviewed by the management team, the team was puzzled as to the source of superstores large inventories of attractive late model cars. Making full use of the comprehensive nature of the initial systems dynamics model they had developed; the team ran a full range of simulations on the model that revealed an unexpected systemic finding—the interaction effect of the GM sales organization’s use of short-term leases had not only led to increase sales but to the availability of nearly new used cars to the superstores. These short-term leases, combined with the extent to which vehicle quality had improved, led to these leased vehicles being more valuable at the end of their shorter lease period than they had been in the past. This was an extremely important finding because the higher the “expected” residual value at the end of a lease, the lower the lease payments. Customers also had the option to buy the car at the end of the lease at a specified price. Leasing as a share of total sales increased from 4% in 1990 to more than 22% in 1997. While basking in the success these shorter leases were having to increase sales, no one was considering what effect these nearly new vehicles would have on new car sales when the nearly new ones all came back into the market. By digging deeper and using the systems dynamics model’s ability to simulate 3  This example is more comprehensively covered in a GM case study found in, Sterman, John D., “Automobile Leasing Strategy, Gone Today, Here Tomorrow” Business Dynamics (New York: McGraw Hill Higher Education) 42–55. The case study goes beyond this chapter in that it provides a more detailed discussion of the systems dynamics process used in addressing the problem. It is also covered in Barabba, Vincent P. Surviving Transformation, Oxford University Press, New York, 2004, pp 135–159.

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alternative actions, it became apparent that the industry’s move from four-year leases in 1992 to three-year leases in 1993 and two-year leases in 1994 was a mistake that had contributed to the number of nearly new vehicles being sold by the super stores, and in 1996 and 1997, these actions would have an even more significant impact.

It Was a Functional Silo Problem From the sales department’s perspective, leasing was a great way of stimulating sales. Faced with dwindling market demand, they could increase incentives not by the traditional reduction in price, but by providing a higher fixed re-sale price for the leased vehicle—resulting in lower monthly payments. As Sterman pointed out the sales force believed that, “If all new car buyers switched to leases with an average term of three years, the trade-in cycle time would be cut in half and new car sales would double— all else equal.”4 But, in these more complex and dynamic times, not all sales were equal. The leasing actions had significant interactions with other elements of the vehicle business. In reviewing this assumption, the team found that in addition to increasing the sales of new vehicles, continuation of short-term leases would also increase the availability of nearly new vehicles, and now there were superstores in the market to sell them as an attractive alternative to buying a more expensive new car to many people. The other effect considered was that as the number of nearly new used cars increased, used car prices could drop leaving people who bought new and kept their car for six years with a vehicle that would not have the trade-in value they had counted on for the purchase of their next new car. From the perspective of the used car superstores, this was a plus. If the customer could not afford the difference between their trade-in value and the price of a new car, they would be able to acquire a nearly new leased trade-in vehicle at a lower price. The simulations made by Pudar and his team also indicated that when the leases shortened the average trade-in cycle, the average quality of used cars for sale would be higher leading more people to choose off-lease vehicles instead of buying new. The analysis also indicated the used market could feedback to reduce the number of customers who choose to buy their car when their lease expires. This was a critical observation because when, at lease end, used car prices are higher than the residual value written into the lease, the customer normally purchases the car below market value. If, as the analysis indicated, by the actions being taken in short-term leases, used car prices dropped below residual values, more customers would turn their cars back in and walk away. The number of high-quality late model cars would increase resulting in a decrease in used car prices, creating a vicious, not a virtuous, circle.

4  Sterman, Business Dynamics, Systems Thinking and Modeling for a Complex World, McGraw Hill Companies, 2000. Page 46.

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What Pudar and his team found was that the final total financial impact of the sales group’s strategy to increase “sales” is only felt after a long delay, and there was little that could be done to undo the earlier decisions. This insight raised the possibility that GMAC, GM’s financial organization, would face losses as used vehicle values fell short of the residual value they had booked and as fewer consumers exercised their option to buy, returning the car instead. It soon became clear that by the sales organization’s use of leasing to shorten trade-in cycle times and fleet sales, GM and other automakers were creating a glut of high-quality used cars at attractive prices. Superstores were, to some extent, simply the market response to the opportunity the manufacturers had created. Given the need for quick answers to the problem, one of the really significant approaches of the team was to configure the model as an interactive management “dashboard” that provided information on the full range of factors critical to a comprehensive strategy (e.g., inventory levels, sales volumes, prices, market share, and profitability). Using the model to test out their own ideas and getting nearly instant approximate answers, instead of hearing a presentation by someone on what they found, the integrated management team, with far broader experience, was able to come up with their own deep understanding of what needed to be done and to provide it quickly. The effort led to two compelling observations: First, GM would need to shift incentives to favor longer leases. Second, it was imperative to conduct a formal analysis to determine the impact of any pricing or marketing proposal on the used car market and its feedback to the new car market. Our market research organization was directed to develop and maintain research studies to better understand consumer behavior and to design the research program so that data would be continuously available. The decision team acted on the wisdom of Ackoff’s admonition that “management should be directed at the interactions of the parts, and not the actions of the parts taken separately.” As GM discovered, the potential future problem was not because of the growth of used car superstores. The problem was that shortening the lease period to sell new cars interacted in a positive way by providing nearly new used cars to the used car superstores. Gaining new car sales today through short-­ term leases was likely to decrease new car sales tomorrow. John Sterman reported in his case study the benefits to GM of understanding this interaction before the competition found out about the interaction in 1996 and 1997. In 1997, a flood of off-lease vehicles inundated the market. Used car prices fell significantly. As prices fell, fewer customers opted to keep their cars. The Consumer Banking Association reported that the fraction of vehicles from expiring full-term leases returned to lessor, rather than be purchased by the lessee, jumped from 29% in 1997 to 39% in 1998. Compounding the problem, about three-quarters of all off-lease vehicles returned to lessor companies incurred losses. The average loss in 1998 was $1878 per vehicle, 220% more than the average for 1993. GM’s early action helped it avoid these losses, while other carmakers found themselves facing huge reconciliation charges. Profits at Ford Credit Corporation

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fell $410 million in 1997 compared to 1996, a 28% drop, largely due to losses on off-lease vehicles. At GMAC, net income from automotive financing operations fell only $36 million, less than 4%, and overall GMAC profits rose more than 6%. In 1998, GE Capital dropped its partnership with Chrysler to finance leases because, as Automotive News (24 August, p.1.) reported: • GE Capital Auto Financial Services got burned on residual-value losses in 1997. Much of that was due to off-lease products from Chrysler • GE Capital cited residual losses as one reason for the decline in operating profits for Consumer Services, the GE unit that includes Auto Financial Services. Profits fell from $1.3 billion in 1996 to $563 million [in 1997]. In 1998, net income at Ford Credit rose to $53 million over the depressed level of 1997 but remained 25% below the net for 1996 (excluding one-time income from asset sales). GMAC’s net on auto financing rose $74 million over 1997, a rise of 4% over 1996, and total GMAC profit for 1998 rose $181 million over 1996, a gain of 15%. In 1998, Ford and other carmakers belatedly followed GM’s lead and began to move away from short-term leasing.5 The team effort demonstrated that there are many decision support tools to address these more dynamic and complex problems. And, as importantly, these problems could be solved profitably AND quickly. The performance of a system doesn’t depend on how the parts perform taken separately, it depends on how they perform together—how they interact, not on how they act, taken separately. Therefore, when you improve the performance of a part of a system taken separately, you can destroy the system. Russell Ackoff6

The general principle that is illustrated in this example is that complex problems almost always involve interacting elements. Remedying one element does not remedy the problem if it fails to take into account the interacting effects of other elements. Therefore, it is important to approximate the potential effects of these interactions over a prolonged time period to provide insight to the decision maker of possible positive or negative unintended longer term consequences.

 Sterman, Business Dynamics, 54–55.  Ackoff’s Seminar at Huntington Beach, March 6, 2003.

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The Relationship Between Data and Wisdom

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As the Senator Tower, Xerox, Kodak, and General Motors stories indicate, this book focuses on the need to improve the manner in which the collection and interaction of data, information, intelligence, knowledge is developed and used to make wise decisions in our fast-changing and more complex environment and to learn from what occurred after the decisions were made. An example of focusing on the parts and not the interaction of the parts occurred in my own journey. My initial approach to thinking about interactive decision making was based on a presentation at a Marketing Science Institute meeting in Boston around 1980 where one of the speakers quoted the poet T. S. Eliot asking, “Where is the knowledge we have lost in information?” I looked up the poem, “The Rock,” and found that Eliot preceded that question with another: “Where is the wisdom we have lost in knowledge?” That led me to suppose that if T.S. Eliot, a poet concerned with man’s relation to God, had the benefit of working with Edwards Deming, Russell Ackoff, Peter Drucker, and others, perhaps he would have added three additional lines, and with some slight modification, developed a decision hierarchy composed of parts that needed to be understood to gain meaning to an idea or issue that was being considered. It would go something like this: Where is the wisdom we have lost in understanding? Where is the understanding we have lost in knowledge? Where is the knowledge we have lost in intelligence? Where is the intelligence we have lost in information? Where is the information we have lost in data?

And rather than lines of poetry, he might have illustrated it something like this: My inclination to use poetry aside, the design of a decision hierarchy is not new.1 In my case, the refinery metaphor of the decision hierarchy fit nicely with my 1  Rowley, J. (2007) points to Ackoff’s contribution to the current discussion; “…authors often cite Ackoff’s 1989 paper as a source for the hierarchy.”

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KNOWLEDGE

INTELLIGENCE

INFORMATION

KNOWLEDGE

INTELLIGENCE

INFORMATION

D D D D D D D D D D D D

INTELLIGENCE

INFORMATION

INFORMATION

D D D D D D D D D

D D D

POPULATION AND ORGANIZATION REALITY REALITY

Fig. 12.1  Refinery decision hierarchy

background and training which led me to believe that many facts (represented by the Ds for data)— sometimes collected through interviews, sometimes generated from transactions or records, or through observation—are distilled into information; that the information is then transformed into intelligence, and then knowledge: all of which eventually provide understanding that is used to develop wise decisions.

 hinking Systemically: Value Lies Not Solely in Developing T and Understanding a Hierarchical Structure of the Elements but Also in Improving Their Interactions in an Attempt to Find Meaning Relative to the Issue Being Addressed The simplicity of the “parts” hierarchy was challenged by the conclusions of Harold Wilensky from his study of a wide range of cases from international relations, economics, politics, and welfare in the United States and abroad as far back as 1967: The way in which the DATA are put into context will strongly determine the way in which the INFORMATION can be used, and the inferences that can be drawn. By drawing inferences about how the INFORMATION relates to a specific issue or decision, the decision team can position INFORMATION as INTELLIGENCE.  To be INTELLIGENCE the INFORMATION must be: • CLEAR because it is understandable to those who must use it; • TIMELY because it gets to them when they need it;

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• RELIABLE because diverse observers using the same procedures see it in the same way (although they may draw different conclusions); • VALID because it is cast in the form of concepts and measures that can capture congruence with established knowledge or independent sources.2

I found further complications; what happens when the collectors of the information and the users of information do not share the same perspectives? For example, creative personnel in advertising or design believe their ideas cannot be assessed by asking potential customers whether they would use a service or buy the product that is being developed. Market researchers, on the other hand, believe there are methods available to capture the underlying values and preferences of potential customers so that an assessment of the potential value of the new idea can be made. Equally, financial personnel are looking for customers’ willingness to pay for the new product or service so they can calculate an expected rate of return to justify the use of enterprise capital. Faced with these complications, I became uncomfortable with studying the parts of the decision hierarchy that I had portrayed with a refinery metaphor that transformed raw data into wise decisions. Jerry Zaltman (now marketing professor emeritus of the Harvard Business School) explained my discomfort when he introduced me to “knowledge disavowal” Knowledge disavowal refers to the avoidance of knowledge in order to maintain the status quo or to avoid a difficult choice or threatening situation. It does not include the avoidance of information for reasons related to its perceived lack of relevance, timeliness, expected utility, or the cost of acquiring it. Knowledge disavowal is as systematic and pervasive as pro-knowledge phenomena and is found in all settings.

An example of knowledge disavowal is given in Chapter 13 when Kodak’s management accepted the solid evidence that their silver halide chemistry was likely to be replaced in 10 years by digital technologies. The knowledge disavowal took place in their selective decision, based on strongly held beliefs, to use digital technology to enhance silver halide technology rather than adopting a straightforward plan to replace it with digital technology. In this case, knowledge disavowal proved to be extremely damaging. On a more personal level, Jerry’s insight reminded me that, after developing the refinery decision hierarchy (Fig. 12.1), I had received overwhelming support and commendation from my peers for developing the simple and easily understood hierarchy. This very positive reaction led me to “avoid” considering alternative approaches that could challenge the direction I had taken and was the basis for continued commendation from my colleagues. In essence, I fell prey to Leon Festinger’s theory of “cognitive dissonance.” Here’s the brief version: Festinger identified key behaviors that individuals will use to avoid being put in the uncomfortable position of finding out they may be partially or completely wrong.

2  Harold L. Wilensky, Organizational Intelligence: Knowledge and Policy in Government and Industry (New York: Basic Books, 1967) Chapter 2.

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• Selective perception: Once we take a position on an issue, we will avoid information that is likely to increase dissonance. This selected behavior results in our making choices in what we read or see and includes finding or being associated with like-minded people who will help buffer us from information or ideas that contradict our belief and/or position. • The more important the decision, the greater the dissonance: The importance of the decision (in my case, a significant amount of time I devoted to develop my version of the hierarchy) leads to greater internal resistance to conflicting information once the fallacious decision has been made. There were also findings in Ian Mitroff’s book The Subjective Side of Science. Ian conducted extensive personal interviews with scientists about their beliefs about the moon before and then after the Apollo mission brought back moon rocks. After studying the before-and-after responses, he found that each scientist’s prior belief about the geological characteristics of the moon had a significant effect on their observations upon actually viewing the moon rocks.3 In my case, the extent of my knowledge disavowal was both wide and deep. In the initial refinery model, I completely ignored all of my experience in political campaigns, government service, and the political in-fighting among functions and departments in large corporations. In each of those experiences, I saw the effect of social arrangements and the political context on the development, use and misuse of information. In essence, the benefits found in the simplicity of the nice, neat hierarchy that had evolved in my thinking had led me to “avoid” concepts that were inconsistent with the direction in which I was headed. This does not, of course, mean that the hierarchical relationship is not valid and helpful in discussing the components. It is how it is understood and used that really matters. Jerry and I attempted to visualize these social and political effects with the following chart incorporating the concept of the “law of the lens.”4 We pointed out that the interaction of the parts of the hierarchy is complicated by assumptions, truth tests, expectations, and rules about decision-making that create a lens through which managers and researchers, as well as information users and information providers, get different views of the decision and its context (Fig. 12.2). In this more realistic illustration, the bent and rejected arrows between the elements illustrate the impact of a possible “distorted” viewing lens used by the individuals involved in collecting and processing data into information, intelligence, knowledge, and understanding, and eventually into a wise decision. The arrows recognize that the viewer’s predisposition on the issue directly affects how people see and accept or reject reports from their researchers and how they determine what is eventually considered in a decision. From the perspective of the person making the final policy or action decision, the chart points to the need to know not only what

 Mitroff, Ian (1983) The Subjective Side of Science, A Philosophical Inquiry into the Psychology of the Apollo Moon Scientists, Seaside, CA Intersystems Publications. 4  Ibid.: p. 44. 3

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Fig. 12.2  Refinery decision hierarchy modified by the law of the lens

information was rejected or modified (illustrated by the dotted lines emerging from the filter) but the reasons for the rejection, modification, and acceptance as well. It is important to understand the extent to which individuals in the decision process differ —and not simply focus on who may be right or wrong. For today’s complex issues, for which there are multiple “right” answers, an understanding of why people differ based on their underlying assumptions is as important to understand as to what might be perceived by many as the “right” answer. Today, both analysis (a method of studying the nature of something or determining its essential features) and synthesis (understanding the composition of parts or elements so as to form a whole) are necessary, but synthesis becomes more important as we face an increasingly unpredictable future. We need a mindset that understands that a complete system is composed of interdependent parts that cannot be divided into independent parts. Each part of the enterprise must rely on, and interact with, the rest of the parts if the enterprise is to succeed. Today, problems are best solved not by breaking them into functional bits, but by carrying them into the next larger system and solving them through integrative mechanisms. But even “carrying them into the next larger system” has the potential to lead to bad decisions if they are viewed through a distorted lens. As was clearly shown by Ian Mitroff who was able to show that a scientist’s view of the moon affected how he reviewed the moon rocks that were brought to earth The most powerful and dangerous case of the distorted lens is the predisposed mind. That is, a mind that is only prepared to see what it expects to see and that filters out what does not fit comfortably with its understanding of how things should be.

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Knowledge creation, dissemination, and application are themselves not separable processes, and the viewing lenses that we use mean that we all have the potential to experience and believe in different realities. This represents both a danger and an opportunity: a danger when the result is conflicted decisions; an opportunity when the sharing of different understandings creates a robust sense of reality and leads to better decisions. What I eventually came to understand is that we need a process that permits the enterprise to accommodate and share different notions of reality. It has also led me to understand that the purpose of a decision-making design is to provide an enterprise with the means to improve the way it inquiries about its opportunities and problems.

The Lens of Learning These different “notions of reality” were further explored by Peter Senge, who along with Chris Argyris and others has opened our thinking to the importance of learning and the way in which it occurs. In The Fifth Discipline, Senge describes those predisposed mindsets (mental models) as “deeply ingrained assumptions, generalizations, or even pictures or images that influence how we understand the world and how we take action.”5 C. K. Prahalad also provided a very active description of the role and importance of dialogue as a method of overcoming the predisposed mind in the learning process: Dialogue means interactivity, deep engagement, and a propensity to act—on both sides. Dialogue is more than listening to customers: It entails empathic understanding built around experiencing what consumers experience, and recognizing the emotional, social, and cultural context of experiences. It implies shared learning and communication between two equal problem solvers. Dialogue creates and maintains a loyal community.6

Prahalad’s description provides the basis for a plan of action, for both individual and collective learning. The value of his description is that it provides the first step in getting people to listen to others because there is a commitment to share between two equal partners. It implies a faith that understanding is made richer by suspending one’s own assumptions and beliefs long enough to consider those of others. Once this understanding is achieved, it prepares us for the really hard work of developing a solution to the problems we now better understand.

5  [Senge, P. The Fifth Discipline (1990), [Argyris, C. (1991) pp. 99–109, and Argyris, C. (1994) pp. 77–85. 6  Prahalad, C.K. and Ramaswamy Venkat R. (2004)The Future Of Competition Page 23.

Based on Good and Bad Experiences, A Beginning Discussion of the Potential Decision-Making Framework from Which Lessons Can Be Learned and Burnt Toast Can Be Avoided

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What follows is drawn, in part, from an article written by Russ Ackoff, John Pourdehnad, and myself, titled “Above and Beyond Knowledge Management.”1 In this chapter, I will start out by describing what is possible in relatively straightforward terms. Later in Chap. 14, I will provide a more complex and detailed introduction and steps needed to design the decision process that can lead to better decisions and the ability to learn from their outcomes The basic model design begins by addressing the limitations of the three components that are generally found in most of today’s decision processes (Fig. 13.1). 1. Decision makers – People use data bank to make decisions 2. Environment and organization – Receives direction from decision makers and uses and returns information to the traditional data bank while implementing decisions 3. Data bank  – Contains the organization’s data, information, knowledge, and understanding In this basic traditional model, a decision maker (people with authority to allocate resources) gets information from the data bank (what the organization knows or can acquire) to make a decision which will be implemented by the organization in the most efficient and effective manner known to them at the time of the decision.

1  Barabba, Vincent, Pourdehnad, John, Ackoff, Russ, “Above and Beyond Knowledge Management” The Strategic Management of Intellectual Capital and Organization Knowledge, Chapter 20. Edited by Chun Wei Choo and Nick Bontis, Oxford University Press, 2002 pp 359–369.

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Fig. 13.1  The traditional framework for a decision process model

The Need to Insert Learning into the Decision-Making Process The first type of learning is “single-loop learning”—the kind that occurs when errors are detected and corrected. This is our most familiar approach to learning. It occurs when someone in the enterprise finds a problem, studies it, makes changes, and gets the program back on track (Fig. 13.2). But while this type of learning is very important, it doesn’t help transfer learning across the organization. Only those who were involved in the original problem have gained anything. And so, we also need “double-loop learning.” Besides detecting and correcting errors, double-loop learning encourages the organization to actively question and modify existing values, norms, procedures, policies, and objectives. There are three critical concepts underlying this approach: 1. All of the components of the learning process are constantly interacting with each other. 2. Pieces of this system already exist in most organizations. The trick is to integrate and synthesize the decision-making process and the learning functions overall to move from analysis to synthesis without simply “imposing” a new model on the organization. 3. The data bank or data warehouse is not static or is it limited to a physical location. Rather, it should be described as an inquiry center within the organization that varies depending on what type of decision we are making. In other words, finance has a body of knowledge … Manufacturing has a body of knowledge as does the Quality group, the Marketing divisions, the Design engineers. The Inquiry Center is designed to provide methods for each of the functions to share in the knowledge of the other functions. The Inquiry Center’s potential contribution to these concepts should be designed around three capabilities: 1. Being able to respond to specific requests for data, information, knowledge, and understanding made by decision makers. 2. Provide unsolicited data, information, knowledge, and understanding based on the interest profile of the decision makers, similar to what Google does to its users based on their/user interest profile.

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Fig. 13.2  Single- and double-loop learning process

3. Provide a network of the individuals that have the cognitive ability to cope with complex problems. In essence, like a brokerage organization, the inquiry center will bring “solution seekers” and “problem solvers” together on a short notice.2 The goal is to link these resources as much as possible, but we want to avoid the tendency to dump everything into a storage system. The inquiry center should not merge an information technology system that puts everything “online.” Such systems are useful, and they support organizational learning, but while they might have worked reasonably well in the past, they are no longer sufficient. Rather, the system should be able to sort, codify, and synthesize information before storing it, so that those who need it can find relevant insights, knowledge, and decisions.

 ow Your Enterprise Can Make Better Decisions and Learn H from Mistakes by Designing and Inquiry System John Pourdehnad and Peter A. C. Smith further elaborated on the design of an organizational learning and adaptation model approach to getting started in their 2012 article:3 • Decide – Choose a course of action and make a record of the decision. • Act – Take action or instruct others to do so. • Monitor – Track the implementation, expected outcomes, and the validity of the assumptions on which the expectations are based. • Detect – Identify any significant difference between the performances observed and expected outcomes and assumptions. • Diagnose – Determine the causes of mistaken expectations and assumptions. • Prescribe – Initiate changes in the system or its environment based on the diagnoses and prepare a decision record on such action. • Evaluate – Assess the impact of the prescribed changes.  This approach is based on the work of Henry Cheesboro a pioneer in open innovation.  Pourdehnad, John and Smith, Peter A. C., Sustainability, organization learning, and lesson learned from aviation. The Learning Organization Vol. 19 No. 1, 2012 PP77–86. 2 3

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• Retain – Collect lessons and make them easily accessible to all those authorized to receive it The Inquiry Center can be as high tech or low tech as the organization chooses. Insights may be stored in a traditional library, a file, or a computer system. The basis of this approach is found in a very long journey, in this case a journey taken by C. West Churchman and Russ Ackoff and their colleagues, which has evolved into what we might call a “learning and adaptation” model to help improve our ability to make strategic decisions, and then learn from them. The Inquiry Center begins with modifications to the basic three components initially described (shaded boxes). These components represent most of the approaches to decision-making that have been a critical part of past processes. But in a learning organization, as shown in Figure 12.3, the decision-making process must be more robust and complete so that it allows decision makers and information providers to effectively work together and collect and use relevant information and to learn from their decisions after they have been made (Fig. 13.3). If we want to not only make decisions but also to learn from them, we must add several additional components because learning is not a natural act in traditional organization structures. For the organization to learn, a system for learning and adaptation must be developed and incorporated into the enterprise decision process. That’s where the full learning and adaptation model comes into play. The only change to the original three components is the data bank is now referred to as an inquiry center. We will further develop this framework later in this chapter. To enable continued monitoring, the enterprise will have to document the information that was used to support the important decisions it has made.

Fig. 13.3  Enhanced decision process model

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This can be accomplished through the use of a decision record, which captures the decision, as well as the underlying assumptions that were used, the expectations that were held, and the types of information, knowledge, and understanding (and their sources) that were employed in making the decision. The following is an example of a decision record. Each enterprise should develop its own to capture the characteristics and the needs of the decision process of the enterprise. It was created by John Pourdehnad when consulting for General Motors.

Decision Record Each enterprise should design its own decision record. In general, the record should be written in a third-person objective language. The intent is that it be understood by a reader with no previous experience with the situation. Decision title/topic: Use key descriptive characteristics/categories. Description of issue: Describe issue within the context of the decision topic that was decided (check one): • Describe decision, including how it addresses the issue. • No decision (if no decision was made, explain why not).

Decision Makers List the name, title, and the date of the persons making decision.

Strategic Context Describe pertinent issues that were brought to bear in the discussion of the decision, i.e., what were the influences, motivations, perceptions of the decision makers. • Arguments pro: Describe factors considered by decision makers that support decision. • Arguments con: Describe factors considered by decision makers that do not support decision. • Expected outcomes: List outcomes (e.g., performance criteria, deliverables).

Assumptions on Which Expected Outcomes Are Based Assumptions are variables that influence the outcome but are not directly controlled by the decision makers. Who is responsible for implementation: Attach project implementation plan, the resources assigned, and the decision-making process:

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The decision record serves as the memory record to monitor and compare the assumptions and expected outcomes with what actually occurs. It also makes all aspects of the decision available to future decision makers. The record is reviewed and agreed upon by the decision-making team, thereby providing the organizational memory of what was decided, why it was decided, and who made the decision. Once the decision is implemented, we use the memory comparator function to track what was expected to happen against what actually happened, as well as the underlying assumptions. This comparison of “before and after” reinforces the importance of monitoring and learning from the implementation of our decisions. When the comparator function finds no significant difference between what is expected and assumed, and what actually happens, then nothing needs to be done, other than to record this in memory for future reference. If, however, a significant difference is found, the Diagnosis and Prescription activity tries to find out why. Perhaps the information used in the original decision was in error, or the decision-making process was faulty, or maybe the decision was correct, but it was not implemented properly, or there were unexpected changes in the containing environment.

Environmental Scanning We can go even further, as well, by using Environmental Scanning tools. Often, organizations do not clearly state the parameters of their decisions: What were the deliverables? What were the underlying assumptions? • Did we assume the economy would remain stable? • Did we assume that the competition wouldn’t make a counter offer to our customers? Environmental scanning is a broad-based function, which should be ongoing at all times and which adds an important additional dimension to our ability to make strategic decisions and learn from them. It is here that we monitor both the environment and the organization providing our decision makers with information and knowledge that tends to exist outside their daily radar screens. Here we track such things as labor strikes, company reorganizations; weather that shuts down the distribution system, activity by the competition, and changes in the value of foreign currencies—the list goes on and on. Without this constant monitoring, the company risks becoming myopic. To be able to anticipate the future trends, the enterprise should change from having a narrow view of focusing on the current relevant industry to a more 360o radar scope approach, because it has become evident that competition can come from anywhere. I say that because the “scanning” information is used to identify threats and opportunities in both internal and external environments of the enterprise. This

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information is directly transmitted to alert the decision makers in addition to being captured by the decision support function for future use. By scanning and assessing the strategic implications of internal and external forces, we are able to focus beyond issues that are merely relevant to a specific decision, and proactively understand what might be happening within our organization or the larger environment that could impact the effectiveness of our overall decisions. If operating the model appears complex, that’s because organizational learning is complex, and there are many interactions between the various elements. This is not a flow diagram. Rather, the model offers a two-dimensional representation of an integrated, cross-functional process that leads to an improved decision process, which incorporates organizational learning.

Implementation Implementing this activity will not be easy, but it is certainly feasible. The difficulty will come in getting agreement to: 1. Have the various functions share their knowledge in a form that can be understood by others. 2. Have decision makers willingly list the reasons why their decision should be constantly monitored. 3. Have the enterprise be willing to take the time to list the reasons behind the decision to ensure that the enterprise will reinforce its belief when the decision turns out to be correct, and to learn to question existing beliefs when it doesn’t. 4. Discovery. The enterprise determines that the value of learning from past decisions is greater than the cost that might be incurred if the underlying assumptions of the decision are made public which might encourage litigation that is brought forward because the basis of a decision is now available through discovery.

To Illustrate How a Decision Process Should Work, Let’s Examine How an Inquiry Center with a Learning and Adaptation Approach Might Have Helped Kodak Take Advantage of a Missed Opportunity and Avoid Its Eventual Fall into Bankruptcy

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Kodak’s Missed Opportunity In 1986, Kodak research labs developed the first megapixel sensor, which could record 1.4 million pixels—somewhat greater than the 1-million-pixel sensor that the assumption surfacing exercise indicated might be able to produce prints of acceptable quality (in this case, limited to 5x7 inch prints). The research also explored algorithms and technology to improve photographic prints and several other promising technologies. In essence, Kodak initiated a number of activities that led to digital technology that could have positioned them to compete sometime in the future with other manufacturers of digital cameras. Their primary motivation, however, was to focus on methods to use digital technologies improve silver halide technology rather than replace it with digital. In essence, management did not determine a strategy—as the company founder, George Eastman, had when he twice replaced an existing still profitable old technology with new technology—to replace silver halide with digital. Instead, they chose a path of using digital to improve silver halide rather than replace it. This strategy eventually led to others, like Sony and Cannon, to replace silver halide. As pointed out earlier, Kodak demonstrated Churchman’s wisdom that the value of information is in its use and not its collection. In the case of the information that was provided to Kodak management about digital photography, we have an example of information that lost considerable value because it was not used to the extent to which it should have been. In this case, it proved to have been a very costly example.1 Had a formal system, like the inquiry center, been in place to track the assumptions accepted by management when they made that 1981 decision, the following events could have alerted Kodak management that some of the underlying 1  Paul Carroll and Chunka Mui, Billion Dollar Lessons, Penguin Group, 2008 provides a more detailed discussion of Eastman Kodak’s missed opportunity in digital photography

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assumptions regarding digital photography were becoming more correct than the assumptions supporting an improved silver halide photography. In 1981, some of the clues to the rapid evolution of digital technology were available, though they were still a bit fuzzy. By 1987, those clues were clear. Kodak simply didn’t have a systemic process in place to take formal notice and address their implications. Their mental predisposition toward maintaining silver halide caused them to pay less attention to the following changes than they should have. • In 1985, the Pixar Corporation introduced the worlds’ first digital imaging processor. • In 1986, Kodak developed a Charged Couple Device (CCD) of 1.4 mega pixel capacity. (Instead of film, a digital camera has a sensor that converts light into electrical charges. The image sensor employed by most digital cameras is a charge-coupled device). • In 1986, The NewTek Corporation produced the Digi-View digitizer designed to run on the Amiga 1000 Computer. • In 1986, MegaVision introduced a 2000-line camera system called the Tessera, the very first digital camera to be used in commercial photographic applications. • 1987 Vidak, a Kodak venture company, began selling the Megaplus, the world’s first megapixel camera using Kodak’s 1.4-million-pixel CCD. With this new information in hand, a less predisposed management team would have reviewed the strategic decision again. This is how they might have used what they learned and determined what actions, based on this new information, the enterprise initiate. They would begin by reviewing the original decision: In 1981, the decision-makers concluded that the science of photography (using silver halide technology) would continue to form amateur still picture-taking systems. Improvements in digital technology would complement (not replace) silver halide technology in advancing photography. If an Inquiry Center had been in place, it would have been able to take the following steps. 1. After reviewing the original decision, they would use the memory comparator function to see how the current outcome (in 1987) related to what was expected: As early as 1985, there were signs that digital technologies were being introduced that were capable of leading to the significant replacement of silver halide-­ based photography. Many of the assumptions supporting the belief that Kodak should continue primarily building on its silver halide technology were proven wrong. 2. Next, they would engage in diagnosis and prescription to explain why the difference occurred: Management, influenced by Kodak’s history as the leader in silver halide technology, accepted the assumptions supporting silver halide and diminished the importance of the assumptions supporting digital technology by indicating that—although they were likely to occur—they would contribute to improving silver halide, not replacing it. As pointed out earlier, they did not ­follow the practice of George Eastman, who, after founding the company, replaced existing technology twice.

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3. They would then conduct environmental scanning, which would indicate that events were occurring that were generally being ignored by management: During that period, an objective review of digital technology introductions would make it clear that those technologies could replace silver halide cameras. 4. With this accomplished, they would have recorded a new understanding of what was happening in the decision support and data bank: In 1987, it would become clear that digital technology can successfully compete with silver halide. Kodak should use its patents and advantages in digital technology to replace silver halide before their competitors replace it and left them behind. The diagram below illustrates how this understanding could have been developed (Fig. 14.1). The insight captured in the decision support and data bank could also have been applied to other strategic decisions that were based on the same assumptions found in this decision record. Kodak would have been able to review the assumptions underlying other strategies like employee acquisition, acquisition of other enterprises, and investments in existing businesses, as described below. In Fig. 13.5, we have changed the label of the Decision Support and Data Bank to Interactive Multi-­Function Knowledge Data Bank to emphasize the need to ensure that the findings of this decision are made available to the entire enterprise and allows them to review their decisions based on the questioning of similar assumptions supporting their actions.

Fig. 14.1  What might Kodak’s use of a decision record as part of an inquiry center have looked like

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Enterprise Actions

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Fig. 14.2  Relationship between enterprise strategy and actions. Applying double-loop learning

Also in Fig. 14.2, the decision record on the right is related to the strategy to integrate digital technology with silver halide. You can see how that decision could affect other strategic decisions to the left.

Acquisition of Other Enterprises Becoming aware of the changes taking place in the digital world might have put Kodak in a position to acquire firms with expertise and methods for employing digital technology. It also would have allowed Kodak to find ways for digital experts to work with the silver halide scientists to improve the interaction between the two technologies wherever possible. These acquisitions could have been financially supported by using the funds that were put aside to improve the ways that digital would improve silver halide. For example, instead of spending significant sums on updating the silver halide facilities at Kodak Park, the Eastman Kodak’s technology hub purchased the Sterling Drug Company for $5 Billion. Imagine what the return of a 5 Billion dollar investment in Apple, whose stock was selling in 1985 for around $10 would have been worth in addition to gaining access to the latest digital expertise.

Employee Acquisition and Promotions Because of upcoming retirements, Kodak would soon be replacing several key managers. Considering the potential new role for digital technologies, the search for executives within and outside of Kodak might have focused on candidates with an appreciation for and experience in those technologies. Unfortunately, this approach was not available at the time and leaders did not put little sufficient effort into challenging actions taken throughout the corporation to

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maintain silver halide technology as their primary technology. Imagine what might have occurred if Kodak’s leadership had utilized this type of analysis when it was becoming clear the company had 10 years to prepare for digital technology to replace silver halide and , instead of reinvesting in the large existing Kodak Park facility to improve methods for producing silver halide material, they could have used those resources to further develop their own digital technology, purchased companies with leading edge understanding of that technology, put a digital technology-­minded management team in place and lead the industry into the realm of digital photography. Paul Carroll and Chunka Mui explored this issue in their book Billion Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years. When Kodak Chairman and CEO Colby Chandler retired in 1990: 2 The choices to replace him came down to Phil Samper and Kay Whitmore. Whitmore represented the traditional film business, where he had moved up the ranks for three decades. Samper had a deep appreciation for digital technology and what it could do for photography. I remember John Smale who was on both the Kodak and GM Board of Directors calling me and informing me that it looked like the board was going to select Whitmore, and what was my impression of that decision. I told John that, based on the direction in which digital efforts would soon be taking over the taking of pictures, I thought it was the wrong choice and they should be selecting Samper. However, the board, influenced by Kodak management members on the board, chose Whitmore. Samper demonstrated his grasp of the digital world by heading off to be President of Sun Microsystems, then CEO of Cray Research. Whitmore lasted all of three years, before the board fired him in 1993. This example demonstrates developing an inquiry center is not simple and it will not be easy to develop and gain acceptance throughout the enterprise. So, my suggestion is that when you see the complexity of what I will be suggesting throughout this book, do not let any of your predispositions toward change and complexity discourage you from, at a minimum, determining if there is anything in the suggested approach that will improve the decision process of your organization. Also keep in mind Edwards Deming’s widely respected opinion regarding the avoidance of decision making that leads to burnt toast. In the case of Kodak because of the process and information that was available in 1985, the enterprise had the ability to stop the burning of toast and instead create a golden-brown toast. Because of their strongly held predispositions, they did not take advantage of the information and process that was available and eventually ended up with burnt toast, which led to eventual bankruptcy of their storied enterprise. An enterprise that had previously continuously adapted to changing social conditions and technology to maintain a successful business and golden brown toast for over ninety years.

 Paul Carroll and Chunka Mui, Billion Dollar Lessons, Penguin Group.

2

Developing the Design and Implementation of an Inquiry Center That Contributes to the Ability to Avoid Burnt Toast

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Up to this point, the book has provided examples of the need to improve the manner in which knowledge is collected, designed, and presented, so that collected information will be effectively used to improve decision-making. This chapter is about developing a process, based on those experiences to better understand the issues facing your enterprise and to think about what to do and develop an approach on how to do it for your enterprise. Rather than providing a finished model and suggesting that you follow it, I have taken this position based on my many years of experience which have led me to believe there are significant differences in each enterprise and that the “one size fits all” approach is not likely to work when working on improving an enterprise decision process. In the article I wrote with Russ Ackoff, Johnnie Pourdehnad we made the point that: The following design is meant to be treated as a theme around which each organization should write its own variation, one suited to the uniqueness of its structure, business and environment. It should be noted that the apparent complexity of the design derives from the not-so-apparent complexity of the process of learning and adaptation. All functions in the model are often carried out in the mind of one person who learns from the experience, usually unconsciously.1

Although it will not be easy, what follows is an approach, which should be modified for your organization’s particular characteristics and implemented in a manner that encourages everyone to learn and adapt based on what was learned from previous decisions.

1  [ibid] Barabba, Vincent, Pourdehnad, John, Ackoff, Russ, “Above and Beyond Knowledge Management” The Strategic Management of Intellectual Capital and Organization Knowledge, Chapter 20. Edited by Chun Wei Choo and Nick Bontis, Oxford University Press, 2002 p 363.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 V. P. Barabba, A Systems Thinking Decision-Making Process, Management for Professionals, https://doi.org/10.1007/978-3-030-89960-8_15

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 he Design Elements of Learning and Adaptation T Support System The following illustration (Fig. 15.1) is the beginning description of how to think about a design plan around which an organization should develop its own variation, one suited to the uniqueness of its structure, business, and environment. It should be noted that the eventual complexity of the finished design derives from the complexity of the process of implementing a learning and adaptation process that will lead to a more transformational decision process. Although the functions contained in the model are often carried out in the mind of one person who learns from experience, sometimes unconsciously, the purpose of this approach is to have the entire enterprise have access to what was learned. In this way, everyone can act more efficiently and effectively in achieving the goals of the enterprise.

This portion of the Learning and Adaptation Support System should be quite familiar to many readers. It is, however, just the beginning of the discussion. Since support of learning should be continuous, a description of it can begin at any point, but we will begin in the lower left side of Fig. 15.1 with the generation from the Part of the Enterprise Involved in the Decision providing [1] Inputs (Data, Information, Knowledge, and Understanding and Wisdom, which may be the whole organization) and its environment. These inputs are received by the inquiry center. Because data must be processed to convert it into information, knowledge, understanding, or wisdom; data processing is a necessary part of the inquiry center. Requested inputs [2] are transmitted back to the decision makers in response to their [3] requests. When the decision makers receive the inputs with which they are provided, they may not always find them useful, particularly if they were not involved in the creation of the information. They may find them unreadable, incomprehensible, doubt their validity, or question their completeness. Therefore, the receipt of [2] inputs often leads them to [3] additional requests. Such requests require two additional capabilities of the inquiry center. This subsystem must be able to generate new data—that is, [4] inquire into the part of the enterprise managed and its environment so that the additional [1] inputs required can be obtained. It must also have the ability to re-use data, information, knowledge, or understanding previously received or generated. This means that it must be able to store data in retrievable form. A data-­ storage facility is a file of information whether it resides in a drawer or computer. It is a part of the inquiry center’s file/bank. Once the new or old data have been processed to provide the information believed to be responsive to the request received from the decision makers, it is transmitted back to them. This request-fulfillment cycle may continue until the decision makers either have all the inputs they want, or they have run out of time and must make a decision with whatever they have. In some cases, they may believe that the time and cost of further inquiry is not likely to be justified by the improvement or increase of inputs that they believe is possible.

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Fig. 15.1  beginning description plan suited to the uniqueness of an enterprise structure, business, and environment

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The output of a decision maker’s desire to do or not to do something is a message that is either an [5] Instruction or a motivational message from the decision makers and is addressed to those in the part of the enterprise involved in the decision whose responsibility it is to carry out the instructions. An instruction is a message to others or oneself that is intended to increase or maintain the efficiency of the organization. A Motivational Message is one intended to affect the values of an organization, or some of its (internal or external stakeholders), hence the organization’s effectiveness. A decision, of course, may be to do nothing as well as to do something. In either case, a decision record [6a] needs to be made. Even when a decision to do nothing is made, no instructions may be required but a decision record needs to be completed to document the reason for the decision to do nothing. Every decision has only one of two possible purposes: to make something happen that otherwise wouldn’t, or to keep something from happening that otherwise would. In addition, there is always a time by which the effect of the decision is expected. Therefore, to learn from a decision, it’s expected outcomes and expected times of their realizations should be made explicit and recorded. All this is equally true of decisions involving the implementation of a decision. If, for example, a decision has been made to build a new factory, there are expectations about when it should be completed, what it should cost, and so on. A good example of the value of recording a decision not to do something is found in the OnStar story, which is discussed in Chapter 7. When the GM team evaluated the opportunity suggested by a GM subsidiary Electronic Data Systems (EDS) and ATT, their initial analysis found customers to be interested, even though they weren’t quite sure exactly how the system would benefit them. They also determined, however, that the capital costs of installing the necessary micro-wave towers across the entire country would be so high that it was decided not to proceed. Later EDS came back; this time with GM’s other subsidiary, the Hughes Corporation. The new idea was to provide a space-based infrastructure that required significantly less capital to get started because the necessary satellites were already in orbit. Based on that new information combined with the information that demonstrated the value of the concept that was stored, the decision was made to move forward, and GM benefitted greatly from being able to quickly revise the earlier decision not to take action. The boxes shown in these figures represent functions, not individuals or groups. As will be seen, they may be performed by individuals, groups, or even a computer and related technologies. These next charts identify additional activities by the numbers in and boldface and connected by dotted lines:

Introducing the Decision Record to the Learning Process As shown in Fig. 15.2, the [6a] decision record and the [6b] monitoring instructions should be sent to the inquiry center which has responsibility for checking the validity of the expectations, assumptions, and information used in making the decision and its implementation. When obtained, information about the validity of the expected effects, the relevant assumptions, and the information used should be sent

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Fig. 15.2  Introduction of inquiry center concept

to the memory and comparator as [7] monitoring inputs. Then, using the information on the [6a] decision record stored in the memory and comparator and the [7] monitoring inputs a comparison should be made of the actual and expected effects, and the assumptions and relevant occurrences. When the memory and comparator finds no significant difference between expectations and assumptions and the performance actually observed and reported

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in the [7] monitoring inputs, nothing needs be done other than enter at [8a] a report on comparing what was expected and what actually happened in the inquiry center for future references. This record preserves what is known or believed. Therefore, it should be stored in an easily retrievable form; for example, by the use of keywords. However, if significant differences are found they are reported as [8b] deviations to the diagnosis and prescription function. Such deviations indicate that something has gone wrong. A diagnosis is required to determine what has and what should be done about it. The purpose of the diagnosis is to find what is responsible for the deviations and to prescribe corrective action. In other words, the diagnostic function consists of explaining the mistake, and therefore producing understanding of it. This is addressed in Fig. 15.3. There are only a few possible sources of error, each of which requires a different type of corrective action. 1. The [2] inputs used in making the original decision were in error, and therefore the inquiry center file/bank requires [9a] correction of inputs so that it will not, or is less likely to, repeat that type of error. The information used in decision making can also come from the surveillance function which is designed to track relevant changes in the environment in which the enterprise is operating. Therefore, it too may require [9b] correction of inputs. 2. The decision-making process may have been faulty. In such a case, a [9c] correction of this process should be recommended to the decision makers for approval. It can be wrong in several different ways: it made incorrect assumptions; it drew incorrect conclusions from the information available to it and hence formulated unrealizable expectations; it did not have sufficient information available to make a correct decision, and even if incorrectly formulated, the objective(s) to be pursued or problem(s) to be solved. That is, it either did the wrong thing or committed an error described by Mitroff and Silvers as TYPE III Error which is described as developing good answers to the wrong questions and TYPE IV Error deliberately selecting the wrong questions for intensive and skilled investigation.2 3. The decision may have been correct but it was not implemented properly. In such a case, a [9c] correction of implementation is required for either the behavior of those in the Part of the Corporation Managed which was responsible for the implementation. 4. The environment may have changed in a way that was not anticipated. Though the environment is not subject to control, it may be subject to influence (9e). What may be needed is a better way of either anticipating such changes, decreasing sensitivity to them, or reducing their likelihood. This may require corrections of any types of actions [9a-9e]. Through these types of corrective actions, the Diagnosis and Prescription function assures both learning and adaptation.  Mitroff and Silvers, Dirty Rotten Strategies, Stanford University Press, 2010 Page 1.

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[8c] Report on Comparisons [6a] Decision Record Expectaons, Assumpons, inputs and Process Used DECSION MAKERS

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Fig. 15.3  Introducing concept of surveillance internal and external

As illustrated in Fig.  15.4, a complete learning & adaptation support system regularly obtains information on a number of internal and external [10] performance indicators some of whose values are capable of raising important questions that had not been considered. When these important questions are surfaced, they [11a] are sent to the diagnosis and prescription function and are [11b] recorded in the file of

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[12] Threats and opportunies

[13a] D & P Decision Record [8b] Deviaon

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Fig. 15.4  Complete learning & adaptation support system

the inquiry center. Once a diagnosis is obtained, the [12] threats and opportunities revealed are reported to the decision makers. Whenever the diagnosis and prescription function prescribes a change, a [13a] diagnosis & prescription decision record of it should be prepared. This record is sent to the memory and comparator where its content can be compared with the facts

Uses of a Decision Record That Led to Saving Lives

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supplied by the input supply subsystem in response to the [13b] monitoring required issued by the diagnosis and prescription function. Deviations [9a] are then reported to the diagnosis and prescription function where corrective action should be taken. Such corrective action may involve correction of the diagnosis and prescription function or any of the types of change previously referred to. Such changes are what makes learning how to learn and adapt possible. An individual information support system can be integrated in the broader system. All it requires is a way of identifying an individual’s interest by keywords and the decision maker’s profile. Individuals can then be notified of entries that are relevant to them. If at this point you are still concerned that this process may be too complex to be fully utilized or accepted in your organization, simply draw a diagonal line (as is shown in Fig.15.5 from the upper left-hand corner to the lower right-hand corner). The illustration should make it clear that part to the left of the diagonal to some extent already exists in most enterprises, and it is the part above the diagonal that is missing in most enterprises. The usefulness of the part that exists is usually called a management information system and is generally quite valuable for improving decisions. Although such systems have proven valuable in the past, their current value is limited until it is imbedded in the more comprehensive system that incorporates the learning and adaptation functions shown to the right of the diagonal which better address the more complex and complicated environment in which we must now think and operate. The traditional MIS alone has relatively little effect on individual and organizational learning because it does not effectively deal with mistakes caused by unexpected changes and their needed correction.

Uses of a Decision Record That Led to Saving Lives A 2012 article by John Pourdehnad and Peter A. C. Smith, referenced earlier, discussed benefits of the inquiry center concept3 “Historical data on airline safety shows that in the early days of commercial aviation, airline fatality rates were approximately 1,500 times higher than those of railroads and 900 times higher than those of bus lines (Compton’s Encyclopedia, 2000). Today it is commonly known that air travel is safer, in terms of passenger miles, than travel by automobile, bus, or railroad. According to Wikipedia (2011) when it comes to a question about risks associated with a particular long-range travel from one city to another, the most suitable comparative statistic is “deaths per billion passenger-kilometers”, thus giving a reason to name air travel as the safest form of long-range transportation. Clearly, the commercial aviation industry is doing something right about safety. Indeed, its progress has been impressive. It exemplifies a successful learning and adaptive (L&A) system. In order to understand its accomplishment, it is necessary to understand the principal functions of its system. The commercial aviation system, in addition to its operating environment, consists

3  John Pourdehnad and Peter A.C. Smith, “Sustainability, organizational learning, and lesson learned from aviation” Emerald, Vol. 19 No. 1, 2012pp 77–86.

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Fig. 15.5  Relationship of existing decision process in most enterprises that is often missing advantages of proposed decision process

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of three major components that interact continuously. According to Krause,4 these are: (1) Software (all the regulations, SOPs, policies, manuals, checklists, maps, performance charts, tables, and graphs) (2) Hardware (the aircraft itself and its supporting system) (3) Liveware (pilots and all the people who they deal with on the ground and in the air) “No [function] is totally isolated from the others; if one element is inferior, it will have a negative impact on all the others.” 2.2. Focus of Learning Since human errors are considered to contribute to more than 70 percent of aviation accidents, the major focus of learning in the aviation system is on improving decision-­ making by pilots and other key stakeholders. In recent years, study of pilot judgment and aeronautical decision-making (ADM) have been a mission of the Federal Aviation Agency (FAA) and the National Aeronautics and Space Administration (NASA). To reduce errors of judgment and improve decision-making skills, a decision-making model has been tailored for the system to fit different flying conditions. It provides a logical decision-making process, even when decisions must be made under pressure. The DECIDE model, according to Krause, stands for: D Detect – The pilot detects the fact that a change has occurred that requires attention. E Estimate – The pilot estimates the significance of the change to the flight. C Choose – The pilot chooses a safe outcome for the flight. I Identify – The pilot identifies plausible actions to the change. D Do – The pilot acts on the best options. E Evaluate – The pilot evaluates the effect of the action on the change and on the progress of the flight This model is used both prospectively, to train personnel, and retrospectively, to diagnose errors and, in some instances, to prepare case studies of known accidents. 2.3 Detecting and correcting errors Although great effort is directed at raising the competency level of all those who work within the aviation system, mistakes occur. In order for the aviation industry to learn and improve, it must and does have a way of identifying errors. A “black box” is on every commercial aircraft. It consists of flight data and cockpit voice recorders. N. Faith5 wrote that black boxes are the best single source of information for investigators. As a memory, they provide data on the long series of events that occur during a flight. Crucially, black boxes are completely objective. Because they record events as they occur, they are exempt from interference and influence where organizational managements have opportunities to exercise defensive activities.6 Analysis of the data in black boxes enables investigators to compare expected happenings with what actually happened and to determine where the difference between them has occurred. Determining what caused deviations from expectations is the responsibility of the National Transportation Safety Board (NTSB). Its main function is diagnosis and prescription—to investigate accidents, identify their causes, and recommend improvements. To achieve a high standard of excellence, the NTSB is a professional body with its own investigators and methodologies.

4  Krause, S.S. (1996) Aircraft Safety: Accident Investigations, Analysis and Applications, McGraw Hill, New York NY. 5  Faith, N (1997) Black Box: Why Air Safety is No Accident, Motorbooks International, Osceola, WI. 6  Argyris, RI, (1990), “On learning and the systems that facilitate it” Reflections, The sol; Journal, Vo.l

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The Potential Benefits of an Inquiry Center Although developing an inquiry center for your enterprise will not be easy nor inexpensive. Based on my experience in both the public and private sector, in my judgment once you have a concept of an inquiry center operating in your enterprise, you can expect the following benefits: • An unambiguous sense of direction permeates the organization. The mission of the enterprise is known and understood by everyone—it is the universal premise behind all decisions and tasks, and it is focused on finding better ways to gain customers, develop, and—most importantly—keep them. • Strategic and operational plans reinforce each other. There are no downstream disconnects between activities. • Decision-makers understand how their roles contribute to the total enterprise— their accountability is clear. All the activities are aligned. • The interaction of market knowledge with creative product and marketing ideas results in a steady stream of innovative and customer-satisfying products and services that leverage the capabilities and resources of the entire enterprise. • There is empowerment throughout the enterprise. Direction and accountability are clear, but there is no micro-management from above. • Conflict and differences of opinion are not suppressed. When they surface, they are channeled into a process that seeks a consensus decision. That is, complete agreement—not necessarily in principle, but definitely in action. • There are no simplistic ideas about how customers or competitors will respond to the actions of the enterprise: planning and execution recognize the full complexity and uncertainty of the market. • Existing and retired employees of the extended enterprise are the most effective recruiters of new employees. • Other enterprises want to do business with you. • When employees are asked, “If this enterprise was a school where people come to learn how to get imaginative idea accomplished, would you pay tuition for your children to attend?” The answer is an enthusiastic “yes.” And most importantly, if Edwards Deming was still around, he would be very impressed by the outcome of your decisions that appear to be headed toward golden brown toast.

Not a Conclusion, but a Beginning As pointed out at the beginning of this book, my goal was to provide a sketch of an inquiry center learning and support system which you can design for your enterprise by addressing and acting on the following capabilities and actions which I came to appreciate while engaged during my entire 60-year career in both the public and private sectors. In doing so, you will need to gain the ability to:

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1. Convince the leadership of the enterprise of the need to alter the current mindset as to the type of knowledge and understanding, they need to manage the enterprise. 2. Learn to think systemically. 3. Understand the impact of alternative business designs. 4. Design the business you want: Using future environmental scenarios to provide insight into appropriate strategic and tactical actions. 5. Record your decisions so you can learn from the identification and corrections of errors by continually monitoring the known and seeking deeper insight into the unknown. This will not be easy, but with continued effort and creative thinking and action, it can be accomplished. The next thing to do is to get started with an understanding that there are alternative approaches to improving the decision process. Also, this is not the only approach to improved decision-making. The book Decision Quality co-written by my good friend Carl Spetzler CEO of the Strategic Decision Group provides an excellent approach to addressing improved decision making.7

7  DECISION QUALITY, Value Creation from Better Business Decisions., Carl Spetzler, Hannah Winter, Jennifer Meyer, John Wiley and Sons, 2016. Coping with Chaos., Ian Mitroff and Ralph H. Kilmann, Springer 2021.

The Benefit of Leadership’s Improved Thinking and Decision-Making that Overcame the Desire of Some to Focus Exclusively on the Existing Business

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GM was beginning to hit on all cylinders in the early 2000s. The $4.3 billion loss from 1992 had become a $3.5 billion profit in 2003. The pension fund, $21 billion in the red in 1992, showed a surplus of $3 billion in 2003. But in 2009, GM’s centennial did not turn out as intended, when the company entered government-­ sanctioned bankruptcy. The easy thing for me to say would be that, well, GM was fine when I retired in 2003. The honest answer, though, is that the whole car business got ugly—no one, not even highly vaunted Toyota, escaped the problems that came from over-capacity, higher fuel prices, a credit crisis, and an economic recession that crushed consumers, reducing overall vehicle sales in the United States by nearly 40%.

 M Epilogue: An Opportunity That Was Delayed at Great G Cost—A Retired Employee’s Perspective So, what happened between 2003 and 2010 to cause GM to go into a government-­ assisted bankruptcy? As pointed out earlier, GM made many significant advances in globalizing the organization, achieving success in China, and implementing major product improvements, some of which are still in place today. At the same time, GM also had many problems, including the failed Fiat alliance, continuing losses in Europe, a Yen exchange rate driven by the foreign exchange carry-trade that inflated competitors’ profits, and a heavy reliance on incentives to sell vehicles in the United States. The most compelling issue that needed to be resolved centered on GM’s legacy costs. These were the pension and healthcare obligations that had accumulated over 50 years of labor agreements, a decade of zero stock returns that affected pensions, the cost of health care that increased 46% (vs. general inflation of 26%), and dramatic productivity improvements that resulted in early retirements and led to having one working employee for every four retirees receiving benefits. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 V. P. Barabba, A Systems Thinking Decision-Making Process, Management for Professionals, https://doi.org/10.1007/978-3-030-89960-8_16

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Rising fuel prices added to the crisis for GM. Large trucks and SUVs were the last large profitable product for domestic automakers. The decline in sales of both hurt profits tremendously. The changing market conditions and the changed economic conditions led to an opportunity to reach an unprecedented agreement with the UAW on dramatic changes in health care. The UAW for its part, through the leadership of Ron Gettlefinger, reset its members’ expectation that the rise in benefits would continue. This resolved a problem that many public employee unions are faced with today. Together the UAW and GM were able to get a new healthcare deal approved by the rank-and-file mid-contract; this set GM on the path to end its legacy healthcare problem. Because it took so long to overcome the legacy of the past, before the benefits of the combined efforts of the UAW and GM could be felt, the automotive industry was hit with a financial collapse and the largest recession since the Great Depression. The freezing of financial markets and the fall of nearly 40% in industry sales created a crisis for everyone. Even highly regarded Toyota would go from making billions to losing billions. Ford, either by luck or prescience when Alan Mullaly took over in 2006, borrowed against the full value of the company assets which provided them with sufficient cash to make it through without assistance. GM and Chrysler were forced to go to the government for financing to restructure, in a government-assisted bankruptcy. In the end, the changes resulting from GM’s thoughtful and careful approach did not achieve their potential in time to overcome the new economic conditions of 2008 and 2009.

 he Price of Not Positively Interacting T with the Containing System My assessment is that during the 1992–2009 period, GM had identified strategic plans to overcome the issues it faced. Although the plan to generate increased income from customers after the vehicle was sold had the potential to set it apart from other automotive companies, GM did not move fast enough to alter its traditional approach to decision-making to take full advantage of the plan. Also, although it started to improve the way it managed the interaction of the parts over which it had control, it did a poor job of managing the enterprise’s interactions with its containing system; that is, the communities in which it worked, the global society (which had concerns over its perceived actions) and elected officials, some of whom tolerated the enterprise while others saw it as an appeaser of organized labor. Although things were improving, there was a deep concern throughout the firm over whether the economy would stay strong, because if new car sales dropped, GM still had to provide resources for its infrastructure and employees. At this point, our group surfaced the concept of moving a portion of GM’s resources to gain income from people who were using their cars whether they were old or new. In our mind, this strategy could serve as a partial backup if new car sales declined (Fig. 16.1).

The Price of Not Positively Interacting with the Containing System Fig. 16.1  Relationship of current GM strategy to alternative business designs

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GREAT THE CALIBER OF THE FIRM

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Physical Products: Knowledge Products “Products primarily “Products primarily made up of ATOMS” made up of BITS”

Figure 16.1 illustrates the extent to which GM management could have directed that a business design be created which builds on the GM OnStar installed base and market position (e.g., commercial and licensing agreements, call center operations, marketing and sales, hardware and vehicle validation, etc.) to a broader set of applications and services based on an expected future technology and service trajectory—likely to be developed by resources within and external to the GM enterprise (vehicle integration, new services, human–machine interface, gateways, alliances and license agreements, wireless communication, etc.). The primary metric to be used to determine the values of this endeavor is the extent to which it improves GM’s market value, with emphasis placed on operating GM as a system designed to ensure the GM enterprise is worth more than the sum of its parts measured independently. A critical component of the discussion was to leverage our traditional business (which is primarily a business of designing, manufacturing, and selling products made up of “atoms”) into an integrated set of downstream knowledge-based subscriber businesses (which primarily provide products and services made up of “atoms AND bits”). This business design would have to leverage our large share of the existing served market to develop a very large subscriber base. It would do so by allowing customers who purchase our vehicles to select from a full range of knowledge-­based services (ranging in price from virtually free to highly valued and priced options) enabled by factory installed technology embedded into the vehicle.

 nfortunately, a Zone of Discomfort Delayed the Introduction U of this Potentially New Form of Income When the plan was being reviewed, Bob Lutz, who had made significant contributions to GM’s basic vehicle business, took the point of view of those who wanted to stay focused on the design and development of new vehicles. He supported his

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position by referencing the fact that Ford had also tried to go downstream as we were proposing. They were very unsuccessful and lost a lot of time and money.

I mportant Differences Between Ford’s Experience and Our Strategy The problem with his argument was that our proposal differed significantly from Ford’s approach. Ford CEO Jac Nasser approached a company called Wingcast and asked them to put a deal together that would position Ford to increase its share of the after-sale income. This of course is not what we had in mind for GM. Wingcast was given an assignment and interpreted the assignment to mean creating a business plan for Wingcast, not for Ford. For example, from their perspective since Wingcast made a part, they had to consider how much they would charge for it. Should they make it just for Ford or for the entire industry? They not only spent a considerable amount of time figuring out what the product was but also focused on what it meant to Wingcast. Our plan, in contrast, proposed that GM do something for its customers that would benefit both those customers and GM, whereas Wingcast was doing something for many clients, which would benefit Wingcast. It was a completely different approach to conducting the new business.1 Although those who wanted to stay focused on the strategy which emphasized the continuation of the design and development of new vehicles, which was accepted by management, the rationale for their approach was based on information from an unsuccessful Ford strategy, which was not consistent with what we were suggesting, and used it as rational to “stay the course.”2 One of the studies we conducted made clear that GM was perceived, at that time, as a company that provided downstream services. The perception of GM as a company that could handle technical capabilities was right up there with IBM and Microsoft. The concept was well received at that time because people saw how it would work. The actions taken by GM and other automobile manufacturers (including Ford) in recent years clearly demonstrate that GM would have benefited by taking the downstream revenue strategy early in 2000. Whether that would have prevented bankruptcy is hard to estimate, but at a minimum the company under Mary Barra’s direction would now be even further ahead than they are now in—moving in a new direction.

1  Woodall, Bernie and Kevin Krolicki. “Special Report  – How Ford became Detroit’s last man standing,” Reuters, January 7, 2011. 2  Sawhney, Mohanbir, Wingcast: Creating and Capturing Value in Telematics, Kellogg School of Management Case Number: 5-104-042, 2004.

“What Is GOOD for General Motors is Good for the Country”

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 Very Early Warning Not About the GM as a Business, A But the GM’s Public Perception Peter Drucker wrote an epilogue in the 1972 edition of Concept of the Corporation, in which he took a 25-year retrospective look at what he had said about GM and how GM reacted to the publication of the initial 1946 edition. Drucker rated GM (in 1972) a success as a business—it became stronger within its industry. He rated GM a failure as an institution—it became the target of attacks from many areas of society and was perceived by many as the perfect American villain. In the epilogue, he reflected on the changes he suggested and the results of GM’s actions since that time: And yet, up to this day [1972], the GM model has remained the one general model of organization for large institutions, and, of course, especially for large businesses. One may argue that GM should have taken the critical look at itself that I proposed twenty-five years ago. But, in retrospect, my critics within GM at that time have been proved right. Not to have changed anything has been the foundation for GM’s success in terms of sales and profits. But it also clearly has been the source of GM’s failure as an institution. For today GM is working hard to overcome its past negative public perception—not because its cars do not sell or because it lacks efficiency. GM is in trouble because it is still seen by some people as deeply at odds with basic needs and basic values of society and community. 3

“What Is GOOD for General Motors is Good for the Country” In 1997, I was asked to participate in a US Senate Hearing. 4 During that hearing, I made the following comment. Mr. Chairman, I find it interesting that I am at this hearing offering advice to the government, based on my experience, much of which was gained as an employee of the General Motors Corporation. I say that being somewhat concerned that many people familiar with the often-repeated quotation: “What’s good for General Motors is good for the country.” might be so bothered by the statement that they would ignore the transferability of the GM experience to the situation at hand. After reviewing the events leading up to the reported quotation, however, I believe a little historical clarification would be of value.

“What Is Good for the Country Is good for General Motors” During his Senate confirmation hearing to become Secretary of Defense, former GM President, Charles E. Wilson, was asked, “If a situation did arise where you had to make a decision which was extremely adverse to the interests of your stock and General Motors Corporation ..., in the interest of the United States Government, could you make that deci Drucker, Peter, Concept of the Corporation, Revised Edition, John Day Company, 1972. Page 305  Testimony, Vincent P.  Barabba, General Motors Corporation, Subcommittee on Government Management, Restructuring and the District of Columbia, United States Senate, April 9, 1997 3 4

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sion?” Wilson replied, “Yes, sir; I could. I cannot conceive of a conflict because for years I thought what was good for our country was good for GM and vice versa.” 5 It is unfortunate that the news reports of his testimony interpreted the “vice versa” to mean “What’s good for the GM is good for the country” and published only this interpretation as a direct quote. Other accounts attribute Mr. Wilson confiding to GM’s general counsel that what he had meant by his “vice versa” was “and what is bad for the country is bad for GM.” 6

The Need to Overcome Misinformation About General Motors On balance, as recently commented on in the press, GM is not even close to the disaster many have made out to be. The company made its share of mistakes, which were compounded by the severity of economic recessions. It went to the government seeking financial help in the form of a loan—not a bailout. After all, in addition to having played a major role in developing and leading the “arsenal for democracy” during World War II, it also established between 1947 and 1973 an industry-wide wage pattern that created the middle class. It has had paid hundreds of millions of dollars to its retirees over the last 50 years instead of having a major portion of those expenses paid for by the government, as was the case with some of its overseas competitors. Instead of support based on significant past contributions to society, it received a verbal thrashing and was ordered to change at the direction of government-appointed advisors. The good news is that, because of the speed at which the government allowed it to go through bankruptcy, GM lowered its operating costs further than it already had by working with the UAW to reduce legacy costs associated with retirement and medical care expenses.

A Suggestion for the “New GM” Now that GM is again a public company, its new management team, led by Mary Barra, has demonstrated its ability to continue to build and market great cars that generate profits and provide great service after the car is sold while also funding new strategic initiatives. In essence, she has done a very good job of utilizing the range of available business designs (Fig. 16.2). In the Make and Sell Design, GM has continued to predict, based on its experience and very capable market intelligence approach what the market requires. Its car and truck program is operating at a profit, much of which is used to fund GM activities in the other business designs.

5   U.  S. Senate Nomination Hearing, Charles E. Wilson, January 15, 1953 Washington, D.C. GPO,: 1953. 6  See Robert A. Nitschke, The General Motors Legal Staff 1920-1947 (Detroit, Mich. 1989) 41.

Anticipate and Lead

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Fig. 16.2  Illustration of alternative business designs

Sense and Respond In the Sense and Respond Design, GM has understood that the future is not easily predicted nor controlled. The leadership of a sense-and-respond enterprise tends to encourage managers to recognize that the unpredictable environment requires giving up control of procedures and processes. In this design, GM has empowered people to improvise and adapt to changing conditions. They have addressed this issue by using new technologies that allow potential customers the ability to identify limitations of current products and demonstrate their desire for alternative solutions. GM’s participation in the “transportation as a service” arena, the investment in Lyft, the acquisition of Cruise Automation (for self-driving cars), and introduction of the electric Chevrolet Bolt serve as examples of successful activity in this business design.

Anticipate and Lead The anticipate-and-lead design assumes the future is largely determined by what the enterprise purposefully does to change things In 2020, GM said it would invest $2.2 billion in Factory ZERO, then called Detroit-Hamtramck assembly, to produce a variety of all-electric trucks and SUVs. The factory is designed to reflect GM’s vision of a future with zero crashes, zero emissions, and zero congestion. GM also said all of its light-duty vehicles will be zero emissions by 2035 and the company will be carbon neutral by 2040. On January 12, 2021, General Motors announced the formation of BrightDrop: BrightDrop, which will offer an ecosystem of electric first-to-last-mile products, software, and services to empower delivery and logistics companies to move goods more efficiently. These BrightDrop solutions are designed to help businesses lower costs, maximize productivity, improve employee safety and freight security, and support overall sustainability efforts. “BrightDrop offers a smarter way to deliver goods and services,” said Mary Barra GM Chairman and CEO. “We are building on our significant expertise in electrification, mobility applications, telematics and fleet management, with a new one-stop-shop solution for commercial customers to move goods in a better, more sustainable way.”

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BrightDrop was born out of GM’s Global Innovation organization and joins the lineup of other recently launched Global Innovation startups, such as OnStar Insurance, OnStar Guardian, and GM Defense. From a growth strategy standpoint, this new business will unlock areas of Business to Business, expansion of the Ultium platform and software and service opportunities. In August of 2021, Mary Barra said General Motors will introduce two new zero-­ emission vehicles for its commercial customers. These will be a full-size battery-­ electric cargo van and a medium-duty truck that will be powered by both the GM’s Ultium electric batteries and its Hydrotec hydrogen fuel-cell technology. And there appears to be more coming.

The Need to Continue Developing a Positive Image However, beyond these positive strategic initiatives, the enterprise needs to learn from the criticism it received when it was forced into bankruptcy—some of which still lingers. When GM asked for the level of financial support it needed, the request was rejected. Peter Drucker clearly articulated the cause of the rejection when he so prophetically provided an early warning 40 years ago in his 1972 epilogue: The major lesson we can learn from revisiting General Motors is that an institution, like an individual, is not an island unto itself. It has to solve the basic problem of balancing the need for concentration and for self-limitation with concern for its environment and compassion for its community. General Motors’ success is clearly the success of the “technocrat.” But so is General Motors’ failure.

Emerging into the New General Motors (Fig. 16.3) My suggestion is to continue in the anticipate and lead business design, as its new leadership has over the last several years, through activities such as Mary Barra’s outreach to young women to encourage and support them to gain the type of education that will benefit them in the future. The development of new applications for use of vehicles serving community interests, etc. GM also needs to develop a clear and concise communication program that points to the company’s past, current, and future contributions that demonstrate a concern for its environment and its compassion for its community. Additionally, in reviewing any current action, GM should assess the extent to which those decisions over time will contribute to winning the support needed from the society in which the enterprise performs its function. To ensure that the company learns from these future actions, as stated in Chapter 15, the actions taken should be recorded in a well-documented decision record, and the assumptions underlying that decision record should be monitored frequently (Picture 16.1).

A Reflection

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(C) An cipate and Lead Serving the Needs of the Community

Perceived Enterprise Value

(B) Sense and Respond OnStar and Downstream Revenue (A) Make and Sell “a car for every purse and purpose” 1908

2000

2020

Fig. 16.3  History of GM business designs

Picture 16.1  Time Magazine covers with Mary Barra and Buck Weaver

A Reflection If, Edwards Deming, Russel Ackoff, and Peter Drucker were still around today and each had seen Mary Barra’s picture on the Cover of May 2021 Time Magazine with GM being listed as One of America’s Most Influential Companies and thinking back to Buck Weaver being on the cover in 1938, I believe they would, each in their own way, enjoy a piece of golden brown toast with a slight smile on their faces.

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In Summary There’s no question that the experience at GM was the highlight of a career with many great (and some not so great) moments. My tenure at GM ended in 2003 on a high note when, during my retirement dinner, Russ Ackoff during his comments referenced our first encounter 30 years earlier, “The worst mistake I every made was to oppose Vince’s nomination to be Census Director”, Peter Drucker, who sent a video, said, “There are two major propositions to Vince’s approach. The first one is that the journey does not start with the departure, it starts with the destination. The destination creates the system and so the center point in Vince’s approach is to be completely clear about the destination that is desired and required and to organize the abilities of an organization around it. And the second major proposition, as far as I see, is that this clear definition of the destination enables us to see a crisis as an opportunity and to see where the strengths are… on which to base action. These may sound very mundane, but actually they are very radical propositions and they make, may create a different way of seeing, a different way of thinking and a different way of acting. They Create effectiveness.” And finally, GM Chairman Jack Smith closed the evening with the following comment: “You stretched our thinking and our horizons, and for that we will always be in your debt. You are one of those people who left a lasting mark on GM.”

Index

A ABC Company, 103–112 Ackoff, R., 27, 107, 119, 121, 163 American Medical Association Political Action Committee (AMPAC), vii American Statistical Association, 25, 27, 97 Anticipate-and-lead, 100, 161, 162 Apple, 100, 138 Arbirary and capricious, 44–47 Argyris, C., 126 Assumptions, 5, 22, 23, 28, 39, 45, 46, 52, 63, 65, 80–83, 91, 101, 108–111, 114, 115, 117, 124–126, 129, 131–133, 135–137, 144–146, 162 AutoChoiceAdvisor, 92, 93 AutoNation, 115 B Barabba, Sheryl, 31, 82, 83 Barabba’s Law, 51 Barra, M., 158, 160, 162, 163 Bauer, R., 12 Behind the silver curtain, 50 Bell, H., 62, 63, 93 Bell, W., 21 Bentsen, L., 6 Bernardi, E., 15 Best Corvette Yet, 73–77 Bjelland, O., 3 Blitzer, H., 51 Boyd, d., v Breedon, B., 56 Breglio, V., 21 BrightDrop, 161, 162 Buff, M.E., 49 Burke, Y.B., 15

Burnt toast, 3–5, 87, 88, 93, 121–122, 127–133, 139, 141–153 Business design–make-and-sell, 98, 99 C Cadell, P., 41 Cadillac Escala Concept, 76, 77 California Redistricting Commision, 17–19 California State University Northridge, 9, 12 Carlisle, S., 87 CarMax, 115 Carroll, P., 135, 139 Carter, J.E., 35 Census Bureau, 3, 17, 22, 25–35, 39, 42–47 Chandler, C., 139 Cherry, W., 74, 76 Chrysler, 119, 156 Churchman, C. W., 5, 115, 130, 135 Clark, R., 7 Cognitive dissonance, 123 Communication Associates, 19, 84 Corvette, 73 Cray Research, 139 D Dalio, R., 115 Danta & Society, vii Datamatics, 5, 21–22 Davenport, Tom, xiv Dean, J., 25 Decision hierarchy, 121 Decision Loom, 58–60, 101 Decision making information (DMI), 21–22 Decision Making Process Model, Learning, 130

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 V. P. Barabba, A Systems Thinking Decision-Making Process, Management for Professionals, https://doi.org/10.1007/978-3-030-89960-8

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Index

166 Decision making process model, traditional, 50, 128, 129 Decision record, 129, 131–133, 137, 138, 144–149, 151, 162 airline safety, 149 learning process, 101, 113, 144–149 Kodak, 121, 123, 135–139 value of keeping, 65 Decision Support Group, 115 Deming, E., 3–5, 97, 121, 139, 152, 163 Dialogue decision process (DDP), 65, 66, 68, 78 Dialogues, 10, 42, 65, 66, 68, 75, 78, 84, 101, 107, 113, 126 The Diffusion of Innovations, 33 DiGiovanni, M., 67 Double loop learning, 68–73, 128, 129, 138 Drucker, P., 4, 58, 80, 84, 85, 88, 91, 97–101, 106, 110, 121, 159, 162–164 E Eastman, G., 135, 136 Eckert, J. Presper, 30, 31 Edison Junior High School, 43 Electronic cameras, 49, 53 Electronic hillsides, 24 Eliot, T.S., 121 Environmental scanning, 132, 133, 137 Envisioning Network, 81 Estrada, L., 43 EV1, 82, 83 EXPLOR award, 93 F Falcone, R., 93 Fallon, W., 49, 52, 53, 56, 63 Festinger, L., 123 The Fifth Discipline, 126 Ford, G., 30, 71, 158 Ford Credit Corporation, 118 Fuji Photo, 49 G GBF/DIME, 33, 34 GE Capital, 119 General Motors, 4, 18, 49–56, 74, 80, 115, 121, 131, 159, 160, 162 General Motors misinformation, 160 General Motors OnStar, 90 Geographic Base File (GBF), 33, 34 Glen, J.H. Sentor, 23, 92

GM’s public perception, 159 Goldwater, B., 15, 17 Gunn, J., 22 H Hansen, Senator Cliff, 26, 27 Hartley, J., 74, 76 Harvard Business School, 17, 18, 55, 77, 86, 123 Hawkins, P., 21 Hidden Persuaders Are Made of Straw, 13 Hogarth, R., 31, 32 Howard, R., 54 Huber, C., 88, 90 Humphrey, H., 21 Humphreys, G., 30 I Ingram, J., 29 Inquiry center, 53, 128–130, 135–139, 141–153 Inquiry center, potential benefits, 152 K Kahn, H., 28, 64 Kassarjian, H., 12 Kearns, D., 41 Killer App, 86 Kilmann, R., 38, 153 Knowledge disavowal, 123, 124 Kodak, 38, 49–54, 121, 123, 135–139 Kodak’s missed opportunity, 135–138 L Lave, L., 81 Law of the lens, 124, 125 Learning and adaptation support system, 142–144, 147 Lennox, D., 37 Lens of learning, 126 LePore, J., vii Lincoln, A., 18–20 Little, J., 54 Lovins, A., 81 Lutz, B., 157 M Mackie, J., 18, 20 Make-and-sell, 98, 99

Index Malloy, Edna St. Vincent, 58 Marketing Science Institute, 121 Market Insight Corporation, 93 Marshall, T. Justice, 47 Maslow, A., 10 Mason, R., 114 Mathematically based models, appropriate use, 51 Mauchly, J.W. Dr., 30, 31 McColough, P., 37, 41 McGee, Senator Gale, 26, 27 MegaVision, 136 Millay, Edna St. Vincent, 58 MIT, 23, 42, 92, 100, 116 Mitroff, I., 27, 38, 44, 77, 81, 114, 124, 125, 146, 153 Mondale, W. Vice President, 41 Moore, S., 42 Muhammad, W.D., 42 Mui, C., 86, 135, 139 Munn, H., 10 MyProductAdvisor, 84, 90, 91, 93, 100 N Nasser, J., 158 Negroponte, N., 100 New insights, 65, 111 Newman, P., 21 NewTek Corporation, 136 Nixon, R., 21, 25, 30 Nofsziger, L., 20 Norton, A., 75 O O’Connell, B., 56 OnStar, 84–90, 100, 144, 157, 162 P Packard, V., 11, 12 Paich, M., 90, 116 Palo Alto Research Center (PARC), 40 Pearce, H., 80, 82 Pixar Corporation, 136 Plato Dialogues, 10 Political Analysis of Socio-Economic Tabulations (PAST), 20 Political campaigns, 15–25, 55, 78, 124 Pourdehnad, J., 127, 129, 131, 141, 149 Powers, J.D., 92 Prahalad, C.K., 126 Precinct Index Priority System (PIPS), 20

167 Predispositions, 32, 53, 57, 58, 98, 99, 124, 126, 136, 139 Price, Waterhouse Co. (PWC), 81, 90, 116 Proxmire, Senator William, 26 Psychological radar, 100 Pudar, N., 89, 90, 116–118 R Racial Disparity, 28–30 Reagan, R., 15, 17, 20, 55, 94 Refinery decision hierarchy, 122, 123, 125 Refinery model, 123 Reinvention, 35 Research Utilization Group, 38, 39, 99 Richfield, J., 10 Riegle, D., 15, 17, 19, 20, 55, 56 Rockefeller, N., 15–17, 30–31 Rogers, E., 33–35 S Samper, P., 49, 139 San Antonio, 6, 26 Sanders, H.B., 5–7 San Fernando Valley State College, 9 Sawhney, M., 90, 91, 158 Seale, B., 29, 42, 43 Selective perception, 124 Senge, P., 126 Sense-and respond, 99, 100, 161 Shabazz, A.A., 42, 43 Shevky, E., 21 Short for Statistics U.S. (STATUS), 30, 31 Short-term leases, 116–118 Sillars, M., 12, 13 Sillas, H., 43 Silo problem, 9–13, 117–119 Silver curtain, 50, 56, 62, 63 Silver halide, 50, 52, 53, 123, 135–139 Single and double loop learning, 68–73, 129 Skaneateles, NY, 49 Slywotzky, Adrian, xiv Smale, J., 54, 63, 139 Smallwood, D., 40, 92 Smith, A., 76 Smith, J., 54, 63, 81, 164 Smith, P., 129, 149 Socrates, 10 Sophists, 10–13 Spencer, R.B., 15, 18 Spencer, S., 16, 18–20 Sprizzo, J.E. Judge, 47 Stakeholders, 46, 114, 144, 151

Index

168 Stanford University, 21, 81, 146 Starr, Lawrence, xiv Sterling Drug, 138 Sterman, J., 116–119 Strategic Assumption Surfacing and Testing (SAST), 44, 52 Strategic Decisions Group (SDG), 64, 65, 153 The Subjective Side of Science, 124 Sun Microsystems, 139 Surviving Transformation, 98 Systems dynamics model, 116 Systems thinking, 97–101, 107, 108, 110, 117 T Tapscott, Don, xiv Technology Entertainment and Design (TED) conference, 86, 100 Thinking systemically, 122–126 TIGER system, 33 TIME magazine, 58, 163 Tower, Senator John, 5–7, 15, 26, 121 Toyota, 68, 70–72, 89, 155, 156 2002 truck program, 70–73 Turnbull, S.L., 81 U UCLA, 12, 15, 17, 43 United Auto Workers (UAW), 18, 156, 160 Urban, G., 23, 92 Uthurusamy, Ramasamy, xiv

V Vilardi, Ernest, xiv W Wagoner, R., 86, 88 Wallace, L., 42, 116 Watergate scandal, 25 Weaver, Henry Grady "Buck", 58, 60–63, 91–93, 163 What is good for General Motors, 159 Whig Convention, 18 Whitmore, K., 139 Wilensky, H., 122, 123 Wilson, C., 159, 160 Windleband, W., 12 Wingcast, 158 Wirthlin, R., 21, 55 Wurman, R., 86 X Xerox, 35, 37–41, 49, 56, 61, 64, 77, 92, 99, 121 Xynetics plotter, 31 Z Zaltman, J., 38, 77, 78, 123 Zarella, R., 80, 86