Decision-Making – Page 2 – understand-culture

Oxymoron

An oxymoron is a contradiction in terms, such as “cruel kindness”. For Americans, “a decision making process” is in many ways an oxymoron.

Processes can offer structure, consistency, overview, monitoring. At best they can support the creation of decision options. In the end, decisions are people-driven. Drawing on personal and professional experience, intuition and judgement, a person or a group of persons makes the decision.

Americans are skeptical of decision making processes, especially when they attempt to substitute them for people. Processes have neither experience, nor intuition nor judgement.

Limitless Resources

Alexis de Tocqueville (1805-1859) – French political thinker and historian best known for his Democracy in America – wrote: “The country appears to stretch on forever and is of limitless resources. But, no matter how fast it grows, it will remain surrounded by resources it cannot possibly exhaust.”

Energy: The United States has more coal reserves than any other country in the world and represent one-quarter of the world’s total coal supply. The U.S. has 272 billion tons of coal reserves and uses about 1.1 billion tons of coal per year. At this rate, America’s 272 billion tons of coal reserves would last nearly 250 years.

According to the 2012 article “American Oil Growing Most Since First Well Signals Independence“ by Asjylyn Loder on bloomberg.com domestic output of oil grew by a record 766,000 barrels a day to the highest level in 15 years, government data shows, putting the nation on pace to surpass Saudi Arabia as the world’s largest producer by 2020.

Net petroleum imports have fallen by more than 38 percent since the 2005 peak, and now account for 41 percent of demand, down from 60 percent seven years ago, moving the United States closer to energy independence than it has been for decades.

Key natural resources: One-third of U.S. land is covered by forests (302 million hectares), making forestland the number one type of land use in the United States. One-fifth of U.S. land is timberland (204 million hectares), which is land capable of producing 1.38 cubic meters per hectare of industrial wood annually. 71 percent of all timberland in the U.S. is privately owned, while 29 percent is publicly owned.

Land: The United States has a land area of 3.8 million miles² (9.8 million km²) compared to 9.7 million km² in China, 0.36 million km² in Germany and 0.38 million km² in Japan.

Population density: United States population density per square mile is 84, compared to 365 for China, 609 for Germany, and 836 for Japan.

Limited, but Relevant

Americans prefer gathering limited, but highly relevant, information, and fast. Comprehensiveness costs time, and must be justified by its value. All information sources should be considered, provided that there is sufficient time. Americans also accept subjective (non-quantifiable) information sources, such as personal references. Their credibility, though, is judged based on experience (track record) and reputation.

For Americans, however, information gathering serves the pragmatic purpose of information analysis, which in turns serves decision making. Information gathering, thus, is seen early in direct connection with the end goal. If enough information has been collected in order to perform good analysis, there is no reason not to move on to the information analysis step in the decision-making process. Information gathering is not an academic exercise.

Because Americans also see the complexity inherent in many decisions, they prefer to break down decisions into sub-decisions, into particulars. This allows for more focus on key elements of the broader decision. The analysis of the information should then be quick and pragmatic. Objective tools are helpful and should be used, but also combined with experience and common sense. Americans are willing to trust their intuition.

All the way or not at all

The appreciation that Germans have for individual competence and their aversion towards incalculable risks sometimes set the condition of a certain degree of caution used when working with innovations.

Therefore, it fits the bill that German companies always approach the execution of updates and improvements in a cautious and well thought-out manner. All of the pros and cons must be carefully weighed, and all influential factors taken into consideration before a critical decision is made.

In this case, a qualified expert will often be called in to assist. “Professional quality management is often the condition for the commissioning of tasks. This is often bound together with unnecessary effort, especially in the case of small businesses; often the incorporation of external consultants is better”, explained an expert from the Chamber of Crafts in an article.

And so there exist a plethora of external experts, consultants, institutions, and established norms for German business owners to turn to in case they should lose perspective in the tangle of modern innovation.

These exist to help to make well-founded and analytically grounded decisions. It has even developed into its own field of study at many technical and business colleges: studies to the systematic approach of solving problems and to the development of complete solutions have begun to fill textbooks and lesson plans.

These approaches help to calculate multiple types of risk in advance, thereby countering the deeply rooted nervousness that comes together with risks and unforeseen situations.

External Factors

Decisions are not made in a vacuum. American decision-making allows itself to be influenced by external factors. External customers, company-internal partners, suppliers, changing management priorities, budgets and manpower all can have impact on individual decisions. American decision making aims to be market-driven.

Market-driven in the U.S. means making decisions based on the market‘s rhythm. If necessary, Americans will skip over steps in their decision making approach.

To turn on a dime: To take a very tight turn, used especially for a vehicle; to change direction quickly. A dime is the smallest in size of American coins.

Experience: To encounter or undergo (an event or occurrence); to feel (an emotion); practical contact with and observation of facts or events; the knowledge or skill acquired by such means over a period of time, especially that gained in a particular profession by someone at work; an event or occurrence that leaves an impression on someone (a learning experience).

Down and dirty: Americans are not perfectionists. The goal is seldom the optimal decision, but instead the most effective decision under the given circumstances. Often timely decisions, even if suboptimal, are the best decisions. They can be corrected.

Thumbs Up or Down

In the American movie Interstellar, when earth begins to become uninhabitable, 10 astronauts are sent through a wormhole to a group of planets orbiting a supermassive black hole. These astronauts are supposed to explore the planets to see if they are inhabitable or not.

However, when communicating their findings back to earth, they don’t transmit long lists of data. Instead, if the area they’ve explored could sustain human life, they simply activate the “thumbs up beacon.”

A Form of Risk Management

Breaking down complexity into its component parts, a common theme in American thinking, is also at play in American decision making. Individual decisions are always a part of larger decisions. They can be either grouped or isolated. Because Americans value focus and execution, they tend towards isolating decisions.

The more clearly defined the decision to be made, the more limited its scope, the greater the chances that it will be made intelligently and implemented effectively. Limited scope decisions are also a form of risk management. Their results can be evaluated quickly. They allow for flexibility and rapid reaction to changing parameters.

And if human action influences the very context in which one is operating, there is a point beyond which grouping decisions increases risk. From the American perspective systems are inherently risky. For if just a few key elements of a system are wrong, the entire system is wrong.

American Entrepreneurs

Scottish-American Andrew Carnegie led the expansion of the American steel industry in the late 19th century with the Carnegie Steel Company. Carnegie established public libraries throughout the United States, the United Kingdom, and other English-speaking counties.

He funded approximately 3,000 libraries in 47 states in the United States, Canada, the United Kingdom, Ireland, Australia, New Zealand, the West Indies and Fiji. He donated 50,000 British pounds to help establish the University of Birmingham in 1899.

British- and Irish-American Henry Ford founded the Ford Motor Company and was sponsor of the development of the assembly line technique of mass production. His development of the assembly line allowed many middle class Americans to afford and buy automobiles. Ford left most of his wealth to the Ford Foundation.

William “Bill” Gates is the former chief executive and current chairman of Microsoft, the world’s largest personal-computer software company. He co-founded Microsoft with colleague, Paul Allen. He is one of the best-known entrepreneurs of the personal computer revolution. After studying the work of Andrew Carnegie and John D. Rockefeller, Gates sold some of his Microsoft stock in 1994 to create the William H. Gates Foundation.

In 2000, Gates and his wife combined three family foundations and founded the Bill & Melinda Gates Foundation, which is currently the largest transparently operated charitable foundation in the world.

The American culture admires risk-takers. They are considered to be courageous, ingenious, hard-working, forward thinking. The American experience is one of trial and error. It begins with how parents raise their children to try things, to attempt more than before, to experiment. A mistake is only one when one doesn‘t learn from it. Trial and error is moving forward, is getting better at something. It is synonymous with learning by doing.

Fracking

Fracking is a way of mining underground gas, but it has been linked to earthquakes and tap water that burns (at least when you run it over a lit match).

The method was first discovered during the American Civil War, when Union Colonel Edward Roberts noticed the effects of explosive Confederate artillery plunging into the narrow millrace (canal) near the battlefield.

Americans, who enjoy using any potential resource once it becomes apparent, soon began experimenting with the new procedure, and these days there are several fracking operations taking place in the US.

Although there have been attempts to legalize fracking in Germany, so far it seems like Germans would prefer not to risk the potentially dangerous method in order to gather new resources.

Kahneman Quotes

Daniel Kahneman is an Israeli-American psychologist notable for his work on the psychology of judgment and decision-making, for which he was awarded the 2002 Nobel Memorial Prize in Economic Sciences.

His empirical findings challenge the assumption of human rationality prevailing in modern economic theory. In the same year, his book Thinking, Fast and Slow, which summarizes much of his research, was published and became a best seller.

„True intuitive expertise is learned from prolonged experience with good feedback on mistakes.“

„We think, each of us, that we’re much more rational than we are. And we think that we make our decisions because we have good reasons to make them. Even when it’s the other way around. We believe in the reasons, because we’ve already made the decision.“

„There’s a lot of randomness in the decisions that people make.“

„Nobody would say, ‘I’m voting for this guy because he’s got the stronger chin,’ but that, in fact, is partly what happens.“

„It is the consistency of the information that matters for a good story, not its completeness. Indeed, you will often find that knowing little makes it easier to fit everything you know into a coherent pattern.“

„We’re blind to our blindness. We have very little idea of how little we know. We’re not designed to know how little we know.“

„We are very influenced by completely automatic things that we have no control over, and we don’t know we’re doing it.“