Decision-Making Archives - Page 2 of 7

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.

Immigrant experience

All Americans are descendants of immigrants. And the immigrant experience begins with risk-taking. All immigrants risk, to one degree or another, what they own and know. Taking that one great risk, that leap of faith, makes small most later decisions in life. Immigrants are, or have become, by their very nature risk-takers. Americans are risk-takers.

The American economic system encourages entrepreneurship. It pays in the U.S. to establish your own business. Businesses owners who enjoy high success do very well financially. Owners who enjoy medium success do well financially. Those, however, who enjoy low success do very poorly financially. “No risk, no reward.”

Small businesses – firms with fewer than 500 employees – drive the American economy by providing jobs for over half of the nation’s private sector workforce. Small businesses are job creators, representing 99.7% of all firms. They make up the following: 64% of net new private-sector jobs, 49.2% of private-sector employment, 46% of private-sector output, 43% of high-tech employment, 98% of firms exporting goods and 33% of exporting value.

Small businesses create more than half of the private non-farm gross domestic product and create 60-80% of net new jobs. 19.6 million Americans work for companies employing fewer than 20 workers, 18.4 million work for firms employing between 20 and 99 workers, and 14.6 million work for firms with 100 to 499 workers. 47.7 million Americans work for firms with 500 or more employees.

According to the Bureau of Labor Statistics small firms accounted for 64% of the net new jobs created or 11.8 million of the 18.5 million net new jobs between 1993 and 2011. Since the latest recession, from mid-2009 to 2011, small firms, led by the larger ones in the category (20-499) employees, accounted for 67% of the net new jobs.

single-minded

single-minded: having only one purpose, goal, or interest; focused on one thing; having one driving purpose or resolve. First known use 1836.

Synonyms: bent (on or upon), bound, decisive, do-or-die, firm, hell-bent (on or upon), intent, purposeful, resolute, resolved, set. Antonyms: faltering, hesitant, indecisive, irresolute, undetermined, unresolved, vacillating, wavering, weak-kneed.

In American thinking to be single-minded is always positive. It means to be wholly focused.

Always positive?

People Driven

Americans are skeptical of business processes that attempt to replace human judgment. They believe that decision-making is inherently human. Drawing on personal and professional experience, intuition and judgment, a person or a group of persons makes the decision. Processes have neither experience, nor intuition nor judgment.

Analysis defines the situation, the options, their respective risks and benefits. Experience informs about how the situation could/should be dealt with. And intuition influences the decision.

Decision: A conclusion or resolution reached after consideration; the action or process of deciding something or of resolving a question; a formal judgment; the ability or tendency to make decisions quickly; decisiveness. From Latin decidere “determine”.

Analysis: Detailed examination of the elements or structure of something, typically as a basis for discussion or interpretation; the process of separating something into its constituent elements; the identification and measurement of the chemical constituents of a substance or specimen.

Pareto

The Pareto principle: Also known as the 80-20 rule, stating that in many situations approximately 80% of the effects come from 20% of the causes.

Vilfredo Pareto, an Italian economist, documented in the early 1900s that 80% of the land in Italy was owned by 20% of the population. Pareto went on to observe that 20% of the pea pods in his garden contained 80% of the peas. It has become a common rule of thumb in business that 80% of sales come from 20% of clients.

The 80-20 rule could be a metaphor about the American approach to many things, or at least about an element or aspect of the Americans approach. Americans tend not to be perfectionists. Not because they do not recognize and honor striving for the best. But because in many cases attaining, reaching, accomplishing that extra 5% is in many cases “simply not worth it”.

Worth. Value. Does the customer want that extra degree of engineering excellence? Is it necessary to calculate that many digits behind the decimal point? Is that depth of analysis necessary in order to make a decision?

80% is often enough. For Americans, depending on the situation, 60% is enough. Depending on the risk-benefit relationship, even less is enough.

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.“

WBS

WBS stands for work breakdown structure. Wikipedia defines it as: „A hierarchical and incremental decomposition of the project into phases, deliverables and work packages. It is a tree structure, which shows a subdivision of effort required to achieve an objective; for example a program, project, and contract.

In a project, the WBS is developed by starting with the end objective and successively subdividing it into manageable components in terms of size, duration, and responsibility (e.g., systems, subsystems, components, tasks, subtasks, and work packages) which include all steps necessary to achieve the objective.“

Wikipedia goes on to claim that WBS was developed by the United States Department of Defense and was introduced by the U.S. Navy in 1957 to support the development of the Polaris missile program.

Breaking down complexity into its component parts in order to focus on what is truly critical is hardly a development of any human organization of the 20th Century. Surely it is has been fundamental to human thinking for quite some time.

“philosophical“

philosophical: of, relating to, or based on philosophy; having a calm attitude toward a difficult or unpleasant situation; characterized by the attitude of a philosopher; calm or unflinching in the face of trouble, defeat, or loss.

„They got into a philosophical debate about what it means for something to be natural.“ And „He’s trying to be philosophical about their decision since he knows he can’t change it.“ First known use 14th century.

Synonyms: abstract, logical, metaphysical, profound, rational, thoughtful. Also: calm, composed, deep, learned, resigned, stoic, serene, temperate. (MerriamWebster)

Being philosophical in the American context if often considered to be detached, abstract, impractical, unpragmatic, even arrogant.

The importance of focus

In his TedEd talk Richard St. John quotes successfull people in order to stress the importance of focus:

James Cameron, producer of Titatnic and Avatar, two of the highest-grossing films of all time: „You’ve got to be super focused like a laser to get anthying worthwhile done. When I did Avatar I was focused for four years.“

Larry Page, co-founder of Google: „You should focus on one important goal and you need to be single-minded about it.“

Jaymie Matthews, astrophysicist and mission scientist, „Focus is the key word for our success. We pulled this off on a tight budget and short time line because we did one thing exceptionally well.“

Tom Monaghan, founder of Domino’s Pizza: „A fanatical focus on doing one thing well.“

Bill Gates: „If you want to be a great software company, you have to be only a software company. You can’t dabble in other things.“

Imagination and Focus

„You can’t depend on your eyes when your imagination is out of focus.“ Mark Twain

„Concentrate all your thoughts upon the work at hand. The sun’s rays do not burn until brought to a focus.“ Alexander Graham Bell

“That’s been one of my mantras – focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.“ Steve Jobs

„I don’t focus on what I’m up against. I focus on my goals and I try to ignore the rest.“ Venus Williams

„My approach to every game was to try to erase the games that were before and try to focus on the game at hand.“ Cal Ripken, Jr.