Decision-making and agility

A racing context

Formula 1 is a very competitive car racing series. Over a lap, approximately 5 – 6 km depending on the venue, cars are normally separated by fractions of a second. To put it in context, that is approximately the same margins that separate the best athletes in just 100 meters. Things move fast and decisions need to be taken fast. There are a lot of variables including some that are unpredictable (e.g. weather, competitor actions). I often model this to a competitive business landscape. Many companies, many variables and at times, razor thin differences between competitors. It is at this level, the speed at which decisions can be taken can make or break a fortune.

In Formula 1, each racing team is allowed two cars – with 10 teams that is 20 drivers. The championship is fought at two levels – at a team level how many points are won decides the World Constructor Championship (and the prize money), followed by an individual driver level – the driver with the most points is declared the World Driver Champion. You can consider the WCC as more of a market share win while the WDC is more of a matter of individual prestige i.e. Jeff Bezos or Bill Gates (instead of Amazon or Microsoft). As the WCC drives the prize money, teams often need to take a decision, which is optimal for the team but not necessarily for the individual driver. Also because the points are not sequentially decreasing, we get some interesting dynamics. For example getting a 1st and 4th (one podium, but 37 points total) is better than a 2nd and 3rd (two podiums, but only 33 points) for a team from a points perspective. Sometimes teams apply tactics that “sacrifices” the performance of one driver to “improve” the performance of the other driver, as the net result is a better score at team level. This is akin to business where some decisions are taken which may avoid a local optimization to look for a global optimization.

The importance of timeliness

In the most recent Spanish GP race (10-12 May 2019), the Ferrari team were faced with two such situations, where the team could have made a decision to interfere with the racing of the individual drivers to optimize the results of the team. In both cases, fan opinions agree that they took the right decision – but the fans were still unhappy and Ferrari did not get the expected results. In either situation, fans believe that what should have taken the team fractions of a minute to decide, or even should have been anticipated and planned for took more than 15 minutes to decide. In a race that lasts only 90 minutes, that is 1/3rd of the time that you are on wrong strategy, just thinking about strategy.  The race was lost there, in the opinion of the fans.

It is not enough to make the right decision – it is equally important to make the decision at the right time.

What we do not know is what took the team so long to decide – what were the considerations in front of them, which the fans may not be fully aware. However, what we can learn from this is that in the business context as well, it is not enough to make the right decision – it is equally important to make the decision at the right time.

Too soon - too late

Sometimes people use "agile" as the reason for making a late decision - wait as long as possible when committing to a choice as this gives maximum flexibility. However, on the other side we have the famous words of Jeff Bezos, “Most decisions should probably be made with about 70% of the information you wish you had. If you wait for 90%, you are probably going too slow”. You have to understand the perspective of these two decision making perspectives. When timing makes a difference to the impact of the decision, you cannot avoid following the advice of Jeff Bezos. In business, contexts keep changing - a right decision taken late would be a wrong decision. However, when a decision (and the impact) is irreversible, it makes sense to wait until enough information is available (until analysis paralysis hits).

Think about adoption curves for new technology as an example – in the pioneering stage, the technology may also be your differentiator. If you are late and only joining the mainstream/laggard, not only have you got more competition for the same space, your work does not stand out as exceptional – your work does not add brand value in the eyes of your consumer. So there’s more to timely decision making than just going fast.

Lessons to be learnt

Even though we may not know all considerations in the Ferrari team garage during the race, we can be sure one of the factors they are worried about was public opinion. It was one of the first things that the team took a public stance on – “We took the right decisions at the right time”, as if they had a point to prove in the court of public opinion. This could also have been influenced by the fury of public opinion that they faced for the decision that they took (or did not take) in earlier races under somewhat similar situations. The lessons should have been learnt on the back of those events, not when faced again with a similar situation.

Isolate and focus on the things that matter on the outcome.

Consider this – the outcome of the race is not decided by the public opinion – but the outcome of the race determines Ferrari’s reputation as a racing team. The goal is to improve the reputation which is determined by the public opinion. By putting undue focus on the factors that they cannot control directly (public opinion), the team may have missed precious minutes in their decision making process in the things that they could influence (racing results). We have limited ability to focus and hundreds of things trying to grab our attention. Isolate and focus on the things that matter on the outcome, not on the extraneous elements surrounding it.

I will like to finish with the wise words of Ben Franklin:

You may delay - time will not!