How (not) to take a decision

What will you have for lunch? Hopefully that's an easy decision. Should we build Hinkley Point C? Yes/no/don’t know? Why is that a harder decision? It will be if we are taking a decision based on facts: if you have decided principles or a priori convictions then it may also be easy. So, first, for Hinkley C, there are huge numbers of possibly relevant facts or evidence. And many of them will be uncertain and contested. (Far harder than: what’s in my fridge?) Second, analysing those facts requires significant specialist expertise, to marshal, verify and weigh all present and future costs and benefits (cf do I prefer cheese or ham?*). But third, even if you did gather the facts and become expert, mine was a trick question. I’m almost certain that you do not have authority to take that decision – ie the legal power to decide yes or no. 

Any decision needs evidence, expertise and authority. And the challenge for any organisation of any size is to find a way of assembling those three in one place at one time – or at least in order to take a good decision. Two possible (safely-abolished) models: the OFT at one point vested authority in the person of the Director General of Fair Trading (DGFT). So the then staff challenge was to provide him (always) with the facts and expertise to allow him to take the decision. This was typically a lengthy sequential process, since the facts were gathered at staff level and expertise applied to them in teams (as lawyers, economists, financial analysts et al were consulted), and they would be assembled in briefs and recommendations that wended their way through the hierarchy, gathering signatures and seniority as they went – or being referred for further consultation (ie more expertise) or more information gathering (ie more evidence). This snakes-and-ladders process could and did take months, aggravated by the difficulties in finding diary time and review slots. (I remember that rare, pure, unbridled, bureaucratic joy of processing though the Office with a copy of the Decision signed - in ink - by the DGFT himself!)

The Competition Commission took a different approach. Faced with rigid statutory deadlines, a Group of (I think at least) four senior experts would be appointed, and they would meet regularly and frequently to digest and pronounce on the facts and analysis provided by the staff team. So the facts (junior staff), expertise (more senior staff and hopefully Group), and authority (the Group) would coincide and so take the decision over a (relatively) short period. These roles were not clear cut – though legal authority was always clearly only in the Group, staff members could influence, and the Group and everyone could learn the facts. This could be a rigid and expensive process (meetings of 20 for relatively straight-forward mergers), but got the job done relatively quickly.

So far so good. Where it’s clear who has authority, then we can now take a good decision, subject to the time and cost constraints of how much evidence to gather and how much expertise should be applied (not easy questions – the ‘victim’ will likely press for more evidence to justify an adverse decision, challenge the expertise and seek to reopen decisions at higher levels of authority.) But things can go awry where authority is dissipated and it’s unclear who decides. At that point, the potential decision is looking for a decision-maker. And any potential decision-maker may face the quandary: can I decide or should I escalate? Or should I ask for more evidence or more expertise? Those can be good reasons to delay, but equally might just be good-sounding excuses. One key is the private incentive of our possible decider. Does the reward of taking a good decision outweigh the cost of taking a bad one? If not, then the natural inclination is to consult, gather evidence, or escalate. And on we go.

So next time you are thinking about taking a decision, or faced with an uncertain decision-taker, ask yourself – do we have the facts, expertise and authority? And if we do but worry about a wrong decision, are we just finding excuses not to take a decision right here, right now?

* Though hopefully you've switched to a plant-based diet...