ROBERT TOWNSEND ON KEEPING DECISIONS SIMPLE
Use this as a guide to making all decisions.
Robert Townsend (1920–98) was CEO of Avis Rent a Car and writer of the bestselling management book of the 1970s, Up the Organisation. He believed that work should be fun and if you weren’t enjoying it you should get out and do something you did enjoy.
There was very little management theory in what he wrote. What he had to say was based on his experience of turning Avis from a basket case into the second biggest player in the American car rental business.
There are only two types of decisions, those that are expensive to change and those that are not.
Robert Townsend
Not everyone is a good decision maker. Some spend an age collecting data and worrying over every little detail. Others barely look at the data and seem to make instantaneous decisions, which to onlookers can appear cavalier and overly risky. Interestingly, there is no research evidence to show which style of decision making is the most effective. This may have something to do with the fact that decisions are about the future and no one can do that accurately. Luck plays a significant part in every decision.
WHAT TO DO
- Have the confidence to take decisions that are cheap and easy to correct quickly with minimal information. The cost of collecting additional information may well be more than getting the decisions wrong. In addition, such prevarication may lead to delays in taking a more important decision.
- Remember, failure to take ‘cheap decisions’ quickly will get you a reputation for being indecisive.
- Delay taking decisions that are expensive and difficult to correct until you have adequate, but not complete, data. What constitutes adequate data will depend on the nature of the decision and how much uncertainty you can live with. What you must not do is use the collection of further data as an excuse for delaying your decision.
- While you can never have complete data when making a decision (if you did there would be no decision to be made), you should subject the data you do have to critical evaluation. Ask yourself to what extent the data has been affected by: incorrect assumptions, wishful thinking, errors in calculation, over-optimistic projections, including customer numbers and cash flows or an underestimation of risk.
- It’s worth remembering when looking at future projections that accountants are trained to be pessimistic/prudent in their forecasts, whereas sales people are, by training and group culture, overly optimistic.
- Always carry out a post-decision review. If you don’t, you’re missing a great opportunity to identify weaknesses and strengths in your decision-making process, both of which can improve future performance (see Quotation 69).
QUESTIONS TO ASK
- What level of data do I require before I make a decision?
- Do I need to vary the amount of data I require between cheap and expensive decisions?