Houston, what decision should I make?

While businesses ultimately exist to make money, I believe that they also have the responsibility to do the right thing. Unfortunately though, managers sometimes get so caught up in releasing a new product or turning a profit that they make very poor decisions. And sometimes those decisions cost people their lives. In my final blog post, I will attempt to shed light on why managers may succumb to poor decisions, and in doing so, I hope to provide a framework that helps limit mistakes. In reaching my conclusions, I analyzed NASA’s 1986 Challenger disaster.

At the heart of the Challenger disaster was a management failure. The simple truth is that the accident could have been avoided. Investigations after the accident have identified four main reasons why NASA made the fatal decision to launch the space shuttle. It’s important to note that the issues below are not unique to NASA. Countless corporations face the same set of problems and continue to make the same mistakes that NASA did back in ’86:

1) Power Issues:A 2011 CBS News article highlighted the fact that the Morton Thiokol engineers who manufactured the shuttle’s O-Rings weren’t present at critical NASA meetings because NASA didn’t directly employ them. When NASA executives wanted to launch the shuttle, the engineers were not able to easily raise a red flag. “As mere subcontractors, they had no leverage; after all NASA was their customer.”

In class, we learned that firms should take responsibility for primary activities and outsource secondary activities. One of NASA’s primary activities is operations, which includes maintenance and testing. NASA therefore should not have outsourced the O Rings supervision to Morton Thiokol. Instead, NASA should have hired top Morton Thiokol engineers and kept them in house so that they could ensure that safety concerns were voiced.

2) Complacency:Human beings are wired to become complacent after a period of time. One of the reasons why our brains use heuristics such as stereotypes is because they are a way to save energy and reach quick conclusions. Sometimes, however, our conclusions cost people their lives. After the disaster, Kutyna, a Veteran Air Force crash investigator, determined that complacency lead to the shuttle crash. For a while, NASA was “supremely vigilant for lurking hazards. [That] vigilance didn’t last.” Indeed, “saying everything is rosy can lead to disaster,” Kutyna said. People cannot take shortcuts when it comes to safety. Just because it was convenient to believe that the O-rings could operate in freezing temperatures because NASA wanted to launch the shuttle, it needed to be tested.

Relationship between temperature and O-Ring Failures

In class, we learned that one reason for Toyota’s slip in quality was due to complacency. Denise Harrison, the VP at the Center of Simplified Strategic Planning, wrote that Toyota executives no longer had its senior engineers mentor new hires so that the company could reach its ambitious growth targets. This resulted in poorer quality cars that sometimes accelerated without stopping.

3) Pressure to Launch: NASA officials were under great pressure to launch the shuttle so that it could be in space when Reagan gave his State of the Union address and so that thousands of children could watch it on television. Sometimes, the pressure to release a product can cause executives to make the rash decision to launch a new device even though there may be errors.

President Reagan and his aides observing the Challenger disaster

Similarly, RIM executives released the unfinished Blackberry Storm in 2008 so that it could ship before the holiday season. In an anonymous e-mail to David Pogue, a Blackberry team member wrote:

When you wrote that this product was released prematurely, you were absolutely right, and everybody here knew it… Internally, many of us argued that we would be hurting ourselves by rushing it out the door. Obviously, our managers disagreed.

4) Psychological Barriers: In the Challenger’s case, the engineer who described the strong likelihood for an O-Ring Failure was “silenced by the group norm of consensus to launch.” As I learned in Management 300, groupthink is when the “norm for consensus overrides realistic appraisals of alternative courses of action.” The day before the Challenger’s scheduled launch Roger Boisjoly, an American engineer, raised the objection that low temperatures increased the rate of failure. He described that he “received cold stares…with looks as if to say, “Go away and don’t bother us with the facts.”

One strategy to avoid groupthink is to assign a person to play the devil’s advocate. Another strategy is to actively encourage dissenting opinions.

In class, we learned that one key component of successful teams is when “people bring forth grim facts…And leaders never criticize those who bring forth harsh realities.”

Promoting Good Decisions

After analyzing the Challenger disaster and examining companies that have made similar mistakes, it is time to formulate a framework that promotes good decision-making. My framework revolves around specific questions that employees should ask themselves before making a major decision:

1. Does the decision that I’m about to make follow the law?
2. Is my decision consistent with my company’s values and processes? Is it consistent with my own personal values?
3. Can I openly discuss my decision with my peers? Have I taken the opportunity to discuss the possible implications with my colleagues?
4. Can I look my mom/dad/significant other in the eyes and smile after making my decision? In other words, am I doing the right thing?
5. What’s the worst possible consequence of my decision and what are the risks? Take time to evaluate your options.
6. Has a similar decision been made in the past? How did that decision turn out?
7. If I feel particularly emotional about making a specific decision, have I waited at least 24 hours to calm down before actually deciding?
8. Am I making my decision because I think it is the right decision or because I am being forced/pressured to make the decision?
9. Will my decision tarnish my reputation or my company’s reputation?
10. How would I feel if somebody else made the same decision?

I wish you the best of luck in all of your future decisions—big and small alike.

Sources consulted

• CBS News
• USA Today
• Gazette
• MSNBC
• Freakonomics blog
• A Profile of Toyota’s Production System by Scott Moore
• How the Mighty Fall by Jim Collins
• Management 300 Lecture, Lesson 17 by Lloyd Sandelands
• Note on the Value Propositon and Business Models by Robert Dolan