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To Decide or Not to Decide: That is the Question

Intel's Andrew Grove has gained a well-deserved reputation as a great manager. The story of Grove and the change he engineered at Intel in the mid-1980s illustrates the important managerial function of decision—the conscious, deliberate selection of a course of action.

In the fall of 1984, Intel, caught in the vise of Japanese competition, found itself with a disappearing market in semiconductor memory chips. Analysis led to a clear conclusion: Intel had to dramatically change what it was doing, or it would not survive. The memory business was no longer viable. So what decision(s) did Intel executives, led by Andrew Grove, make? At first, they decided to do nothing.1

For nearly 20 years, the driving thrust of Intel had been making memory chips. At the end of 1984 the company considered several alternatives to save the company: retrench with a "go-for-it" strategy to compete head-on with the Japanese; differentiate based on some undetermined technological advantage; create a niche market for memory; OR abandon the memory business and invest in the only profitable business they had at the time: microprocessor chips for personal computers. Losing money each month, Intel execs decided to do nothing regarding the memory business. Reflects Grove, "During that time we worked hard without a clear notion of how things were ever going to get better."

Nearly a full year after concluding that the memory business was not viable, no decision had been made, and Intel was suffering. Grove knew something had to be done. When he asked founder Gordon Moore what a new CEO would do if brought in from the outside, Moore said a new CEO would get out of memory, and asked, "Why shouldn't you and I walk out the door, come back and do it (decide) ourselves?"

Making decisions is a normal and frequent activity for managers. In contrast to personal choices, management decisions tend be made as a result of deliberation and thought—often from a list of alternatives. So why is the concept of decision so often misunderstood—and even worse, so often misapplied?

First, decision is not the same as analysis. If this weren't so, Grove's decision would have come much easier and sooner. Decision involves selecting a course of action; sometimes this is something no one (not even a tough executive) can do easily, for any number of reasons. Grove was reluctant to adopt the ingrained belief that Intel was a memory chip company. Analysis may help identify alternatives but it will not determine a course of action. Second, decision is not a calculation or problem-solving activity. "Deciding," for example, that inventory must be reduced is actually not a decision, but a symptom of a real decision (choosing a course of action). Peter Drucker refers to these various symptoms or inputs as "adaptations" made in response to or because of the decisions already made.2 Ineffective managers get sidetracked in the comfort of manipulating data or belaboring specific functional problems; decision allows people to figure out (adapt) what needs to be done.

Third, decision often comes from a list of alternatives, one of which is to do nothing. This means the decision is not a compromise or half-measure. A surgeon does not decide to remove half a spleen because of uncertainty among the alternatives—he/she either does or does not remove it. Remember, a decision is a thoughtful, deliberate response, weighing risks. As Drucker notes, one nonnegotiable guideline is, "act or do not act, but do not 'hedge' or compromise."

Finally, managers must know when to make decisions. In the case of Intel, no one was eager to make the decision to exit memory, and the decision could not be delegated down the chain of command. Effective managers not only can be decisive but also know when not to be. While Grove needed to make the crucial decision discussed here, making too many decisions with too little deliberation can be dangerous. "The fine art of executive decision consists in not deciding questions that are not now pertinent, in not deciding prematurely, in not making decisions that cannot be made effective, and in not making decisions that others should make." — Chester Barnard3

Effective managers may decide to do nothing or reject making decisions for good reasons. For one, a course of action may not be needed until later and there's no need to establish premature "prejudice" for a course of action. Some decisions cannot be made effective—this is likely what Grove was facing. Another good reason not to make a decision is that someone else should make it. Effective managers determine when a decision must be made, who should make it, and when analysis can provide no further insight.

1Only the Paranoid Survive (1996) by Andrew Grove
2The Essential Drucker (2001) by Peter Drucker
3The Functions of the Executive (1938) by Chester I. Barnard

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