Hbr Case Study All The Wrong Moves


Subject: Individual Behavior in Organization

Section: D Group: 7[pic 1]

Anant Saraogi (2015199)

Pushkar Bhave (2015207)

Irina Rajan (2015215)

Piyush Soni (2015223)

Pushpal Saha (2015231)

Sanjukta Roy (2015239)

Shivendra Pratap Singh (2015247)

Uddipta Bhadury (2015255)

The case study discusses the problem faced by Nutrorim and its CEO, Don Rifkin. Decision making is a critical task in any organization and same is the case with Nutrorim. During the past year, Nutrorim had suffered from a spate of bad decisions. It is a challenge for them to revisit their decision making strategy and come up with new approach for effective decision making.

This case revolves around the product ‘ChargeUp’ and the controversy it faced. It also depicts the merits and de-merits of Nutrorim’s decision making strategy.

To discuss about the decision making strategy of Nutrorim and suggest an effective alternative for the same.

  • Challenges in making critical decisions.
  • Avoidance of firm stands by the CEO, Don Rifkin.
  • Theoretical Concepts[pic 5]

Decision making occurs as a reaction to a problem. That is, a discrepancy exists between the current state of affairs and some desired state, requiring us to consider alternative courses of action. It is also to be noted that one person’s problem might be another person’s satisfactory state of action.

Every decision involves interpretation and evaluation of information and development of alternatives keeping in mind their strengths and weaknesses. Hence in entire decision making process perceptual distortions often surface that can bias our decisions.

  • Rational decision making model:

This model includes number of assumptions including that the decision maker has all the complete information and is able to identify the alternatives in an unbiased manner.

It is a process in which decisions are constructed by using simplified models by procuring the essential features from the problems without including all of its complexity.

  • Intuitive DecisionMaking:

It is an unconscious process which is created out of the conscious thoughts which basically relies on the holistic associations.

  • Errors in decision making:
  • Overconfidence bias: It is a well-established bias in which a person’s subjective judgement is reliably greater than the objective accuracy of those judgements.
  • Anchoring Bias: It is a tendency to fixate on initial information because of which one fails to adequately adjust for subsequent information.
  • Confirmation Bias: In this we seek out information that re affirms past choices and to discount information that contradicts past judgements.
  • Availability Bias: It is a tendency to base the judgement on the information which is readily available.
  • Escalation of Commitment: It refers to staying with a decision even when there is clear evidence that it is wrong.
  • Randomness Error: It is tendency of individuals to believe that they can predict the outcome of random events.
  • Risk Aversion: Tendency to prefer sure gain of moderate amount over riskier outcomeeven if the riskier outcome might have higher expected payoff.
  • Hindsight Bias: It is tendency to believe falsely, after the outcome is known, that one would have accurately predicted it.

Decision making process in characterised by bounded rationality, common biases and errors and the use of intuition. In addition to this individual differences like personality, gender, mental ability and cultural differences also contribute in deviation from the rational model.

  • Recommended Solution[pic 6]

Don Rifkin has worked hard to keep the company’s decision making process open and democratic and has always ensured that he considers maximum possible inputs from the associates on a problem.


Unformatted text preview: C A S E S T U DY Nutrorim’s best-selling sports supplement has been recalled because of a “new and improved” ingredient. The company’s CEO wonders: Why do the decisions we make keep coming back to haunt us? All the Wrong Moves T HE COLD JANUARY SKY was just sleepily clicked a few keys on his laptop dawning gray over Minneapolis as Do and began glancing through his favorit n e Rifkin awoke. With every cell in his stock chat. Scanning the list of senders body, he longed to put a pillow over h , is head and sleep, but the alarm added insult to injury. Slapping the of butto n and pulling on his oversized Turkish bathrobe, he stole from the bedroo m and quietly shut the door behind him , leaving his wife to sleep. He padde d toward the kitchen and turned on th e cofeemaker. Sitting down at the kitchen table, D on he saw a red exclamation point next t mings just resigned from Dipensit gonna drop fast once this hits the o ? street. the name Stan with the headline “Ba Turns out he lied on his resume – Don felt slightly queasy. A year eard never received that PhD from U.Clier, his own company, Nutrorim, had news!” When he read the message, D . purchased a small stake in Dipensit. on Berkeley as he’d claimed! The stoc “Sheesh, I didn’t exactly trust that guy, gasped: k’s ” Did anyone hear that Wally Cumhe grumbled. Wiseman, Ford, and a group of others He recalled how smoothly the who the best-selling performanceenhancing le tended to form strong opinions and decision process had seemed to go sports powder on the market. push them aggressively. And while Don The following year, when the new had his own opinions–and often voiced when verLaurence Wiseman, the hardthem – he also worked hard to keep the sion of ChargeUp had been in its fin company’s decision-making processes driving CFO of Nutrorim, had championed th al open and democratic, and made a point stages of development, Don and R of asking for input from as many people e purchase of the Dipensit stock, insi &D as possible. head Steve Ford had dressed in wh sting that the small company might m ite coats and walked through the co ake an excellent acquisition candidate i mpany’s huge lab, agleam with chro n the future. A subcommittee had be me and white tile. They wended their w en formed to carefully review the purch ay ase decision. Don vaguely remembered that there had been a few murmurs of con “For decisions with a certain amount of built-in cern–someone had even questioned t predictability…the process seems to work he really well. credentials of Cummings, the startup’s But if a decision involves clear winners and los CEO. But in the end, the subcommitte ers, e seemed to have addressed the concer it stalls.” ns, and the senior team stood behind th e decision. Don cinched his bathrobe tighter. During the past year, Nutrorim had s The previous spring, Nutrorim had tional attention. Then, following an en ufbeen fered from a spate of bad decisions. at the top of its game. Founded in dorsement by a famous Olympic ath In 1986 fact, that’s what today’s meeting w by an organic farmer and his wife, lete, sales of ChargeUp, the company as ’s the about. A consultant, hired to review t company had sold its products thro organic, performance-enhancing sup he ugh company’s decision-making proces a network of individual distribut plement powder, had gone through th ses, e ors was coming in that morning to prese before Don had joined as CEO in 1 roof. As a result, Nutrorim had hired nt hundreds of new employees, expand 989. the results of his individual intervie Thanks to a series of testimonials ed ws its production facilities, and acquire ofwith senior managers. fered by doctors and personal trai d two vitamin firms. After going public i ners, To Everyone’s Taste? n Nutrorim’s products had gained na- 1997, the company had expanded past stainless steel tables where tec his boss, the dictatorial CEO of a retail hnidischain. tribution of ChargeUp through excl cians milled seeds and blended the Of course, there were some excepallutions to Minnesota nice, especially sive deals with nutrition stores and a organic ingredients that comprised among the more competitive, highly Nuthanalytical types in upper management. letic clubs, and by 2002, ChargeUp trorim’s various lines of vitamins a nd was nutritional supplements. “Hey, Darlene, how are you?” Do n waved at a lab technician who was w earing gloves, a hair bonnet, and a fa ce mask and pushing a trundle cart do wn an aisle. Though she was recogniza ble only by the walnut-rimmed glasses she wore, she smiled –he could tell by the wrinkles around her eyes – and said a brief “Fine, boss, thanks.” Don loved being in the lab. Thoug h he was a manager and not a scientis t, he was an increasingly enthusiastic stu dent of microbiology; every day, he learn ed something new about the nutrition al benefits of Nutrorim’s products. He a lso believed strongly in management by walking around. From the start, he h ad tried hard to foster a happy, partici patory, democratic culture at Nutrori m. This had seemed relatively easy, si nce most of the company’s employees h ailed from the Minneapolis area, where“Mi nnesota nice” was practically a state l aw. It was also partly an act of defianc e: When Don was fresh out of busines s school, he’d had a terrible run-in with Steve stopped at a table where a tec nized the familiar taste of ChargeU and looked at Steve. hp. “That’s what we like to hear,” said nician was mixing raspberry-colored It smelled like a combination of drieSteve. “The only real diference is that powder from two large canisters into d the second cup is the one with Lipitrene two beakers of water. “Hey, Jerri, mind raspberries, newly mowed grass, a in it.” if Don does the blind taste test?” he nd “Ah,” said Don. Lipitrene, developed asked. burnt toast. in Nutrorim’s labs, was a new combina“Not at all, it would be an honor,” “Here, take a sip of water before y tion of organic oils and seeds that apJerri replied, pouring some liquid from ou peared to enhance fat burning. Steve a beaker into two cups. try the next one,” Steve ofered. D wore his pride in the new ingredient like “Shut your eyes,”said Steve. Don co on a new father. mdrank some, then tried the second c “We’ve finished with all the tests, plied, and Steve handed him one of th up. and now we’re gathering final input on e “So?” Steve inquired. the taste,” Steve said, his eyes glintin cups.“Down the hatch.” “No diference.” Don opened his e g. Sipping from the first cup, Don recog yes “The handof to marketing and sales - DANIELVASCONCELLOS is already in gear.” He paused. “In fa ister, all of which had “Now with Lip “Well, we’d like your opinion, yes,” ct, said Cynthia. I was invited to the product marketin itrene”splayed across them in large, “Okay, here it is,” Nora responded. emg “I know this whole thing is already a meeting at 2:00. Any chance you’ll bossed letters. She asked everyone done deal, but I don’t understand why in be there was this huge need to improve the room for feedback. In the end, th ChargeUp. It’s selling very well as it is. there?” “I’ll drop in,” Don replied,“at least f e Why fix something that isn’t broken?” majority – including Steve and Don – Steve shot back,“Nora,you don’t kno or liked the label with the gold letters. B w a minute.” ut ••• what you’re talking about.” Everyone The meeting started out peaceabl when asked for her opinion, Nora Ste stared at Steve; the silence was palpab rn, y le. enough. Cynthia Pollington, the prod a former entrepreneur whose compa ny uct marketing manager, presented t had been acquired by Nutrorim the pr ehree final designs for the new ChargeUp c vious year, was recalcitrant. “Do I have to vote?” she asked. anDECISION MAKING Rifkin?” said a male voice.“My nam e is June Rotenberg looked increasingly Don jumped in, feeling the need to Matthew Norton, and I’m an investig grim. When Don finished, she spoke up a. restore peace. “Tell you what, Nora an tor with the Minnesota state depar “I just checked my voice mail,” she sai td. d ment of health. I’m calling becaus “It was Linda Dervis at KXAQ radio. On Steve. Let’s take this of-line, OK?” e e we’ve been investigating 11 cases of of the people who got sick must have The Recall contacted her.” She looked around the By late September, at the end of the gastrointestinal distress among people room.“Guys, once this news hits, thing first s quarter, sales of ChargeUp with Lip- who took your ChargeUp supplement wi are going to go downhill quickly.” itrene had leapfrogged the standar th Jerry Garber, the general counsel, d Lipitrene.” chimed in. “I think we have no choice product by 20% in the test market o “What? Are you sure?” but to pull ChargeUp of the shelves,” f “Unfortunately, yes,” the inspect he said.“If we don’t, we could be facing greater Minneapolis. Plans for a stat or a class action lawsuit. Talk about PR eresponded.“The afected parties are problems…” wide launch, followed by a national o all “Why are we even considering a rene, members of Syd’s Gyms, and they call?”asked Ned Horst, who headed the were well under way. Don was please all Sports Supplements division. “There’s d. nothing wrong with the product.I shoul In an all-staf meeting, he asked d Steve know, because I’ve been using it since i and the ChargeUp team to stand and t be came out.” recognized.“You have all demonstrat “I suspect you’re right,” Jerry added. ed “And a recall will cost us.” the kind of gung ho spirit that make “Well, thank God we haven’t exs panded distribution yet,” said Don. Nutrorim a leader,” he noted, noddin “Recalls are expensive,”said June.“B g ut to Steve while the audience broke int under the circumstances, I’m with Jerry o . applause. Besides, think about the cost of not re••• calling a potentially bad product.” The phone call came on October 5.“M “Damn it, people, there’s no way r. ChargeUp is unsafe!” Steve exclaime mous recall cases – the Tylenol crisis d, enough. The public always seems to r faced by Johnson & Johnson, Suzuki’s slamming his hand down on the confe erecall of its 2002 and 2003 auto modrmember how a crisis is handled mor els–and noted how the companies deal ence table. “We put Lipitrene throug e t h than the crisis itself. People will reme with them. The din in the room grew louder and mber only how long it takes us to act. louder. Don, frustrated, whistled everyone to attention. ” “Look, we’re getting nowhere,” he Suddenly everyone began talking said. “The first question here is, What at once. Steve took an increasingly en are the criteria for making a recall decision? What lenses should we use to trenched position against June, who reach such an important decision? We tried to get him to see things from th need that kind of framework to come u p e public’s perspective. Ned worried op with an answer, and we need that answer fast. You, you, and you,” he said, enly about Nutrorim’s relationships with pointing to June, Jerry, and Ned. “Go Syd’s Gyms and other channel partn find out as much relevant data as you can, and pull together an analysis in th ers. Jerry tried to remind everyone of fa e next 24 hours. I’ll meet with you, and recall using the product there betwee “It seems like everything is a matter of debate.” n September 25 and 29. The victims ra Nora sighed. “Ever since I came here, I’ve been nge in age from 19 to 55.” in too many meetings about meetings.” Don felt the blood drain from his fa ce. “Are you telling me that the product h as to be recalled?” “I don’t have the authority–or the e the inspector to the team, PR direct two full years of testing. We ran all kind s vor of toxicity studies in animals and on idence – to make you do that. So for t human volunteers. Then we did anothe he r time being, I’d simply like your coope tier of clinical trials in humans.” He rlooked hard at June.“If you need me to ation in conducting an investigation. defend ChargeUp to the health departI ment, the reporters, or anyone else, I understand that distribution is limite have about 500,000 pages of documen d to the Twin Cities area, is that correct tation to show them.” ?” “Of course we all believe you, Steve, “Yes.” ” “That’s fortunate. Meanwhile, yo June replied tentatively, “but that kind u of response can look like defensiveness may want to consider a voluntary r , eand it can backfire.” She looked pleadcall,” he said just before hanging up. ingly at Don. “I’ve already drafted a Don asked his assistant to call a press release saying we’ll fully coopera n te emergency meeting with the heads with any investigation, but that’s not of PR, sales, R&D, Sports Supplements , and legal. As he described his discussion wit h we’ll form a preliminary view. I’m call ing all the senior managers for an 8 a m meeting tomorrow. You can present o ur findings, and we’ll take a vote.” He looked hard at Steve, who was scowling. “Steve, I want you out of t he discussion for the time being. You’re a little too passionate about this, and I need some cool analysis here. You c an press release announcing the decisi on. The release included a quote from Do n, assuring the public that Nutrorim wa s “doing everything possible to cooper ate with the investigation.” Two weeks later, Don received an other call from Matthew Norton.“I ha ve good news,” he said. “It turns out th at the people who got sick picked up a b ug from the gym’s smoothie bar.” Don gasped.“So that means Nutror im is exonerated?” he asked. “Yes, and fully,” the inspector repli ed. “We’ll send out a press release sayin g so today.” speak your mind at tomorrow’s meetin g.” The following morning, after hearing the analyses and prognoses, the major ity of senior managers quickly agreed with the subcommittee’s view that recalling the product was the only choice. Following the meeting, June issued a Don reported that the board ha decision-making process at d Nutrorim.” been heartened by a recent analy st’s report calling the series of unfortun ate events with ChargeUp a “fluke” for an “otherwise solid firm that has a hist ory of making sound decisions.”Despite the fact that the analyst had recommen ded a “buy,” the board members were concerned about the damage to the Ch argeUp brand and adamant about maki ng absolutely sure that this type of thi ng would never happen again. To that e nd, the board strongly recommended a topto-toe process review. Gibson, Calling All Volunteers having The boardroom was abuzz as Nutrori worked with two CEOs who sat on t m’s he 15 top managers settled into their sea board, was the “obvious choice” fo ts. ra The consultant sat quietly on Don’ consultant. s Someone turned down the lights right, sipping cofee. as “Okay, let’s get started,” said Do the first PowerPoint slide appeare n. d “As you all know, we’re going to he on the conference room screen.“I w ar ant this morning from Synergy Consultin to thank each of you for allowing me g to Group’s Gibson Bryer, who will prese speak with you during the past mon nt th,” his preliminary findings. But first, let the consultant began. “My initial fi me ndreview quickly why I, with the full su ings show areas of agreement and pdisport of the board, wanted this proce agreement about the efectiveness ss of the review.” He clicked to another slide. “You told subcommittee,”he said.“The next ph Don, who was talking to another me that for decisions with a certain ase manager, pretended not to hear. A few amount of built-in predictability – deci of our work with Gibson is to come u minutes later, he walked to Nora’s offic e p sions like how to improve your distribu with a better, more resilient decisio and tapped on the door.“Got a second? ” ntion network, whether to alter your making process that works well both he said, poking his head in the door. print ads – the process seems to wor in Nora nodded, and Don perched on k the corner of her desk. “You don’t look calm times and in rough. Anyone?” really well.”He clicked to the next slide No one volunteered. Then Anne Ha very pleased about this,” Don said . soothingly. n“But if a decision involves clear winne nah, who headed the vitamin divisio “Well, no,” Nora said, clearly peeved rs . n, and losers, it stalls.”Click.“A prelimina and Ned Horst tentatively raised the “I’m completely buried in this marketry ing launch at the moment, and I have ir survey about the inner workings of thehands. Don looked around the room other fish to fry. And to be honest,” she process itself, however, reveals mixed and gazed at Nora, the former entr went on, “I’m pretty tired of all this renavel-gazing nonsense.” eviews.” Click. preneur. “Nora, I’d like you on the “Some of you feel that this company team,” he said. “Your perspective is is too consensus driven and that thing als ways invaluable.” don’t get done in a timely fashion.”Cli ck. Just Make a Decision! “Others say that the decision-making “Hey, Nora,”Steve said sarcastically, process is fine the way it is. Still other wavs ing to her as the meeting disbande get a bit frustrated at times, wishing d, that the CEO would make definitive “congratulations for volunteering. Jol calls more often.” Click. “Some say th ly “Well, I picked you because you see at m good show.” the company deals well with tough is to hold back in the senior management meetings,” Don replied, trying his best sues; others say that conflict is too oft to be gentle. “You know, the ChargeUp en problem presented us with a real oppor suppressed or swept under the rug an d tunity to look at what’s broken. You that this causes resentment.” Click. come from outside the company, and “Some feel that the culture of the com you have clever, fresh ideas. I think yo u pany is democratic and inclusive; oth are just the person to bring these issue s ers worry that the louder voices and to the fore.” squeakier wheels dominate. Lights up “Look, Don, I appreciate that, and I , completely sympathize with what you’ please. I’m assuming many of you hav re e trying to do. But I come from a comquestions.” pany where all decisions were made in Some hands went up, and Bryer spe the room. I didn’t allow anyone to leav nt e 45 minutes methodically addressing t until a call was made. Here, it seems he like everything is a matter of debate. concerns. Don looked at the clock and ” then stood up to thank him.“It’s almos She sighed. “You know, this consultant t time for us to end this meeting, but be driven committee is just more evidenc e fore we do, I need three volunteers for of what’s wrong. Ever since I came her a e, I’ve been in too many meetings about meetings.” approach to decision making.” She tightened her lips. “Maybe it’s time for you to take a more dictatorial What’s the right decision-making DECISION MAKING process for Nutrorim? • I WENDYWRAY Christopher J. McCormick is the president and CEO of L.L.Bean in Freeport, Maine. f I were to give points for good intention But how they utilize and play of the strengt s, hs then Don Rifkin would score pretty we and skills of their in-house experts is key. Th ll. is He seems honest and genuinely intereste ability to juggle skill sets includes knowing d in how to leverage personalities so that eac doing the right thing. Both are laudabl h e team member is continually challenging attributes in a leader, but they go only so status-quo thinking and developing new far. problem-solving techniques. For Rifkin in Rifkin does not appear to have a proble particular, this skill also involves asking th m e making decisions and, as evidenced by right questions of the people he relies on to his provide critical information. Granted, there choice to launch the new and improve is d an art to creating this type of engagement, ChargeUp, he appears to encourage crea but it seems as though Rifkin doesn’t hav tive ity, innovation, and risk taking. even the slightest idea how to initiate thos On the other hand, it seems that Rifkin e has conversations. created a culture devoid of candid inqui A look back at how my organization rery, cently responded to a change in local labor where objective analysis and oversight ta market conditions speaks to the value of thi ke a s backseat to maintaining a “happy, partici interplay. As site work began on a new paL.L.Bean customer contact center, anothe tory, democratic culture.” As a conseque r nce, company announced its plans to locate an Rifkin now realizes that the outcomes of even larger call center right next door. Bedecause this development posed a reasonabl cisions made in this kind of culture are le e adthreat to our seasonal staffing needs, the ing to an unhealthy organizational dyna challenge I put forward to the organization mic, was “Is it too late to reconsider? What are paradoxically creating the type of corpor ate culture he disdains. Rifkin’s biggest problem is that he does n’t ask enough questions.I often say that my company’s greatest asset is its people, and t hat this asset is at its best when engaged. Wi thout By asking the right questions of the ex perts in his organizatio n, Rifkin would pu t into our options, and what are the costs?” Thes play healthy dynamics that would lead e questions led to countless others that imme to more cross-functional collaboration. diately mobilized the entire company to con sider alternatives, despite the fact that grou a culture of inquiry, engagement doesn’t nd had already been broken. The result is that pen. In addition to being a champion of in we found a new location and started operations in the same amount of time and on be vation, a CEO is responsible for constan tter terms than we had for the original projec assessing risk through questioning. Unfor t. Rifkin’s challenge is complicated by the f nately, Rifkin is not asking the types of quact that his decision-making process has led to tions that will create the environment of a reactionary culture characterized by consid countability his organization needs to suc erable resentment and second-guessing on t By not probing the experts on his sta he part of his management team.With a renew Rifkin has missed a huge opportunity to r ed focus on inquiry, Rifkin would experience tw shape the culture of his organization and o important benefits. First, he would create a tablish himself as a strong leader. A stric ccess to the information he needs to make b mode of inquiry would have, among oth etter decisions.Second,he would set an exam things, made the decision about whether ple for his own managers that speaks to the val recall ChargeUp much easier. ue Of course, it must be understood that s of diligence and personal accountability. By asking people the right questions, cessful top managers are rarely experts Rifkin would put into play healthy dynamics that would lead to more cross-functional col more than a few organizational disciplin laboration, greater acceptance of decision s, and better business results in which his entire team would feel more fully vested. R hapnotly tuesacceed. f, eester er to ucin es. DECISION MAKING his ifkin wants to be a better leader than former boss and has strived to form a corporate culture that takes into accou nt the “Minnesota niceness” of most of his e mployees. While these objectives are goo d startin g points, the lac k of consistency in all quality of decision making. Fortunately, The decision-making crisis at there are a few things he can do to improve Nutrorim is a blessing in disgui matters. First, he should demonstrate stron g se, leadership by setting firm management pro for it ofers Rifkin a chance to - rules – especially for investment and cess install irm management rules M&A decisions, product launches, and risk management – that are easy to apply and and transparent to everyone. build trust within the company. M&A decisions, for example, should be ciult n lity . In owed and diuin pt he ve onal Eiund Hauke Moje (hauke_moje @de.rolandberger.com) is a partner at Roland Berger Strategy Consultants in Hamburg, Germany. formed on the basis of precisely defined criRifkin’s approach to management and deteria that cover everything from due diligence, strategic and operational aspects o f sion making undermines trust. It’s diffic the merger, and a clear exit strategy. Trans for teams to function well together whe parent rules prevent management from growing too bullish, practicing selective he there is so much inconsistency and volati aring, and ignoring risks. They also go a long at work. way toward establishing trust, because peo Let’s start with Rifkin’s leadership style ple know what to expect and what they’re the case of the bad stock purchase, he sh responsible for. I would also recommend that Rifkin unpoor judgment, a lack of professionalism, dergo intensive coaching to help him develop a consistent leadership style and lear an inability to view facts objectively. In ad n to take a more active role in managing his tion to not taking simple business preca team. Coaching could help Rifkin do a bette r tions by personally vetting Dipensit, Rifk job of developing his people. For example, it’s clear that Nora Stern is a hands-on mandemonstrated selective hearing that ke ager, rather than a talker, so Rifkin should keep her on practical tasks – such as givin him from absorbing dissent. g The picture is diferent in the case of t her responsibility for a plant where she can develop her skills–rather than force her ont recall. If you look at it from the perspecti o subcommittees. He should also let his manof decision theory, Rifkin reacted in a rati agers know what is expected of them, espe manner. Nutrorim faced two scenarios: cially in terms of team behavior. He can praise Steve Ford for his R&D expertise but ther ChargeUp with Lipitrene would be fo to be the cause of the customers’ illness, a lawsuit. Management could not take that or it risk, since the probability of the product would not. Likewise, Nutrorim had two o being faulty was obviously beyond a negligi ptions: Recall the product, or don’t. If th ble level and there was no time for further i e nproduct turned out to be faulty, keeping itvestigation. Rifkin did a good job of hearing on people out and decisively following the subthe market would most likely have meant committee’s recommendation to withdraw the the product immediately. company’s demise, given the possibility But Rifkin’s inconsistent approach to thes of e events undercuts his authority and t make him understand that his is only o decision-making crisis at Nutrorim is a bless he overne viewpoint among many, and that he mu ing in disguise, for it ofers Rifkin a chance t st o remain a team player even if he does n install firm management rules. And Rifkin ot can build trust within his management tea agree with particular decisions. m As the Swiss novelist Max Frisch wrote, by setting an example and openly commu“A nicating his intentions and goals for the crisis is a productive situation–you only h company. In accomplishing both, he’s doing ave what is necessary to improve the company’ to take away the flavor of catastrophe.” s The decision-making processes. DECISION MAKING I “What’s the right decision-making process for Nutrorim?” raises another question: “What’s the right decision-making process for Don Rifkin?” Ralph Biggadike ([email protected] columbia.edu) is a professor of professional practice in the management division of Columbia Business School in New York. agree with Gibson Bryer that the curre causing trouble. Murmurs go unaddressed, nt opinions are unbalanced, top managers feel decision-making process at Nutrori increasingly frustrated, and bad decisions a m re seems to work fine for decisions with so the norm. Hence, the final question–“What’s me the right decision-making process for Nubuilt-in predictability but not for those trorim?”–raises another question:“What’s t with he clear winners and losers. Day-to-day right decision-making process for Rifkin?” operaIt would help if Rifkin could view conflict tional and procedural issues are one thi as an important source of energy and see ng; that it’s his responsibility to understand all important problems or strategic matters sides of an issue. To do this, he needs to exthat plore his own issues first. If I were coaching involve conflict or debate are quite anot him, I would begin by asking him why he her. hasn’t investigated the “murmurs” he’s ove And when it comes to the latter, the proc ress heard, and why he chooses to deal with conat Nutrorim is broken. flict in private rather than in public. I might The problems with the decisionask,“How has the decision to take things ofmaking line helped you in the past? What are the process at Nutrorim stem primarily fro benefits and drawbacks of doing things this m way?” The difficulties he’s had with his manRifkin’s aversion to conflict. He believes t agers reflect his aversion to conflict. All lead hat he keeps the process open and asks for i ers face people like Steve Ford from time to nput, time. Commitment and passion are worth but he doesn’t realize that his approach encouraging in direct reports, but assertiveto ness and conviction can have their downbuilding a friendly culture squelches diss sides. To become more comfortable dealing ent with people who possess these qualities, pa and debate. He’s trying to build a “nice” rculture by making it homogeneous, and th at’s ticularly in group settings, Rifkin n a lot like deck stacking. If Rifkin wants a bate options. Each subgroup should report eeds to etter regularly to the larger group, which can the get away from his and others’ perso balance of views and, hence, better deci n nal feelsions, debate a given issue’s pros and cons. Thes ings. In a group meeting, he could s he should choose members more caref e ay, for exully. groups can be set up like teams of lawyers, ample,“We’ve heard a strong case f Nora Stern makes an important poin with one critical exception: Those individuor Y Does . t als with the strongest opinions should argue anyone else have data or experien when she says that in her former compa the case for the opposing side. This kind of ces that ny, decision-making structure can go a long wa might suggest another approach?” debate was held out in the open, and dif y Rifkin should also take a good, har ertoward unearthing the opinions of all ind look at ences were worked out in the group. Foll volved, including those who feel left out, an the way he selects members of his owd subcoming this example would cut down on the f toward building the kind of balance Rifkin mittees. In his desire to avoid disagr rusneeds to develop in his company. eements, tration among Rifkin’s managers, redu I would stress to Rifkin that he has two prihe seems to seek out homogeneity. ce mary responsibilities: to guide the decisionPublic relobbying, and bring to light some key op making process so that all the data, opinion lations and legal, for example, are c ins, orporate ions. I recommend that Rifkin use subgro assumptions, and options are identified and kindred spirits, and leaving the head ups fairly discussed, and to make the final deciof R&D to gather data, identify assumptions, an sions. It would also help if he explained the out of a discussion on a product reca d crereasoning behind his decisions to his direct ll looks reports. N What’s the Right Decision-Making Process for Nutrorim? >> C A S E C O M M E N TA R Y utrorim needs a serious reality chec through the decision to purchase stock i Rifkin can’t allow his team me mbers to n Nora Stern, as the outsider, is the voi create their own versions of reality. Dipensit without exercising due diligence ce For exam. of reason when she notes that there is t ple, Ford, the R&D head with veste Investing in a company is like buying a oo d interhouse: One makes the purchase decisio much navel-gazing at the company. To ests and a difficult personality, pr n o events based on a combination of hard factors su many people, including Rifkin, are opera people from having candid conver ch tsations as price, condition, and school system, a ing on hunches and gut reactions that co when they are most needed – duri s uld ng times well as soft factors such as general impre put the company at risk. Rifkin abdicates of crisis. Rifkin needs to buckle d shis own and sions, conversations with neighbors, and responsibility when he fails to sponsor make it clear to Ford and everyone so a else that on. It is inexcusable that Rifkin allowed sh learning organization that builds knowle they will be held accountable for aredge their acholders’ money to be spent on a stake i as a competitive advantage. He needs tions and their results and that no o n to ne gets to show leadership and a willingness to ma steamroll others. Without this rule, ke the comdecisions. pany can only react after the hors The stock purchase is a perfect case e has left in the stable. point. The CFO, Laurence Wiseman, ma To ensure better decision makin y g, Rifkin have his talents, but it seems he push should work hard to create a cultur ed e that rek. wards on the basis of unit performance a them, and give them feedback. He should s make sure that results are openly celebrate well as individual contributions. He shoul d d and that when failure occurs, everyone lear spend more time developing leaders – I lik ns e to think of them as mini-CEOs – who have a passion for results and understand how th eir Paul Domorski ([email protected] actions afect the company. Rifkin’s job is t avaya.com) is the vice president of service operations at o Avaya, a communications monitor his managers’ progress, motivat network and service provider e in Basking Ridge, New Jersey. The payof for a lot of hard work and seemingly endless preparation occurs when it’s time to make hard decisions. Dipensit without having launched a tho from it. Like members of a sports team, every rone of these individuals is accountable for ough investigation of the CEO’s backgrou his or her own assignment. Without that nd accountability, the team cannot win. In the when questions first arose. Rifkin and h end, Rifkin should play the role of a quarteris back and be the one calling all the plays. team should have delved into any rumo Getting this role right sometimes leads to rs, tough discussions, but the results can be probed any allegations, studied the busin outstanding. ess Sometimes the answers to dilemmas will model, and fully understood any contract be obvious; other times, more analysis will be ual required. Either way, the teams at Nutrorim obligations. must do a better job of getting at the heart of The same fact-finding failure occurre problems. The payof for a lot of hard work d and seemingly endless preparation occurs with the ChargeUp fiasco, which should h when it’s time to make hard decisions. ave been investigated immediately. Rifkin sh . ould have dispatched a qualified team to Sy d’s Gyms to investigate the facts and intervi ew the people afected. Ford and his team sh ould have reviewed the allegations in light of earlier toxicity studies and clinical trials to d etermine whether any of the alleged proble ms had ever occurred during testing. Indeed ,a thorough investigation might have preve nted the crisis in the first place. ...
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