When Times Are Tough, Do You Make Better Decisions?

I heard this in a meeting today “When times are tough you make better decisions.” I wonder if this is true. They say that necessity is the mother of invention and this means something similar.

A common Toyota saying is 「困らなければ知恵が出ない」 (komaranakereba chie ga denai) which means “You won’t use your brains unless you have problems.” Ohno used this title for one of the chapters in Gemba Keiei titled Your Wits Don’t Work Until You Feel the Squeeze in this blog.

Harvard Business School Professor John Kotter wrote in Leading Change that the first step in a successful transformation is to create a sense of urgency.

On the other hand Taiichi Ohno also wrote in Gemba Keiei to “do kaizen when times are good” because in tough times you may be forced to cut the muscle and not just the fat.

So one of the central challenges of becoming Lean is how to create a sense of “tough times” even when times are good, and to use the truly tough times to focus your thinking and use your brains to make tough decisions and improvements, free of distractions and “happy” decisions you can make when you are making lots of money.

What do you think? When times are tough, do you make better decisions? Or do people make short-term decisions which are not better?

3 Comments

  1. John Hunter

    January 8, 2007 - 7:47 pm

    When you are in a bind you are more likely to do something. When times are good, many are content to let things go, and not make any tough decisions or those that might upset some… When in a bind it is accepted that something has to be done so you can often get past the “we are doing ok, why make us change…” objections.
    Similarly it can encourage those to question a decision they don’t agree with (instead of when times are good thinking, well I disagree but I will just go along…). So it is possible that in a dysfunctional management system (which is a lot of them) it can seem that when times are tough better decisions are made.
    In addition, when times are bad any decision might seem good when things improve due to regression to the mean.
    Mainly, I think, when times are tough people are willing to make riskier decisions. Which might very well not be better ones. But they might actually be a bit better than average if we often are too cautious (which I think is true in many cases thought far from all). “Just stick with what we are doing it can’t be too bad we have been successful for a long time.” That idea is far too widely accepted.
    But the best approach is definitely one that is like Toyota’s. Never be satisfied. Always seek to improve. Do not be complacent. Do not take the easy way out because you can afford to (in good times).
    Stay ahead of the game. It is not hard to find tons of problems to work on whether you are GM or Toyota.
    Have the discipline to focus on the problems even when times are good. That is the key in my opinion. That allows for a much broader range of options (when times are bad certain options are no longer available – for example, when Toyota had to lay off workers…).
    Another key is to examine and improve your ability to use your improvement process (PDSA, A3…). Getting better at it is exactly what making better decisions is about. Now you also have strategic decision… but improving your improvement process will go a long way to improving your decision process in general.
    Ackoff also has some very good ideas on this, on documenting decision making and evaluating decisions over time… and finding systemic weaknesses (too cautions, to optimistic, overestimate IT “magic”, underestimate time frames…). Then you can improve. I think it is pretty obvious you can be better if you constantly work at improving decision making instead of just waiting till you are in trouble and then trying really hard.

  2. Michael Schaffner

    January 9, 2007 - 6:01 am

    John Hunter makes some excellent points. The only observation that I can add is that “tough times” tend to help you focus on the key issues involved in making the decision. In tough times you don’t have the luxury of dealing with all aspects of the issue in detail. By helping to eliminating the distraction of tangential issues and focusing you only on the truly important ones your decision may be “better” in that it truly addresses the root issue.

  3. Barry

    January 9, 2007 - 7:34 pm

    This is a very good question. Jon and John provide a lot of interesting points of view.
    I remember reading what Onosan had said and thought he made a lot of sense.
    My personal opinion was that he was imploring people to always work to improve. I kind of felt that he thought that was the best way to possibly avoid the Bad times. In other words if you didn’t strive to improve continuously then you might as well figure on the Bad times surely showing up.
    I also feel as though this is the most Offensive position a company can take. Being on the offense by always seeking out ways to reduce wastes in your system and improving your margins. This allows you to generate a few more % of profit and store it up in order to weather any hard times that might appear.
    Perhaps it has something to do with the Production Leveling thing, but applied to Improvement. If you are constantly improving, then maybe you don’t have to depend upon BIG and potentially Riskier Improvement Spurts that would occur as a result of BAD Times.
    While Times being Tough might very well tend to create organizational focus. I think it is perhaps a dubious assertion that the decisions or decision-making would be better.
    It seems to me the goal should be not to have to endure the Tough Times by sticking to your knitting when times are good.
    I also think it is a good thing for Society to have a company like Toyota who believes in continuous improvement. A company which continuously strives to reduce the amount of resources required to make its products is a good thing. Using less of the Earths resources to create ever more valuable products for consumers is what I call progressive.
    I personally think Toyota could be a lot more aggressive in their marketing. They could be informing the marketplace that they are reducing the amount of resources they are using to create a vehicle like the Prius.