New Zealand is facing a productivity challenge created by our low levels of industrial and commercial efficiency. The escalating pace of enterprise and increased political pressures to deliver enhanced public services means managers must become better decision makers.
In terms of labour output, New Zealand is only half as efficient as the United States. Our productivity growth during the 1990s was the third worst among 27 OECD countries. When it comes to competitiveness, we rank 19th behind countries like Singapore, Hong Kong, Iceland and Ireland and just ahead of Chile and Estonia. The discomfiting reality is that if all New Zealand's investment was in the hands of many of its competitors, the output would be appreciably better than anything the nation's public and private sector managers achieve.
If unlearned lessons are one example of poor decision making, there is no shortage of real-life evidence that we seldom learn from our mistakes. Despite expensive enquiries, expert reports and declarations that lessons were learned, police computer projects, the Accident Compensation Commission, the National Library and the Justice Department all collapsed at an estimated cost to the taxpayer of more than $130 million. At least three other projects whose failure could cost another $300 million are classified as high-risk.
In the Health Service, an enquiry was held to discover why a pathologist at Gisborne hospital's cytopathology laboratory made so many undetected mistakes over a five-year period in what has been described as the country's "biggest medical disaster". His recurring mistake was part of other serious errors--called "sentinel events"--that occur at an estimated rate of approximately one in 1000 reportable events in our health and disability sector organisations.
Our private sector isn't much better. Consider, for instance, the series of operational debacles and poor strategic decisions that led to the demise of our once largest enterprise, Fletcher Challenge. The legacy of poor decision making in that enterprise and its offspring continue to this day. Safety issues recur year after year at Tranz Rail and NZ Steel, resulting in deaths and horrific personal injuries.
On a more systemic level, New Zealand is near the bottom of the international league table when taking start-ups on from the small business phase, a failing that suggests less than effective decision making.
If there is a relationship between education and national prosperity, why isn't teaching the craft of decision making a dedicated discipline, either on the job or in our business schools? Too often it is overly theoretical, unstructured, informal or anecdotally subsumed into wider specialities such as marketing, strategy and leadership. Managers are left to rely on their intuition, anything they can learn arbitrarily from their own and others' experience or their ability to cope with corporate politics.
At a non-theoretical level--teaching by using actual experiences--decision-making's application is confined to random, unstructured methods by individuals and post-project reviews and usually used only to investigate large failures.
It is now fashionable to introduce so-called knowledge management and/or "learning organisation" practices, which usually involves installing a sophisticated computer retrieval system for quick access to archival documentation. Its most useful perceived applications are twofold:the ability to identify people in organisations with relevant skills and experience who can be consulted, and the collection of data to identify useful trends upon which to focus management attention.
Unfortunately, today's more flexible labour market replaces almost the entire employee base of most organisations every four or five years, depleting the pool of individuals worth consulting. And, while organisations can identify what needs attention, a computer can't convey how best to achieve it. …