Wrong Moves and Analyzes the Decision-Making Process

¶ … Wrong Moves" and analyzes the decision-making process of Nutrorim CEO Don Rifkin and his management team. The essay also makes recommendations regarding improvements, including changes to management styles and the use of decision tools.

Analysis of Key Issues

The key issues in the case involve deciding whether to recall ChargeUp after a health inspector made allegations that the drink was responsible for causing illness among 11 people. During the process of making this decision, other issues become apparent. CEO Don Rifkin had created a corporate climate that discouraged dissent and failed to optimally use his people's abilities. By trying to create a climate of inclusiveness, Rifkin has gone too far in the opposite direction and instead discourages his people's best efforts by stifling dissent and debate. Nutrorim's managers get bogged down in the decision-making process, with the result that they routinely make poor decisions, one after another.

Rifkin's management style was shaped fresh out of business school by an unfortunate incident with his former boss, a "dictatorial" CEO. The incident apparently traumatized Rifkin to the point that he put significant effort into making sure that he did not run Nutrorim in that fashion. Rifkin tried to develop a "happy, participatory, democratic culture," not realizing that such a management style would undercut his ability to be a successful leader. In the absence of conflict or challenges, Rifkin's inconsistent management style might be only slightly dysfunctional for day-to-day operations. But during times of crisis where difficult decisions needed to be analyzed, debated and resolved, Rifkin's approach was ineffective. He may have made a point of asking for input from as many people as possible, but he left his team with no clear, definitive process to optimize decision-making. By creating so much uncertainty, Rifkin set his team up for failure.

In addition to deciding specifically whether to recall ChargeUp or not, Rifkin needed to overhaul the decision-making Nutrorim process. Even though the ChargeUp recall was the most urgent, in the long run the need to fix their broken system was also a high priority. As long as they used a decision-by-committee approach, with Rifkin making arbitrary decisions in private and "offline," Nutrorim was subjecting itself to a series of disappointing results. Rifkin's decision to recall ChargeUp was actually a valid decision, but his handling of it undermined his authority.

Investing in Dipensit was another example of Rifkin and Nutrorim's failed approach to making important decisions. Some members of Rifkin's team had misgivings about the purchase of Dipensit stock, but Rifkin neither personally undertook the necessary research, nor did he take seriously the reports of the subcommittee that he delegated the responsibility to.

From failing to perform their due diligence in investing decisions, to not gathering enough information about the proposed ChargeUp recall, to hiring an indecisive consultant, Nutrorim stumbled through one ineffective decision after another. Nutrorim needed to put in place a system where Rifkin and his team asked the right questions and created an environment of accountability and responsibility. In particular, Rifkin needed to ask the right questions of his people and help them develop improved problem-solving techniques.

Decision-Making Tools

Nutrorim needs to work with an organizational decision-making tool, for example, the rational model. This tool however does not work under real-world conditions where there is a lack of information and significant uncertainty. The rational model especially falls short with a management team like Nutrorim's, which can neither process all the information nor be objective enough in many cases to select the best solution. Another failing with the rational model is the assumption that managers agree about values, goals and preferences; clearly this is not the case at Nutrorim. The various department heads, R & D, PR, and the CFO, all have different orientations and priorities.

The Carnegie model is better suited to help Nutrorim resolve their challenges. This model is more realistic and more accurate than the rational model. The company's managers should be encouraged to satisfice and determine the criteria to evaluate solutions and limit the range of alternatives. Satisficing would be more productive for Nutrorim's managers than searching for every alternative.

The Carnegie model also acknowledges the reality that managers are restricted by bounded rationality, that is, a limited ability to process information. Nutrorim managers can still improve their decision-making by strengthening their analytical skills. Nutrorim must also work towards organizational coalitions that enable their subcommittees and team members to achieve decisions by compromise, bargaining, and negotiation.

If Nutrorim adopts the Carnegie model, the company will become better at seeking good solutions that meet their goals in spite of the challenges of uncertainty and disagreement.

Recommendations

Rifkin needs to establish management process rules. These rules should include a decision-making protocol that defines criteria for the company's key decisions. This process should include transparent rules that keep the management team from being too aggressive, and from dismissing valid objections and ignoring risks.

Rifkin must also do a better job of selecting his subcommittee members. Because he wanted to avoid conflict, Rifkin chose people whose views did not conflict, but neither did they work well together as a team to make effective decisions. For Rifkin to get better recommendations from his people, he needed to do a better job of selecting balanced subcommittee members.

Rifkin himself should undertake management coaching to help him develop a more effective leadership style. Rifkin needed to be comfortable exercising authority, even in situations where he would prefer that everyone remained "Minnesota nice." By developing his own leadership skills, Rifkin would also be better able to develop his people. For example, Nora was clearly dissatisfied with being involved in "meetings about meetings." Rifkin's drafting her onto the subcommittee to review the consultant's recommendations was exactly what Nora did not need, nor did her involvement serve the team well either. Instead, Rifkin should give Nora practical, hands-on managerial tasks to perform.