Decision Debacles and How to Avoid Them

Decision debacles – decisions that go so wrong they are reported in the media – involve three mistakes: faulty decision practices, premature commitments, and mis-allocation of resources.

These mistakes, together with the more detailed traps into which they draw decision makers, are found in many decisions that go wrong without attracting media coverage. To avoid decision debacles, governments and organizations should apply the lessons derived from research into decision-making.

These lessons include the need to spend time early in the process to uncover hidden or ethical concerns, care in managing the social and political forces that might block the decision, focusing on clear objectives, exploring a wide range of options and estimating risk. It is also important to root out perverse incentive structures to gain information needed for learning.

On January 1, 2000, Britain’s prestige project to usher in the new millennium opened in Greenwich, London, with a gala attended by royalty, top politicians and many of London’s glitterati. The Millennium Dome was originally championed by the Conservative Government which lost power in 1997. The new Labour Prime Minister, Tony Blair, took on the project, calling it “a triumph of confidence over cynicism, boldness over blandness”.

The Dome was hyped as futuristic, flashy, and high tech, but became a national embarrassment within weeks of opening. Politicians have been arguing ever since over who was to blame. The media and others were downright hostile, calling it vain, vapid, patronizing, and much else. With its £25 ($38) admission fee, it was criticized for being grossly overpriced. Twelve million visitors were forecast but fewer than 4.5 million, many with cut-price tickets, paid to get in. The Government put £785m ($1.3bn) into the project and had to infuse it with an additional £175m ($265m) to keep it afloat. Now, bidders plan to bulldoze the building and use its picturesque location on the River Thames to build something else.

How do decision debacles happen? Are they preventable? Can the risks and the magnitude of the losses be foreseen? Can a debacle be headed off with a mid-course correction? This paper offers some insights to these questions.

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