As he [Ken Iverson] explained in his book, Plain Talk: Lessons from a Business Maverick,

Most of today’s corporations were conceived as command-and-control organizations. The founders of integrated steel mills, for example, clearly assumed that the “genius” of the organization resided almost completely in management … In contrast, we built Nucor under the assumption that most of the “genius” in our organization would be found among the people doing the work. 2 3 From the outset, we shaped our business to let employees show management the way to goals that once seemed unreachable.

“The big business, Sloan saw, needs unity of direction and central control. It needs its own top management with real powers. But it equally needs energy, enthusiasm, and strength in operations. The operating managers have to have the freedom to do things their own way. They have to have responsibility and the authority that goes with it. They have to have scope to show what they can do, and they have to get recognition for performance.

The truly important features of the decisions Vail and Sloan made are neither their novelty nor their controversial nature. They are:

1. The clear realization that the problem was generic and could only be solved through a decision which established a rule, a principle;

1. The definition of the specifications which the answer to the problem had to satisfy, that is, of the “boundary conditions”;

1. The thinking through what is “right,” that is, the solution which will fully satisfy the specifications before attention is given to the compromises, adaptations, and concessions needed to make the decision acceptable;

1. The building into the decision of the action to carry it out;

1. The “feedback” which tests the validity and effectiveness of the decision against the actual course of events.

These are the elements of the effective decision process.

2. Demands: Leaders have to balance two often competing demands on the business — People and Process. This requires simultaneously maintaining a great reputation with the employees, customers, and shareholders (the People side of the business); and improving the productivity of how the firm makes/buys, sells, and tracks these transactions (the Process side of the business).

3. Disciplines: To effectively execute, there are three fundamental disciplines (routines): Set Priorities; gather quantitative and qualitative Data; and establish an effective meeting Rhythm. It’s in these meetings, debating the data (the brutal facts!), where the priorities emerge.

4. Decisions: Ultimately, all of the above require some decisions. To scale the business requires getting four key decision sets — People, Strategy, Execution, and Cash — absolutely right, and there are right and wrong answers. Shortchange any one element and you’re not maximizing your opportunity.

The truly important features of the decisions Vail and Sloan made are neither their novelty nor their controversial nature. They are:

1. The clear realization that the problem was generic and could only be solved through a decision which established a rule, a principle;

1. The definition of the specifications which the answer to the problem had to satisfy, that is, of the “boundary conditions”;

1. The thinking through what is “right,” that is, the solution which will fully satisfy the specifications before attention is given to the compromises, adaptations, and concessions needed to make the decision acceptable;

1. The building into the decision of the action to carry it out;

1. The “feedback” which tests the validity and effectiveness of the decision against the actual course of events.

These are the elements of the effective decision process.