Research

Who's on first? Decision-making in the midst of disaster

Experts say the Hurricane Katrina recovery effort arguably represents one of the great natural disaster recovery and redevelopment challenges in U.S. history — perhaps exceeding even the Dust Bowl of the 1930s and the San Francisco earthquake of 1906. But before the work can begin in earnest, the stakeholders in New Orleans must decide what to do — and this first step may turn out to be as difficult as the renaissance itself. Two professors from the W. P. Carey School of Business have made a study of the science of individual and group decision-making, and they offer their thoughts on the overwhelming task that lies ahead.

2005-09-28

The list of tasks to be accomplished before the scattered residents of New Orleans can be repatriated is long and complex. In fact, experts say the Hurricane Katrina recovery effort arguably represents one of the great natural disaster recovery and redevelopment challenges in U.S. history — perhaps exceeding even the Dust Bowl of the 1930s and the San Francisco earthquake of 1906. But before the work can begin in earnest, the stakeholders in New Orleans must decide what to do — and this first step may turn out to be as difficult as the renaissance itself.

Over the past several decades, decision researchers have extensively studied how individuals and groups make decisions, and how to improve this decision-making process. Daniel Brooks and Craig Kirkwood, professors in the W. P. Carey School of Business, say there are lessons from this research that could help with the decision-making for the Gulf Coast rebuilding effort.

The first step is recognizing that decision-making is actually a task in and of itself.

"My experience is that people don't typically make the distinction between deciding and acting, because what you do and the decision on what to do are wrapped in the same mental package," Brooks commented. "And especially when there are multiple stakeholder and decision-making groups — as there are in this case — the decision is very distinct from action. Ironically, while multiple participants make the job of getting things done easier, it is actually more challenging deciding what to do."

Stakeholders ignore the complexity at great peril, however. How these decisions are resolved will not only guide the immediate recovery effort, but will also shape the region for decades to come. It is no exaggeration to say these decisions will impact the very life — or death — of southeastern Louisiana.

Decision-making in an open society

The process of deciding what to do next in New Orleans is subject to enormous pressure, originating in the nature of the disaster itself and the complexity of the communities involved. The number of communities hit — each with its own issues, the number of overlapping government jurisdictions, and the range of businesses and organizations impacted means that not only are the problems uncountable, but the number of decision-makers is large. All these factors exert pressure on a decision-making process which, in our pluralistic society, is by design deliberate and slow.

The task is a political obstacle course, and throughout it all, decision-makers will be operating under the spotlight of the international media. And the interests of the media are different from the interests of the community, Brooks said. "The media don't sell education, they sell drama: something that makes it gripping. In every catastrophe, the media drift toward topics associated with blame. That's unavoidably divisive, and it fractures the group of decision-makers into competing camps. It works against people working together."

"In this atmosphere, decision-makers ranging from top federal officials to community activists will be expected to choose among numerous alternatives quickly, and they will be expected to be right. Under these circumstances, collaboration and coordination will be difficult, even though all share the common goal of recovery," Kirkwood said.

"In a big way, the future of the entire New Orleans region hinges on the ability of the many involved government agencies and private sector stakeholders to sort through the untold number of special interests and make decisions that will best serve everyone. The result could either be one of the great comebacks in world history, or a disaster of its own." The slowness of initial response with its subsequent human suffering intensified public scrutiny, adding to the pressure to decide and act quickly.

"Ten days after the storm there were still a million people without power and communication," Brooks said. "The absence of these basic services created a high degree of urgency, which exerts pressure on the decision-making process. We can expect that the demand to immediately address dire realities will force decisions to be made in pre-determined amounts of time. These circumstances are very different from, say, the environment in which a decision is made about how to build a memorial for the World Trade Center. In that case, the consequences of moving slowly are not life-threatening."

"In New Orleans, the risk is multidimensional," Brooks continued. "Certain subgroups of the larger population are highly focused on certain subjects — some on the historical aspects of the city, others on financials, others on safety, others on technological advances. With all these various competing views, decision-making is put under a lot of stress. However, it's not just what you do, but how you go about deciding what to do." The government and civic leaders associated with these subgroups all will be participants in the decision-making process.

In addition to time urgency, they will be faced with myriad alternatives. Proposed solutions may turn out to be as numerous and diverse as the interest groups themselves. "There are going to be a lot of ideas on what to do now," Brooks said. "That's the real challenge in a case like this, where you have multiple stakeholder groups, under lots of time pressures and public scrutiny. They may find themselves in the ironic situation in which the more good ideas they have, the more difficult the decision-making is going to be."

Complicating the decision-making process is the fact that there are no processes in place to deal with something as huge as Katrina. Kirkwood says that's partly because of the way the U.S. government is structured. "In the American system, government power is diffused by design," Kirkwood says. "The Founding Fathers were determined to avoid an authoritarian, centralized government. The result is a government process that's usually slow to make large decisions."

While there is likely to be intense pressure to make decisions quickly, there also will be controversy about what constitutes the "right" decisions. "There is no central authority that has the uncontested right to make these decisions," Kirkwood said. "Already there have been disagreements about decision-making authority during the rescue efforts."

As government begins to function more normally across the region, these disagreements could grow.

— Craig Kirkwood, professor of business

The decision-making will become even more complex as people start to move back and create a new reality "on the ground" with their individual decisions. The tourist industry, for example, is already mobilizing to bring back core workers and reopen hotels that escaped the flooding. "As essential services begin to be restored, will it be politically or legally possible to forcibly remove people who are rebuilding, even if what they are doing does not agree with a new master plan?" Kirkwood asked.

Seeing possibilities through a lens

Extensive research over the past several decades has shown that both group and individual decision-makers are subject to a variety of biases that make it difficult to quickly arrive at good decisions — and these research results are relevant to the situation on the Gulf Coast. "We know that people tend to focus too much on what happened in the immediate past, and don't give enough attention to other possibilities that may be more likely, although they haven't happened recently," Kirkwood said.

"People are also overconfident about their level of understanding of uncertain situations and underestimate the likelihood of extreme events. We tend to focus on 'good stories' that sound reasonable, and therefore give too little attention to data that disagrees with what seems reasonable to us. In groups, we are subject to 'bandwagon' effects where we all agree with someone who has a good story and don't scrutinize the possible downsides sufficiently before giving group approval."

In addition, there is a disconnect between the knowledge individuals gain by experience and their self confidence about subjects with which they have had no experience — a phenomenon could work against good decision-making. "Research over the past half-decade has shown that as situations become more complex, people feel more confidence in their opinions about how those situations should be addressed," Brooks said. "Ask someone how best to fix your refrigerator and they may be hesitant to help — they have little confidence in their ability to fix appliances because they may have tried this in the past and know that they can fail.

Ask the same person how best to handle the withdrawal from Iraq or stabilize global oil supplies and they may have very specific recommendations that they are willing to argue for passionately. The reason is that there is little experience trying out one's ideas as sovereign manager of the Middle East or global energy — and, as a result, little experience with failure there. The result is that as complexity increases, direct experience is less common and personal confidence goes up, not down, on what the best path forward is."

A catastrophe on the scale of Katrina is unparalleled in the past two decades, Brooks said, so direct experience in managing such an event is scarce. "As a result, social research predicts that there will be many 'experts' speaking with great degrees of confidence and passion in support of their ideas on what should have been done in the past to prevent this event and what should now be done to recover from it," Brooks said. "And of course, the complexity of the event precludes proving any of the experts wrong, as well, so their commentary will continue." Add to that the element of urgency, Brooks said.

"When you encounter a situation you have never experienced before, there's a premium put on learning, and then responding to that learning," Brooks said. "But learning is typically a slow process. As a result, we must negotiate tradeoffs between choosing a really great solution that would take so long to implement that it doesn't help the immediate need … or choosing something really quickly that in the long run may be stupid. Decision-makers in New Orleans will be trying to find something in the middle: a decision that is as good as you can make under the time constraints."

And Kirkwood pointed out that disaster recovery is different from growth in development, which by its nature is evolutionary. "The decisions that led to the situation today in New Orleans were made over decades and over centuries," Kirkwood notes. "Nobody decided in one fell swoop to build all those levees. The system just grew, and it was a very gradual process. And now you have a situation where, for that whole area, you have to figure out how to spend money on recovery. Who even has the authority to do that?"

The answer, Kirkwood says, is no single government body, or even all government bodies together. And that's a problem officials will have to deal with. For example, as property owners with flood insurance begin to receive payouts, some may decide to return to the city — something that officials cannot completely control. As a result, the ability of government decision-makers to remake the city will be in part controlled by the decisions of the hundreds of thousands of displaced residents making individual decisions of their own.

Making better decisions

Decision research provides some advice on how to improve decision-making in these types of complex decision situations. "We know that it is usually counterproductive to immediately start talking about what alternatives should be selected," said Kirkwood. "People and groups quickly line up behind competing approaches, and then the fight is on." In a situation like this, there will be many legal and political levers available to people who don't like the alternatives being proposed. They often can slow things down for a long time.

Instead, experts say it is often better to first spend some time focusing on objectives (in this case, what we would like to accomplish by the redevelopment effort and how much we are willing to spend to get there) before deciding the means we will use to get there. As the late George Harrison sang, "If you don't know where you're going, any road will take you there." Without some agreement on objectives, experts say, different government agencies or other stakeholder groups are likely to pick different "roads," with resulting disagreements, or even chaos in the worst case.

"It's not necessarily intuitive for us action-oriented Americans to spend time thinking about our objectives before we take action," says Kirkwood. "We tend to want to get on with doing something, but the problem is that if we don't spend some time deciding about our objectives before we take action, we can end up with both controversy and some nasty unanticipated side effects."

He noted that while it may seem like a paradox, taking some time to clarify objectives before proceeding to consider specific action plans can actually save time in the long run. Focusing on objectives can help to clarify areas of agreement and disagreement among stakeholders, leading to more creative alternatives that better meet everyone's objectives.

A common goal of recovery

Kirkwood added that it doesn't necessarily require a lot of time to clarify objectives. "A few meetings with key stakeholders represented could be sufficient," he said. "It is probably unrealistic to expect agreement on the priorities of different objectives, but simply having a complete list of the key objectives of different stakeholders can be useful in conducting the public discussion about how resources should be allocated to different redevelopment efforts."

Another lesson from decision research is that it pays to take a clear-eyed view of the uncertainties in a situation. Decision research has shown that we tend to give too much credence to events that have recently happened when doing our risk assessment, Kirkwood notes.

"It seems possible that the New Orleans levee system might be rebuilt to withstand a storm far worse than Katrina because of what has just happened, but there are limited resources available, and this may not be the best use of these resources," Kirkwood said. "Additionally, there are other identified risks around the country that may be more likely, with potentially even more catastrophic consequences. Perhaps the limited resources would be better spent on some of these alternatives."

Brooks believes the pressures of the situation could actually ameliorate potential divisiveness. Though total "collaboration" among all the various subgroups of New Orleans is unlikely, Brooks says the universal push toward the common goal of recovery may create a situation in which decision-makers, working separately, may in a sense actually be working together. In fact, he thinks, the defused decision-making authority may actually be an advantage.

"I'm optimistic," Brooks says. "There is long heritage in the U.S. of cooperation during times of stress. In terms of self-organized systems of individual decision-makers, there are enough common objectives that it's going to be a better situation than having one authority."

Management Faculty