Separate Right Decision from Right Outcome

Two outs, top of the fifth, bases loaded, the score is tied 5-5. That was the situation I found myself in last Sunday as manager of my Little League baseball team. My pitcher had given up some hits and walks and now we were in a jam. What should I do?

I called time out, walked to the mound, and spoke to my pitcher. I let him know that he did a great job, but that in light of the situation, it was time to bring in a new pitcher. I called the center fielder in to take the mound. He’s my son, a very good pitcher who is calm and generally effective in these situations. I give him the ball, tell him to have fun and just pound the plate.

Strike one. Strike two. There was no strike three.

The batter hit a grand slam, putting us in a 9-5 deficit we couldn’t come back from.

Later that evening, I reflected on the game and the decision I made, and I recalled what Jeff Ma had said in his keynote presentation at the Transplace Shipper Symposium conference earlier that week: you have to separate the right decision from the right outcome.

Jeff is the CEO and Founder of tenXer (acquired by Twitter in April 2015), but he’s more famous for being a member of the MIT Blackjack Team in the mid-1990s, which was featured in the book Bringing Down the House and the movie 21. The main focus of his presentation was the importance of using data and analytics to make better business decisions. Jeff basically argued that the more data and information you have (assuming it’s timely, accurate, and complete), the better decisions you will make — that is, the decisions you make will have the greatest chance (probability) of achieving your desired outcomes.

But in Blackjack, the right decision based on the information at hand does not always result in a winning outcome, something Jeff learned early on in his card counting days when he lost $100K making the right decisions (based on probabilities) at the Blackjack table one night. And the same is true in business and sports.

“Don’t focus on the results, focus on the process,” Jeff advises. In other words, don’t second guess your decision if the process you used to make it was well-reasoned and informed. The right process will more often than not lead you to the right desired outcome, while a poor process might get you lucky sometimes, but more often than not will lead you to failure.

Jeff trusted his process, went back to the casino the next day, and won back the $100K plus another $70K. If I find myself again in a tied game with the bases loaded, two outs, and a pitcher who is losing his effectiveness, I will make that pitching change again. It was the right decision last Sunday, even if the outcome wasn’t the one I desired.

Jeff’s advice crossed my mind again this weekend when I read about the pending Sysco-U.S. Foods merger, which the Federal Trade Commission is trying to block. According to Reuters:

Sysco Corp will be left with a bill of around $1 billion if the U.S. government kills its $3.5 billion merger with US Foods, regulatory filings show, underscoring the perils of doing deals that have a good chance of being blocked by antitrust regulators.

Sysco, the biggest U.S. food distributor, has spent more than $400 million so far on a combination of integration planning, financing charges and on defending the transaction in court, based on a Reuters analysis of its filings. To put that into context, Sysco’s net profit for its fiscal year ended June 28, 2014 was $932 million.

If the FTC prevails, will Sysco’s management team second guess its decision to pursue the merger? They probably will; it’s only natural. But was it the right decision regardless of the outcome? Would the company, like Jeff Ma heading back to the Blackjack table or me heading back to the pitcher’s mound, make the same decision again today? The answer ultimately depends on how much Sysco trusts its decision-making process and the quality of the information it uses to make those decisions.