James Drogan

The following exchange took place in my MIS in Transportation course.

Me:

Let's assume that we can divide the world of decisions into the routine (we do it every day, there are no surprises, we have the data, the decision rules are clear) and the non-routine (we're facing a new situation).

I'm interested the experience that your company has had with decisions in these two categories, especially how the relative number of decision may have changed in the two categories over time.  For example, does your company face more non-routine decisions now than in the past.  What are the causes of this change?

Student:

We have recently encountered a whole new set of decisions within the last year. I started at the company in the summer of 08' when the market has reached its pinnacle and the shipping world was a very different place. Once the market began to fall in the fourth quarter, the nature of the business began to change drastically.

The operations department was suddenly bombarded with claims that normally would have never been pursued. The charterers department was flooded with sketchy companies that seemed to be created overnight and brokers were crying for us to fix with them because of "good relationships". The area where we had to be most vigilant was in regards to payments especially for hire on ships and freight for cargoes. Almost overnight specific charterers began defaulting on payments. The company had not seen this in a very long time, but knew that it meant their cash flow had run out and/or they were very close to bankruptcy. The main goal of operations was now to collect freight or immediately inform management if charterers were not cooperating.

Management's new focus was to monitor payment and the charterers who were defaulting. Existing deals had to be renegotiated because many charters could not meet their prior commitments. The company has been in existence for over 125 years and has the reputation for being a good performer. Our proceeding reputation helped us to weather the storm since people were not as reluctant to do business with us. However, charterers were aware of the cash flow associated with a major company that has significant backing and were suddenly throwing claims at us left and right. The legal department became more important than ever in immediately addressing disputes and trying avoid trials.

(The company and student have been concealed at the student's request, and other minor editing changes have been made.)

My sense is that this example of the non-routine is going to become the new routine.  Business systems (inclusive of information systems) will require reconfiguration in order to be able to compete in this "new normal."  Clinging to old ways may well lead to exit from the market.  In Forces and Managing the Business I have suggested ways to contend.

Dave, over on bizzXceleration: Performance, Value and Profit, also has some things to say about this matter.