The Denial Tree

By Mark ChussilBen Gilad

In a recent episode of CBS’ legal drama “The Good Wife,” a client of the law firm at the center of the show faces a tough business decision. He is the CEO of a fictional “power drink” company and a 16-year-old girl has died after guzzling several of his company’s beverages. The family sues. The law firm repre­senting the company offers to settle for $800,000. The family’s lawyer demands $14 million.

The law firm’s senior partners recommend going to court. If the senior partners spoke decision trees instead of words, this is what they would say:

competition in court

Fearing an unpredictable and emotional jury — and, the show tells us, six more wrongful-death claims wait offstage — the CEO tells the senior partners he wants “certainty.”  What kind of certainty? “A war game.”

(As Shakespeare could have said, a mock trial by any other name would be a war game.)

The client allocates $100,000 for the exercise. The senior partners will role-play the Blue Team, the law firm representing the client. They assign their two brightest associates to the Red Team with orders to “give it your all” as they role-play the family’s legal team. They recruit a mock jury. An equity partner, a retired judge, will preside. They stuff a mock courtroom with cameras to tailgate jurors’ reactions. They give the Red Team $10,000 to hire an expert witness to testify. The teams hiss “see you in court.”

The Red Team role-plays aggressively. They show photos of the (previously) vibrant 16-year-old. They trace an IP address and confront a company executive who touted the weight-loss virtues of energy drinks on pro-anorexia (!) websites. They hire an actress to cry hysterically on the stand as the girl’s grandmother. It’s hard to remember that the Red Team’s lawyers are actually actors role-playing a Red Team’s lawyers who are role-playing…

Midway through the mock trial a poll of the jury shows unanimous victory for the Red Team, awarding the family $45 million. Break for commercial.

The furious senior partner leading the Blue Team screams at the associate leading the Red Team. She stands firm: after all, there’s no point to a war game if you pull your punches.

At the end — spoiler alert — the Red Team wins. The mock jury recommends $50 million in compensa­tion to the family.

The CEO orders the senior partners to settle with an offer of $12 million.

This TV drama should be a required part of every MBA curriculum. It shows the difference between a decision tree and a denial tree.

Denial trees are decision trees from which inconvenient truths have been pruned, and they are danger­ously popular in real-life business decisions. The CEO wanted a decision tree. The senior partners pro­vided a denial tree.

The war game lets us draw a much more realistic decision tree. Based on it, the CEO should strive to set­tle if X, the probability of winning in court, is less than 76%.

competition in court

A key point about the drama: the senior partners didn’t know they were providing a denial tree. They thought they were giving their client good advice. That’s what’s so insidious about denial trees and the overconfidence that fertilizes them.

We (the authors) have each run hundreds of business war games for corporations around the world and we’ve seen the same decision-making benefit portrayed on that TV show. We’ve learned that war games don’t only tell you what you don’t know; they tell you what you don’t expect and even what you don’t want to know. An inconvenient truth is still truth. Denial can destroy wealth and careers.

Were we in denial that a TV drama could teach valuable lessons about strategy decisions? Not anymore.

About The Authors /

Mark ChussilMARK CHUSSIL is founder & CEO of Advanced Competitive Strategies, Inc., and, with Benjamin Gilad, a cofounder and partner of Sync Strategy. He has conducted business war games, built custom strategy simulators, and taught workshops on strategic thinking for dozens of Fortune 500 companies on six continents, resulting in billions of dollars made or saved.

A pioneer in quantitative business war games and a highly rated speaker, he has 35 years of experience in competitive strategy. One of his simulation technologies has won a patent; a patent is pending on another. He has written three books, chapters for five others, and numerous articles.

He has been quoted in Fast Company, Harvard Management Update, The New York Times, The Wall Street Journal, and elsewhere. He received the Fellows Award from the Strategic and Competitive Intelligence Professionals society in 2013. He earned his MBA at Harvard University and his BA at Yale University.

  

Dr Ben GiladBENJAMIN GILAD, PhD, is founder and president of the Academy of Com­petitive Intelligence, Inc., and with Mark Chussil, a cofounder and partner of Sync Strategy. He is a former associate professor of strategy at Rutgers University’s School of Management, and a pioneer in the field of competi­tive intelligence and war gaming. He has published seven books and more than 90 articles in academic and practitioners’ publications on the topics of behavioral economics, competitive intelligence, and business war gaming.

He has been running war games for Fortune 500 companies since the 1980s and teaching a course on war gaming as part of Fuld-Gilad-Herring Acad­emy of CI which grants CIP certification in the field of CI. The Strategic and Competitive Intelligence Professionals society awarded him its highest Meritorious Award in 1996.

He earned his PhD in economics at New York University, MBA at the University of Central Mis­souri, and BA at Tel Aviv University.

  

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