Factors Mitigating Against Informed Decision Making

There are also people-related factors that may prevent managers from “doing what is optimal for the company”.  These include the following factors.[1]

  • Personal emotional attachment to a particular project or indication.
  • Keep the project on the books because of the science, despite the economics
  • Manager survival – fear of loss of star manager, staff, budget
  • Project survival – lack of awareness of how project compares to others
  • New manager lack of knowledge of what is optimal or risky
  • Lack of comparative information.
  • Need to keep things simple – multi-factorial decision making is challenging
  • Delays in providing analyses to support decision making.

These factors need to be managed if the portfolio is to function properly.[2]  Portfolio managers may be further challenged by senior managers for whom informed decision making is not an imperative.

Incentive Metrics can be a component of informed decision making, as long as they accomplish strategic goals.  They are easy to invoke but may distort strategic goals – ‘you get what you measure’, quantity over quality.  Thus, Portfolio Managers that are asked to support incentive metrics need to be cautious about what they accomplish.   The challenge to any kind of overt metric is that it can be inherently incentivizing given the high motivation of the R&D staff.

[1] Stephen A Williams, Decisionability, “Cost-Risk-Value Optimization – Enabling Drug Developers to “Do the Right Thing”, CHI, Strategic Resource Management & Portfolio Management, November 17-19, 2008, Philadelphia

[2] Google – investile dysfunction, as in http://www.investiledysfunction.com/