In a murder trial, to prove that a defendant was guilty the prosecution must establish that:
- The victim was killed;
- The defendant unlawfully caused the death of the victim; and
- The defendant did so with “malice aforethought.”
These are known as the elements of the crime. Elements have been defined for many legal actions. They are the major things which all must be proved in order to establish the prosecution’s (or plaintiff’s) case.
We can by analogy think of the elements of a major business decision. In a board context, where typically management will recommend an option for the board to approve or reject, these are the major things that management must establish to the board’s satisfaction. The recommended option must be:
- Strategically sound;
- Financially sound;
- Operationally sound;
- Prudentially sound (i.e., acceptable from a risk perspective)
- Ethically sound; and
- Legally sound.
These are the minimal conditions; a decision satisfying these conditions would be reasonable or defensible. It may not be the best decision. For that, an additional element point must be established:
- The option is on balance better than any other relevant option across elements 1-6.
These elements are often not independent matters. For example, what counts as financially sound will depend on the organisation’s strategy (and ultimately of course on its purpose).
Each element must in turn be established by argumentation, governed by standard principles of clarity and rigor.
Associated with each element are a series of critical questions. Addressing the critical questions generates supporting arguments or objections. For example, critical questions for strategic soundness might include:
- Is there a wider corporate strategy pertaining to this type of decision?
- If so does the proposed option align with that strategy?
- If there is no wider strategy, or no alignment, is this option nevertheless strategically defensible?
The elements listed above are generic, suiting a typical major business decision. However, just as different crimes have their distinctive sets of elements, so particular categories of business decision would have tailored sets of elements.
The “elements of the case” approach can be used in a variety of ways. It can for example guide the development and structure of the board paper and presentation in which the recommendation is advanced. Or, it might be used within the board meeting to structure attention and discussion.
Thanks Tim! As usual this is an interesting article about a important topic. I scanned it a few days ago and have returned several times and finally something just popped up!
These two examples are quite interesting partly because they are united – consequentially in the future. One persons (or more for that matter) liberty is at stake and in anothers ones purse.
But what perchance is the analogy in them? The first instance is an ‘Effect-cause’ case and the second case is an almost arbitary list of categories. How do you prove soundness going forward? Unless you are dangerouly adopting dubious dated norms wholesale not so easy.
Perhaps an alternative structure would be a Cause-effect structure. Where the business fundamentally shifts that landscape, ideally without being seen. In this scenario advantages above the base survival lever are so compelling that other options rarely compare.
Thanks Circolo. Interesting suggestion, though I’d resist the idea that the elements in the major business decision case are “an almost arbitrary list of categories”. In fact these are the dimensions that are recognized in practice, sometimes explicitly but often implicitly, as being the major ones that must be considered. They are rooted in the nature of business decisions in a society such as ours.
You might wish to familiarise yourself with Inductive and Deductive Reasoning, another of the tools described in Barbara Minto’s ‘The Pyramid Principle’.
Your examples are, I think, based on Inductive Reasoning. The essence is that all points must be proved in order to establish the case. Therefore it is important that they are all MECE and of the same type.
Deductive Reasoning is what Sherlock Holmes is famous for!
Thanks Charles. I actually am familiar with what Minto has written about inductive versus deductive reasoning, but didn’t find it very useful. She uses those terms very differently from the way they are standardly used in logic and philosophy of science, and there are within those disciplines far more extensive and insightful bodies of knowledge about those types of reasoning than is found in Minto’s book. Also, whatever they might be called, Sherlock Holmes signature inferences tend to be abductive rather than deductive.
Tim, do you mean by “each element… supported by argumentation” that each element has an argumentation process, or that a sound argument needs underpin the element’s contribution to the decision?
With the first meaning, I wonder why “each element” and not “all elements”, because I can envisage an single argumentation process that supports all elements.
With the second meaning, I wonder whether the *process* is underemphasised. That is, suppose two boards, one of which is unfairly influenced by a dominant interest and the other is democratically balanced. In either case, the recommended option can be sound by all listed criteria and supported by sound arguments. However, decision by the first board may be unsound by virtue of the flawed decision process.
Hi RdR, Good point. I think I mean both – that each element should be supported by a strong overall case (not just “a sound argument”) resulting from an appropriate process of argumentation.