I'm going to have us look now, very briefly, kind of an application and then we're going to get into a much deeper dive into some very tough set of decisions. For the application, I'm going to have us briefly take a look at Charlene Barshefsky. She's with Zhu Rongji, the then Premier of China. Charlene Barshefsky is the US Trade representative. She's in the Presidential Cabinet with that position. And her job is on behalf of the United States to work out agreements with other countries, in this case China. And in particular, in this case to help bring China into the World Trade Organization, and conversely, at the same time to open up China to US products. Everything from Hollywood films to Boeing aircraft. And she with Zhu Rongji negotiated extensively, primarily in Beijing a deal. The two of them, Zhu Rongji flying from Beijing to Washington went in to see the then President Bill Clinton. And despite a long 14-hour, non-stop flight bringing Zhu from Beijing to Washington, by time he arrived, the administration, Bill Clinton, the President shown here, had decided not itself to sign the agreement. A rather unfortunate moment, much criticized in the public media. Somehow, the Premier of China was allowed to fly to Washington to sign an agreement that in the end Washington was not ready to sign. Here's the point I'm going to have us focus on for just a minute. Charlene Barshefsky publicly criticized in newspapers and beyond for this problem, said to herself, "Okay, I believe in what we're trying to do, which is to open up more trade with China and now I quickly, and in a good sense, good and timely, have got to get myself up, dust myself off, and get right back into the game." Later that day, after Bill Clinton said he's not going to honor the deal, he was not ready yet to sign, she called up Zhu. Got a discussion going, and talked in turn with members of both Houses on Capitol Hill. Talked in turn to the AFL-CIO, the big labor organization. Talked and turned all kinds of enterprise around the country on why free trade or open trade with China, with a lot of downsides that are known in advance, on balance net would be a good thing for this country. Six months later, now with a signing actually in Beijing, Charlene Barshefsky, having made a whole range of good and timely focus here on timely especially decisions, brought this debate, this discussion to a close that helped bring China into the World Trade Organization. And of course, today we know the consequence; the amount of trade between China and the United States, just an enormous flow these days compared to a trickle back then. Let me add one more point and I'm going to reference here Ann Livermore, at the time when the photograph was taken, who was a Senior VP or Executive VP at Hewlett-Packard, the big maker of technology products, including home computers. And Charles Elachi, who again, when the photograph was taken, ran what's called Jet Propulsion Laboratory, JPL. We know less about that although we know what it does by seeing what some of the consequences of what they put into space. When missions go to Mars for example, or out to find Neptune, or to see the moons of Jupiter without people on board, it is the Jet Propulsion Laboratory that puts together the hardware, arranges for the launch through NASA. So, this is the organization when there's no people on board that sends for example, the rover mission to Mars. Charles Elachi, a scientist and engineer, a physicist, read a lot about a decision making mindset that would be good and timely at Jet Propulsion Laboratory. And in a famous example that he often cited, well-known to the outside world, he had arranged, he had authorized two of his senior engineers to send two separate missions to Mars. They were going to land at separate times, and both of the missions failed for technical reasons;. The engineering had some issues in it, And the two engineers separately decided to walk into Charles Elachi office to say, "Big error here, and we hereby resign." And Charles Elachi told them, and he's retold the story many times, I've seen him tell it directly. That, "We just spent $400 million for you to make that decision. It didn't work so well, go back to the Marine Corps, precept there. You've got to tolerate decisions that aren't so good for the first time. So, now that you've learned from those, you're going to not resign, you're going to work for me, and we're going to get two more missions to Mars." And these are the two engineers that put together what are called as missions, spirit, and separately opportunity two missions that did land on Mars. And if you've looked at a photo of the surface of Mars or seen an IMAX film in recent years about that, these two engineers did it, they solved the problem. Charles Elachi says to his 4000 employees repeatedly, "I want you to make exacting decisions. I want you to make them timely. And I'm not looking here for perfect. You're going to learn from mistakes." So, it's an illustration just to anchor that one more time of that again Marine Corps formulation of getting to 70 percent, getting out there, make the decision, make it timely. And Livermore back here at Hewlett Packard, often said when she was there, she is no longer with the company, that, "I want decisions to be fast enough. They don't have to be super fast, don't just get into it and make it. We're gonna make mistakes, but I don't want them to be perfect and taking too long on the flip side of that." The point I'm going to make is that in management, we recognize that we're all worried about making an error in a fast-moving world cycle time shorter. And the management challenge is to recognize that and to do something about it to manage it, so the people around you, once you've delegated a course, can make good and timely decisions. A couple more thoughts before we then take a deeper dive. I'd like you to absorb these as well on being ready to make good and timely decisions, as we're about to see when a lot of faith hangs on getting them right and hangs on getting them in a timely fashion. Lots of research and behavioral psychology, behavioral economics, well summed up in a book called Thinking Fast and Slow. It's a book that pulls together a lot of research. It's great on the factors that lead people for example, take a look at the second bullet here. Predictably lead people to be overconfident in judgments when they're kind of new to the area. They start feeling good about themselves, even too good about themselves. Think about a person you've hired that six months into the job. Since we know that there's the predictable tendency for people to be overconfident, this is indeed something we can do something about as a manager. Most worrisome of all by the way, of all these behavioral, call them recognize shortcomings of the human condition, we're not computers, we're not automatons, is what I've got captured in the box at the bottom of the screen there. It's almost like a surgeon general's warning. It's a little bit ironic because it says this, "If you've had a great quarter, a terrific year, watch out because some of these behavioral shortcomings so well-summed up in this book that I've already referenced, Thinking, Fast and Slow, Daniel Kahneman, the author of that book. When things are going swimmingly well, there is a tendency for all these suboptimal problems to become more acute. People become, if it's been a good year, a great quarter, overconfident. Hubris sets in. We're doing great, we don't have to make any changes when maybe some of that greatness is literally the luck of the draw. And the last bottom paragraph there in that box, for me, is one of the most profound statements about what we have to do as a manager of people in an organization with a good strategy. And that is guard against over-optimism and by the way over-pessimism. We have to manage that. Over-optimism, hubris sets in. Over-optimism, we don't do anything. There's a middle ground, and just maybe make that tangible by way of illustration, the great Japanese automaker Toyota, for years has adopted the mantra, I think we all know it, of continuous improvement. We've got a great auto. They've often dominated the world industry in terms of price and quality, but don't rest on your laurels. We got to think about what are the four improvements that still need to be made. Continuous improvement. And that's a managed culture. I've gone into Toyota, talked with the people who, I challenged them on that and they said, "Of course, we had a great year Mike, but in fact, we're really worried about four new problems and that's where we focused."