What Hugo Chavez taught me about decision-making.

Hugo Chavez and my Uncle made a massive decision through their joint belief in clarity.

I’ve never met the late Hugo Chavez but I am one degree of separation from Venezuela’s revered leader thanks to his dealings with my uncle, Rod Stuart who was based in Montreal. And Rod had this very instructive story for me as a researcher when once I had tried to impress him with the grunty statistical work I could do.

I thought I’d be impressing my Uncle who was a civil engineer and the man in charge, the person at the very top, of several hydro projects world-wide. He was responsible for, or consultant to (I think) 6 of the largest hydro projects on our planet including the Three Gorges project, the massive Canadian Churchill Falls project, a huge Pakistani damn built in the 1960s as well as the top-10 ranked Simon Bolivar Hydro project in Venezuela.

It was on this project that uncle Rod was asked to consult. He received a phone call in Montreal directly from Hugo Chavez asking Rod to come to his palace. “Duncan,” my uncle advised me, “if any world leader asks you to meet at their palace my best advice is to catch the next plane.”

So he reported to Chavez who was trying to sign-off the new hydro project. “What’s the problem?” my uncle asked.

“The engineers,” said the president, “they’ve recommended two sites for the hydro project – we could flood this valley over here…or,” he said, pointing to a map, “we need to drown this valley over there. But which one?”

Rod knew the engineers who had written the massive report: “Mister President, the guys who wrote that report are very good. They practically wrote the book on hydro decisions.”

“That’s the problem!” barked Chavez. “I don’t want a book, I just want an answer.”

So my uncle agreed to read the report over the next 48 hours, and deliver a recommendation for the President.

“It was an enjoyable two days,” Rod reported. He was in his 70s at the time. “My hotel room looked over the swimming pool and suddenly I realised why Miss Venezuela always wins Miss Universe. Duncan, they all looked like Miss Universe.”

Two days later he reported back at the presidential palace. The report, he said, was very thorough, and had considered geo-physical risks, return on capital, social costs, time frames, delivery of electricity, worker safety, climate…the whole rich texture of risk and return on a massive capital project.

“…and?” asked the president.

“Mister President, what the report is really saying is: it’s about 50/50. So I have two questions for you, and then we can come to a decision. My first question is this: are you certain you want to build a hydro project at all?”

“Of course I am,” said the president  “We are a growing country and we do not want to be energy dependent.”

“Then it comes to this. If on economic grounds both sites are about 50/50, and on risk terms they are about 50/50, and on engineering terms they are about 50/50 and the social cost of drowning this valley here is the same as drowning that valley over there…if it’s all about 50:50 then here is my second question. Mister President, do you have any personal reasons for choosing this valley or that valley?”

Hugo Chavez looked at the map and weighed his words delicately. He pointed to one of the valleys and reflected, “You know, my mother grew up in a little village over here….”

“In that case,” said Uncle Rod, “I suggest we build the dam in the other valley.”

Rod told me the story because he wanted me to understand that decisions, big or small, have no need to be over-complicated. Often in statistics we are compelled to test whether one number is “statistically” higher than the next. Rod’s point: if you’re having to test whether there’s a difference, then really in real terms there isn’t any difference. For that reason he and Hugo Chavez were able to reduce what started off as a complex quadratic equation, and layer by layer cancelling out the differences between Option 1 and Option 2. In the end, having taken a step back to check that any decision needed to be made at all, the difference between Option 1 and Option 2 was really a test of whether the president could sleep more comfortably with one choice over the other.

Both men knew they didn’t live in a perfectly black and white world, and both knew – to their credit – when to stop focusing on the decimal points and when to simply make a decision.

Rod found Chavez to be an open-minded, intelligent man. His words: “I don’t want a book, I just want an answer.” are a credo that researchers ought to live by.

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