Zero-Defect Decision Making

Chief Executive

These days any bad decision could really devastate your company. So how do you decide which opportunities to bet on?

As president and chairman of Houston-based ATP Oil & Gas Corp., T. Paul Bulmahn has firsthand knowledge of how beneficial a good decision can be -- and how destructive it can be to be wrong. His company, which completes drilling at offshore oil and gas sites that other companies have previously scouted and abandoned, has seen spectacular growth during the past few years. ATP was #21 on the 1999 Inc 500 list, #5 on the 2000 list, and #73 on the 2001 list. For ATP every single decision is high stakes. The company's cost per venture is massive -- on average ATP will spend $100,000 per day per project. So Bulmahn knows he'd better pick his projects wisely. Careful decision making is a skill he's taught himself to bring to every opportunity he considers. And in a tightening economy it's a facility any CEO can benefit from. Managing editor Evelyn Roth asked Bulmahn how he makes smart decisions in such a high-pressure environment.

Once you've found a project that might be worth investing in, how does ATP proceed?

My problem solvers here at ATP go into the reasons why the other company didn't want to go forward with the project. Sometimes the other company would rather put its limited capital into drilling another exploration well. And that makes sense for it. However, going forward with the project may make sense for us because the primary thing we do is to focus on proved and developed properties. We just have to find the reason why the exploration company decided not to develop the project.

How do you come to informed decision making?

I'm trained as a lawyer, and I also have a graduate business degree. My legal training has probably helped in my decision making because lawyers are taught to always look for the flaws, the weaknesses, the things that they can capitalize on. In business you have to have a positive attitude, and you have to be willing to look for the upside in things. So I probably am bringing a very conservative balance to the picture of my decision making.

You have also served as a judge. What advantage do you bring from that experience?

Well, I've trained myself to listen. I spent five years as an administrative law judge. I was forced to sit and listen to what people said and also to try to figure out what they weren't telling me -- what they didn't say -- and to determine what was in the best interest of all the parties.

How does that apply to your life now?

One thing I learned from that experience is the value of having people work with you who have great practical experience. I'm not an engineer, and I'm not a geologist either. I need to rely on my experts who understand those technologies. I have tried always to focus on hiring people in each technical discipline who have a combination of practical experience (they've already been out and made mistakes with other companies and learned from that) and an academic side (they have either one or several degrees, and they understand technology and how and when to use it skillfully). Those folks can best tell when and how to use technologies that can be very important in making something work where someone else walked away from a project. I recognized early as a judge that the stronger people are at determining both the positives and the negatives at every position, the more successful you're going to be in problem solving.

What are you listening for in the information that your staff is giving you?

I'm listening for a degree of preparation. And when I hear my engineers, geologists, and geophysicists going through the litany of facts about a particular project, I have a comfort level about what they're telling me. I also recognize that for some of the projects that we are fortunate enough to secure, we don't always have the opportunity to prepare extensively.

We have to make some very quick decisions, like when we did a rig takeover recently. The rig had drilled to target depth, and the original drillers didn't find the prospect they were looking for. But on the way down they hit two hydrocarbon-bearing sands, which would indicate that there was something there. The question was, Was there enough there to complete the well for those narrow sands? So my folks had to make some very quick evaluations and a lot of judgments and assumptions about the data that they were looking at.

And in that instance we came to the conclusion that we could justify completing the well into the upper sands. So we then agreed to take over the drilling rig and its expensive operation. It was somewhere in the vicinity of $100,000 a day. That's really almost unheard of in this industry, for decision making to happen that quickly -- to move forward before nightfall when you've only learned about the possibility during the morning and then you have to consider it and run all your business evaluations and contracts during the afternoon.

Do you think the skill of listening that you have developed can be taught?

Yes, I do think that people can learn how to listen better. Many people will form conclusions based on the first fact they hear instead of listening for all the facts. So reserving judgment until you've heard the entire conversation is important. When some people hear a fact that they have some emotions about, they will begin preparing what their response should be, so their ears are somewhat plugged to the other facts that are still tumbling out into the conversation. I think it's very important not to be too judgmental too quickly and to wait until you've heard all of the conversation instead of just that part with which you might agree or disagree.

Do you find even now that you go into certain conversations with preconceived notions or preconceived emotions that you have to hold back?

Oh, yes. Oh, all the time.

And what do you tell yourself so that you can be as neutral as possible?

I try to push away assumptions and judgments that I might bring to a conversation. For example, I've seen instances where people will assume something about other people by the way they're dressed or by the way they talk instead of listening to the wisdom that the person may be communicating. And if I can compel myself to be unbiased and not be opinionated until I hear the entire conversation, that's helpful to me.

Have you had employees who don't understand the notion of listening? Or do you find some way to find that out as you're interviewing them?

Because I'm involved in nearly every interview of potential employees for ATP, if I like the person immediately, I will try to think of all the reasons why that individual won't work out at the company. However, if I am quick to form a judgment that the person probably won't work out at ATP, I try to find every way to change my mind -- to find things about the person that I know are going to work out here. And by taking the reverse position from my immediate instincts, frequently I will learn things that I otherwise would never know.