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.
If you're interviewing candidates whom you really seem to like, what sorts of questions would you ask to draw out negative information?
I'd ask them tough questions and try to make them think very hard before they spoke. I'd try to get them to relate some of the toughest decisions they've had to make or ask them questions that would tax and perplex them.
However, if I don't think the person would be a good fit at ATP, I'll try to throw some softball questions in, just to get the person to relax. At that point I'll attempt to challenge the interviewee to try to measure his or her ability to think and articulate thoughts. Communication skills and thoughtful answers that demonstrate knowledge and experience can quickly overcome first impressions.
Have you ever made a mistake in hiring?
Yes, there have certainly been some people that, in hindsight, I should have questioned more. I probably would have learned that the person wasn't a good fit.
Have you made business decisions based on information that you should have listened to more carefully?
All the time. I'm never happy about the way I listen. I wish that I could force myself to listen more carefully all the time.
What kinds of mistakes do you think you make when you do err?
There are times when I have made assumptions based on what a person has said, and those assumptions later turned out to be invalid. I wish that I could have asked more questions. But I think even though there are decisions that I have made that I would acknowledge weren't the best ones in hindsight, I've never looked back. Decision making is a forward-looking process. You have to be comfortable enough with the decisions that you've made to cut and run and move on.
You always have to look ahead, not at the what-ifs. And to the extent you make a mistake, you need to simply do your best to fix it.
That would presume that most mistakes are fixable.
They're not all fixable.
Does that mean that at this stage of the game you've run into an unfixable mistake?
Well, most of our projects -- save one -- have worked. And that one project is an instance where even looking back at the data presented, I still would have made the same decisions. Until we drilled and learned that that well had a much smaller acreage than what had previously been known about it, we couldn't have known.
Which means, in psychological jargon, you basically let it go and forgave yourself?
That's correct. As soon as we learned that the decision was not a good one, we cut away on the project. We plugged the well, and we moved on. And probably if I had completed that well, we would have had a little gas out of it and could have then said, gee, 100% of our projects have worked, which never hurts when you're talking to investors. I just can't do that.
Did that affect the way you listened to the next project?
No, because looking back on the data for that well, we would have made the same decision again the second time.
There are cases where it's very clear what's right and what's wrong, and there are cases where it's much more ambiguous. How do you deal with ambiguity? Do you treat it on a case-by-case basis?
While every instance is different, frequently two options are presented, and you have enough money for only one of them, and you have to try to figure out which is the better of the two. And in comparison you just need to ask the questions until you're persuaded that one or the other is going to emerge.
And then you just go with your gut?
Then you move with your hunch. My instincts have been very successful over a long span of time, and I'm willing to trust my instincts. And I've always forced myself to be as prepared as I possibly can be to make the decision.
How do you teach that skill to people?
I think that's tough. Preparation is something you can show them with outlines and with questions and recommendations on how to proceed. But that's something that I think folks have to learn at an early age -- to really know how to perform hard work to get the answers that they are looking for. I have really tried to surround myself with people who are like me, in terms of whether they're willing to work hard to reach objectives.
It sounds as if a lot of your communication with your people is oral. There's a school of thought among many CEOs that they just don't want to hear it. They don't want to be distracted by personal charm or persuasion. They prefer that everything be written and that they can then make their own decisions in a more sterile environment.
But you build in a huge time element when you require that your people always reduce things to writing.
And that's what you're trying to avoid?
If we couldn't reach rapid decisions, we would lose some opportunities. I do require certain items to be written down, such as the economic runs. Those are certainly in writing to be able to look at the different runs and strategies that were employed in comparing projects. But writing tomes is not what I want my people to be doing.
I want my people to be active and thinking and creative -- and working to develop projects for the company.
Often founders, when they begin to build their businesses, trust only their own instincts -- and that makes sense for a fledgling business. But many founders never learn the skill of trusting their employees. How did you learn to trust your staff?
I think that because of my own background, I've really learned what it is that I don't know. If you can recognize where you have strength and where you need to plug holes, you can surround yourself with people who can plug all those holes.
And then listening to those people is very important in making decisions. That's what drives me -- I try to be the listener that I always wanted to be.
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