Decision Quality

14The Amoco Unleaded Gasoline Decision

If a man will begin with certainties, he shall end in doubts; but if he will be content to begin with doubts he shall end in certainties.

—Francis Bacon

As they embark on the journey to decision quality (DQ), decision makers often ask how applying the tools of DQ and decision analysis would compare with other tools of financial analysis they would otherwise use. Comparatively speaking, is DQ a better investment in terms of time and money? This is not an easy question to answer, since there are few situations in which the two approaches are applied side by side. Typically a decision is addressed either with traditional analysis tools or with the tools of DQ, but back in 1968, coauthor Carl had the chance to do a direct comparison. Chicago-based Amoco (at the time called Standard Oil of Indiana, then renamed Amoco and later merged with BP) was wrestling with a difficult strategic decision.

Amoco, a major U.S. oil company, confronted a choice: whether to voluntarily switch its nationwide gasoline production from leaded to unleaded. The health and environmental consequences of leaded fuel were beginning to emerge at that time, and government agencies had begun talking about banning lead additives. Would talk turn to action? No one could be certain.

Refiners had long used lead additives (tetra-ethyl lead) to boost gasoline octane. Leaded fuel had become the standard. Through its acquisition of American Oil Company, Amoco owned one of the only ...