From The Effective Executive (ch. The Elements of Decision-Making) by Peter F. Drucker. This excerpt describes the four different types of problems, and how to identify and deal with each.
These are the elements of the effective decision process. The first question the effective decision maker asks is, "is this a generic situation, or an exception? is this something that underlies a great many occurrences? or is the occurrence a unique event that needs to be dealt with as such?”. The generic always has to be answered through a rule, a principle. The exceptional can only be handled as such and as it comes. Strictly speaking, one might distinguish between four - rather than between two - types of occurrences.
There is first the truly generic, which the individual occurrence is only a symptom. Most of the problems that come up in the executives work are of this nature. Inventory decisions in a business, for example, are not decisions, they are adaptations; The problem is generic. This is even more likely to occur in events within production. Typically, a product control and engineering will handle hundreds of problems within the course of a month. Yet whenever these are analyzed, the great majority prove to be just symptoms; that is, manifestations of underlying basic situations. The individual process engineer or production engineer who works in one part of the plant usually can't see this. He might have a few problems every month with the couplings or the pipes that carry steam or hot liquids, but only when the total work load of the group over several months is analyzed, does the generic problem appear. Then one sees that temperature or pressure has become too great for the existing equipment, and that the couplings, holding different lines together, need to be redesigned for greater loads. Until this is done, process control will spend a tremendous amount of time fixing leaks without ever getting control of the situation.
Then there is the problem which while a unique event for the individual institution, is actually generic. The company that receives an offer to merge with another, larger one, will never receive such an offer again if it accepts. This is a non-recurrant situation as far as the individual company, its board of directors, and its management is concerned. But it is of course a generic situation which occurs all the time. To think through wether you should accept or reject the offer requires some general rules. For these however, one has to look to the experience of others.
Next, there is the truly exceptional. The truly unique event. The power failure that plunged into darkness the whole of northeast America from the Saint Laurence to Washington in 1965 was according to the first explanations, a truly exceptional situation. So was the thalidomide tragedy which lead to the birth of so many deformed babies in the early 60s. The probability of these events we were told, was one in ten million, or one in one hundred million.
Such concatenation of malfunctions is unlikely to ever occur again, as it is unlikely for instance, for the chair on which I sit, to disintegrate into its constituent atoms. Truly unique events are rare, however. Whenever one appears one has to ask, "is this a true exception, or only the first manifestation of a new genus”? and this, the early manifestations of a new generic problem, is the fourth and last category of events with which the decision process deals.
We now know for instance that both the northeastern power failure and the thalidomide tragedy were only the first occurances of what, under conditions of modern power technology or of modern pharmacology are likely to become fairly frequent malfunctions unless generic solutions are found. All events but the truly unique require a generic solution. They require a rule, a policy, a principle. Once the right principle has been developed, all manifestations of the same generic function can be handled pragmatically. That is, by adaptation of the rule to the concrete circumstances of the case. Truly unique events, however, must be treated individually. One can’t develop rules for the exceptional. The effective decision maker spends time to determine with which of these four situations he’s dealing. He knows he’ll make the wrong decision if he classifies the situation wrongly. By far the most common mistake is to treat a generic situation as if it were a series of unique events. That is, to be pragmatic when one lacks the generic understanding and principle. This inevitably leads to frustration and futility.