“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong”. Thomas Sowell.

There can be fewer more poignant statements than the above in relation to some of the decisions made in the corporate world over the last 18 months. In reading the pages of the business press, it would be easier to come to the conclusion that so many of the disastrous decisions that were made during this period, must have been by those who were immune to living with the consequences of their choices. This issue is of critical importance to all leaders, as our capacity to make the right decisions, at the right time and in the right way is one of the most important capabilities we bring to any leadership role.

The January edition of Business Week, surveyed the best and worst managers of 2002. It lists a whole catalogue of leaders – the good, the bad and (literally) the ugly. It profiled Andrea Jung of Avon Products (definitely not ugly), who through some brave and wise decision-making took the company share price up 19% in 2002 in a market sector that across the board had dropped by 2%. It also highlights those less rosy stories about Andrew Fastow (Enron’s previous CEO), or even the mighty Bernard Ebbers – he who borrowed a little old $408 million from World Com (pretty ugly to be honest).

The dividing line between the good, the bad and the even mildly ugly was the nature of their decisions. Again Sowell helpfully states “The most important question is not what is best, but who shall decide what is best”. That has never been more so than in the above examples.

So how do leaders ensure that they are able to make the ‘best’ decisions, particularly when the choice appears to be between two bad ones? If we knew the answer to this one and could bottle it, we would be very rich indeed. However, there probably are some basic questions that can be of use in this regard:

1. ‘What does the ‘helicopter’ view look like?’ The need to have the big picture in view is obviously essential. The challenge for many leaders is that the further up the food chain we go, the harder it is to get the information we need, as opposed to the information people give, that they think we want.

2. ‘Who do I need to run this decision by?’ This is an essential part of getting the ‘helicopter’ view and an antidote to the isolation so many leaders feel. It is up to each of us to connect ourselves substantially with individuals that will tell us the way it really is. This form of personal accountability and thus personal governance is one of the greatest guardians of effective corporate governance.

3. ‘What perception will this give people if I make this decision?’ I am not suggesting for one second that others’ opinions should drive our decision making. However, considering their perceptions is important. We all know that ‘perception isn’t reality’ but actually to many people in the cut and thrust of business life, it so often is. Let us be generous in our attitude to Mr Ebbers and say that there is nothing untoward about the huge loan he took from World Com. However, there is an intense naiveté that is painful to even think about, if he did not consider the perceptions of others around the decision he made.

4. ‘This is a decision I could make, the question is, should I?’ I just can’t get past the thought in my mind that so many of the senior executives, whose reputations are now being shredded, should have asked this question. In positions of privilege there are many things that we can do in life, because our privileged position makes that possible. However, in the lofty heights of senior leadership we must constantly address ourselves the question, ‘Even though I could, should I?’ Great Leadership so often lives and dies in the choice between these two options, the choice between the ‘could’ and the ‘should’. If we are to protect ourselves and the reputations of our organisations, it is a question we must constantly address, particularly if there is any possibility of a perceived or real conflict of interest.

None of the above are guarantees, but these would certainly aid us in making better decisions, which is what so many of those who follow us need us to do. However, we must remember that so often we have no idea of the consequences of our decisions when we make them, and so a final benchmark for the quality of our decisions, emerges around the questions of ‘rightness’ and ‘decency’.

Steve Boloven knows exactly what I am talking about. In April 2002 he participated in an Internet auction, benefiting a children’s charity and purchased a wedding dress. Steve is a bachelor, so this was not for his pragmatic use, but rather as a gift for his mother. The actual wedding dress in question was that worn by Nia Vardalos in the film, ‘My Big Fat Greek Wedding’. He testifies that this was the only thing that had made his mother laugh in the previous 10 years, and so as a reminder to her during her difficult days of ill health, he bought her the dress. When the film was first launched, it was thought that it would probably struggle to cover costs. However, Hollywood history, as it so often does, turned the tables and the film has been a huge blockbuster success.

Steve bought the dress as a vehicle of encouragement and inspiration for his little old sick mum; a right, gracious and very decent thing to do. Now that item, which he bought for just a few hundred bucks, is being auctioned for 2.5 million dollars!!

So often in our decision-making, we don’t know what lies ahead, hence the quality and nature of our decision is key. Our friend Steve invested in the right things and the pay off has been significant indeed. The chances are, even in this challenging economic environment, the same can be true for us.

Phil Wall
CEO