“In life, one bad decision often leads to other bad decisions.” These are the words of Andre Agassi, the former professional tennis player describing on 60 Minutes a cascading series of bad decisions that almost ruined his life.
While Andre’s story had a generally positive outcome; he struggled back from depression and drugs to regain tennis glory, find the love of his life and turn into a philanthropist that has raised over $100 million dollars for charity, many business professionals and businesses aren’t as fortunate.
Once the bad decision train starts rolling, we often respond by adding more coal to the fire. This is particularly true for senior leaders that perceive that they have the most to lose if they admit that they were wrong.
Consider:
- It’s common to deal with major project problems in new product development or technology infrastructure for firms to double-down and keep investing when all of the signs say, “pull the plug.”
- Once senior leadership allows a move away from goodness….something that crosses the ethics or values chasm, it can be like pulling the plug on a dam. Think Enron.
- Greed begets greed. AIG’s founder, Hank Greenberg in Business Week on his successor, Martin Sullivan: “I know for a fact that Sullivan told everyone, Just do everything you want, get as much business as you can and don’t worry about a goddam thing.” (See also my post from last year, “The Dollar Bill Auction and a Failure of Rational Judgment.”
- Momentary success creates a blind spot in the front-windshield. “Here’s to a future of more trucks and fewer cars,” toasted a Ford CEO in the earlier part of this decade. He got it half right!
- The gut reaction to a recession is to cut and then quit moving. Firms hunker down and wait for the storm to pass, when they should be moving faster to create in anticipation of the storm passing.
And don’t get me started on the nearly endless examples from history.
The “bad decision train” is difficult to stop or derail once it gets moving. It seems to take extraordinary courage to admit that you are wrong. A combination of ego and fear often prevail, driving us to go all-in when we should fold and walk away.
While the instinct to pursue bad decisions with more bad decisions might be difficult to overcome, it is critical that leaders fight this tendency by fostering a culture that encourages teams and individuals to challenge decisions, particularly when new facts and lessons learned begin to point towards a different direction.
The trick of course is to not err in the opposite direction, and create a culture that second-guesses every decision and results in people constantly rearranging the deck chairs in a never-ending stream of shifting priorities.
Ideas for Derailing the Bad Decision Train
- Carefully develop and communicate the assumptions that underlie major projects. Teach team members to constantly compare initial assumptions to the current marketplace realities and make it safe for them to push the alarm button.
- Recognize that as a leader, it is your job to foster a learning culture. Define what this means for you and your team and ensure that it is supported in actions, not just easy words. Learning includes recognizing mistakes and adapting behaviors.
- Recognize that your behavior sets the pattern for everyone. Shoot messengers and execute teams for making mistakes, and you will create a culture that never questions a decision regardless of how visibly wrong it truly is.
- Encourage dissenters..not toxic employees, but the courageous individuals willing to stand up and tell you that your baby is ugly.
- Manage the second-guessing by challenging teams with cold feet to go through the process of vetting original assumptions and developing alternatives. Hold them accountable to more than complaining. If an idea is wrong, fine. What’s the alternative?
- Accept the reality that you will need to make tough decisions that will fly in the face of prevailing emotions, including your own. This is your job.
The Bottom-Line for Now:
The list of suggestions above is just a starting point. Admitting failure and moving on is harder for a variety of personal and sometimes job saving reasons than plowing ahead on a strategy of hope. It takes courage to lead effectively, and sometimes that courage calls for a retreat or a complete change of plans.
Are you courageous enough to derail the bad decision train?
Nice to see you recognize that those of us that dissent around issues are not toxic employees!! Great advice, Art.
Helpful points to review as my group begins to learn how to function as a team to get effective results and not just activity. Thanks.
Congratulations! This post was selected as one of the five best independent business blog posts of the week in my Three Star Leadership Midweek Review of the Business Blogs.
http://blog.threestarleadership.com/2009/11/11/111109-midweek-look-at-the-independent-business-blogs.aspx
Wally Bock
Liked your article and agree with it wholeheartedly. Most managers never ignore the sunk costs involved in making a decision. The ‘too much invested to quit syndrome’ is fairly powerful driver of human behavior. Also, once hubris sets in, it is imposible to think that you could be doing something wrong. Once this happens you are almost at a point of no return.
I agree with this article, 110%. I think there is a mindset that goes on in corporations, especially in top management, that when a decision is pursued that seems to be a bad decision, the person or people involved in making that decision must stand by their sinking ship rather than doing what they can to salvage what they can. It is important to understand that in any company within any industry, mistakes are going to be made; however, in order to learn from those mistakes, the first step begins with admitting the error. As you note, that is very hard to do. I believe that in order to implement this, there needs to be a change in the SYSTEM of the company and start from the top down in order to prevent a “do as I say, not as I do” mentality.
Thanks for providing the suggestions of how to derail the bad decision train, those are good advices and really helpful. It is unavoidable to make a bad decision, but the important thing is you have to recognize that you did it wrong. I love the one of recognizing that your behavior sets the pattern for everyone. Just like you said, if you shoot messengers and execute teams for making mistakes, no one will want to take a risk for telling the truth and questioning your decisions.
Art,
About a month ago I read Tina Seeling’s book, “What I Wish I Knew When I was 20.” In the book, there is a chapter that talks about learning from our failures as much as our successes. One suggestion she has is making a resume of failures to accompany one’s resume of successes. As individuals, if we learn from our failures, then we can also learn from our succeses. I haven’t started to create my failure resume yet, but I believe I should start. I would like to see the resumes from past CEO’s in the banking industry (and others that have failed) to see when the failures started occuring and how long it took until anyone began to learn from them.
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