Presumably you make decisions all the time, in managing your matters, selecting strategies and tactics, and of course outside the work environment as well – with your spouse or significant other, family, and pets; in the context of your church, synagogue, club, neighbourhood; and on and on.
If you’re in a position of leadership at your firm, you make different types of decisions, and more of them, than you did before you joined management.
We’re here to talk about the management/leadership decisions you make.
Typically, they have several common characteristics:
• You are often deciding between or among options that are equally – but differently – attractive. Similarly, they both or all may have equal – but different – perceived defects.
• The decision you’re facing is often ‘new’ in the sense that you haven’t faced this particular question or one a lot like it before. If you’re a litigator, who to depose is a familiar decision; if transactional, whether to acquire for stock or cash. I’m not saying they’re simple but they’re recurring. The decisions I want to talk about rarely recur.
• Also, each of your available choices invariably brings its own executional, tactical, or prudential challenges: When to do it? How to announce it? How to explain the rationale behind it (understanding you will be talking to both proponents and opponents of whatever selection you’ve come up with)?
• Speaking of proponents and opponents, how much consensus among your partners and those who will be affected do you seek or need? Virtual unanimity? Solid backing? No ‘over my dead body’ opposition? Or simply your own unilateral fiat as manager?
• Finally, and this may be the hardest for those of the lawyerly temperament, how do you know when you’ve gathered enough data and information to decide? Couldn’t you have always pursued one more angle, sought one more opinion, run down one more option? (Yes, you always could have, is the answer; but that just re-states the problem.)
What puts this discussion at the top of my mind is, not surprisingly, a recent experience.
The governing body (think the Executive Committee) had to choose a new leader for the organisation, to replace a popular but time-limited interim head. Custom dictated that the new leader could essentially serve indefinitely at his/her pleasure; in the history of this organisation, no incumbent leader had ever faced an outright challenger and all seemed to understand that the only ground for replacement was somewhat akin to impeachment for high crimes. So the choice would have lasting consequences. (I have changed some details to keep this organisation unidentifiable here.)
After an exhaustive review of all plausible candidates, over 50 in all (drawing from inside and outside the organisation), and extending over 18 months, the committee was down to two leading finalists, A and B. Decision time!
Only they could not decide for the life of them.
Over days of multi-hour meetings, they were deadlocked and neither the supporters of A nor those of B would budge. Your classic hung jury, but with no judge to deliver the dynamite Allen charge.
Now, before telling you what the committee actually did, let me share with you a recent Harvard Business Review (HBR) article, ‘Three Timeless Rules for Making Tough Decisions.’ For our purposes, only the third one counts; the first two are for routine and repetitive choices.
What is that third rule and when should it be invoked?
These were decisions like how to respond to a competitive threat, which products to invest more deeply in, how to better integrate an acquisition, where to reduce a budget, how to organise reporting relationships, and so on.
These are precisely the kinds of decisions which can linger for weeks, months, or even years, stalling the progress of entire organisations. These decisions are impossible to habitualise and can’t be resolved with if/then rules. Most importantly, they are decisions for which there is no clear, right answer.
Leadership teams tend to perseverate over this sort of decision for a long time, collecting more data, excessively weighing pros and cons, soliciting additional opinions, delaying while they wait – hope – for a clear answer to emerge.
Sounds like the type of leadership – A or B – decision our committee was facing. Note that (a) there is no single right answer; (b) you can never collect enough data to make the decision for you (the concept of ‘data’ itself is somewhat misplaced here); and (c) at some point there are no new arguments to be made or perspectives to be considered on either side. The conversation devolves into repeated, and often increasingly vehement, restatements of stances announced previously.
In this situation, what do our HBR friends recommend?
‘It’s 3:15pm,’ the CEO said. ‘We need to make a decision in the next 15 minutes.’
‘Hold on, the CFO responded, ‘this is a complex decision. Maybe we should continue the conversation at dinner, or at the next offsite.’
‘No,’ The CEO was resolute, ‘We will make a decision within the next 15 minutes.’
And you know what? We did.
Alas, this is not what our committee friends did.
Deadlocked over A vs. B, they chose C – who was no one’s first choice at all. If you’re wondering whether this selection didn’t discredit the entire 18-month, 50-candidate exhaustive and exhausting process, we sympathise with your view. And yet C is leading the organisation today. (It’s too soon to issue a report card.)
Now, as a matter of decision theory, what should our committee have done?
Certainly the HBR method – start a timer running – has much to commend it, including the signal virtue of clarity.
Conceptually, I submit in situations such as this there are three choices:
• Just decide. Whether you use the HBR method or (seriously!) flip a coin, just decide. The future is unknowable, so get over that implacable reality and admit you’re making a decision under conditions of uncertainty. That’s what leadership does. Much to recommend here.
• Go back to the drawing board and re-open the competition. If you can’t reach consensus on A or on B, start the whole process over. I know after 18 months and exhaustive canvassing of candidates, human beings face exhaustion and I’m not blaming our committee in the least for choosing not to put themselves through this all over again (plus, what if they ended up in the same place again after not 18 but 36 months?). Conceptually pure but practically speaking tone-deaf and actually a non-starter.
• Or re-structure the decision-making process from the get-go to enumerate the choices being made and the criteria which will go into selecting winners and losers. Unfortunately our committee would have had to do this 18 months earlier, but you aren’t so limited.
Let me elaborate on #3.
This requires the decision-making body, at the outset, to specify not just the question they have been entrusted to answer (‘Who should be the next leader of the organisation?’) but the acceptable criteria which can be employed in judging candidates. The key word here is ‘acceptable.’ In other words, try to achieve consensus on permissible priorities and characteristics of [future leaders in this case, but whatever your choice concerns in your case]. Here they might be things like:
• previous familiarity with the organisation
• ‘domain expertise’ about the organisation’s industry
• emotional intelligence
• financial acumen
• intellectual heft
• imagination and creativity
• an optimistic, ‘can do’ attitude
You get the idea; these are just examples.
But, hypothetically, had our committee agreed on such criteria at the outset, it would then have been impermissible for supporters of A or of B to introduce a new criteria in favour of their champion or against the other side’s, such as ‘has lived in New York,’ ‘went to the right schools,’ or ‘has a terrific spouse.’ You get the idea.
If you doubt whether this can work, just try it. We were recently working with a firm to draw up a list of behaviours their (new) compensation system should be designed to encourage, and ‘pro bono’ was dutifully suggested and resoundingly seconded.
But when it came time to allocate everyone’s limited number of votes among all the possible priorities listed, how many votes do you think pro bono got? Zero.
You see, priorities can actually be discovered, and acceptable answers narrowed down.
To paraphrase the hackneyed script the politicos and corporate flacks trot out every time there’s a mass shooting or similar tragedy, ‘our hearts go out to [C] and their family is in our thoughts and prayers.’
Bruce MacEwen is the president of Adam Smith, Esq. You can read his blog here.