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Leaders need to not only make good decisions, the right decisions, but they also need to recognize which are the important decisions they have to get right, and which in hindsight are going to prove trivial and not worth the trouble. Making good decisions is itself a major task for any leader. Both the decisions you make and the way you make those decisions are part and parcel of your leadership. To lead is, after all, to lead to. Distinguish Vision from Overconfidence A few years ago the Sloan School of Business published a study showing that most managers suffer from overconfidence in decision-making. Specifically, they believe their guesses are more accurate than they really are—which means they may make risky stratefic bets. Even scarier was the finding that this overconfidence is greater the higher you go in a business. Senior executives and business owners have the worst cases of overconfidence. I thought of this study when the economy slowed down in 2000. Brad Mead, president of Delta Capital Group LLC of Avon, Connecticut, observed that his clients were ignoring the bad economic signs and their own declining sales—but still budgeting on the assumption that sales would grow in the next year. He told his clients "To assume the downturn is only temporary is a pretty big bet. As a CEO, you can't take that chance." But still many did. The lesson, according to Mead, is that many business leaders and certainly most entrepreneurs are optimists by nature and tend to look at the future through rose-colored glasses. So watch out for the "optimism trap" as Mead puts it. Leaders certainly need to think big, but they also need to protect the company. Do We Rethink Decisions Often Enough? "The chairman and chief executive of Providian Financial Corp., the controversial and financially troubled San Francisco credit card giant, said yesterday he will step down amid acknowledgments by company officials that a cornerstone of its business plan had been a failure." (San Francisco Chronicle, October 19, 2001) In the end, the leader is the one accountable for the decisions. It's best to make sure plenty of thought goes into them and to reconsider tham at every turning point along the way. They say it's never too late to change your mind. But as the CEO of Providian learned, it might be wiser to say that it is never too early to change your mind. Sometimes the only way to find out if a decision is any good is to give it a try—and then turn around in a hurry if the evidence is unfavorable! The leaders with the longest tenure in business are usually the ones who don't mind changing direction frequently. Don't Feel Pressured by Your Competition Often everyone in a market or industry gets on the same bandwagon at about the same time. As a leader, it can be hard to go against conventional wisdom. Margret Whitman, CEO of eBay, showed a laudable independence of mind when she held back and refused to join the throng of dotcom companies spending huge amounts for prime time adverstising before they were profitable. For instance, in 1999, her competitors went for multi-million dollar Super Bowl ads, but she held back and waited another year before launching her first big ad campaign. In hindsight, her prudence was warranted. eBay has survived and thrived while those early big spenders are mostly gone by now. Plany Hay When the Sun Doesn't Shine It's easy to follow the herd and profit when times are good, or the old saying has it, to "make hay when the sun shines." It is harder to know what to do when it's raining. Should you pull back or keep trying to achieve your goals? Juniper Networks, a Sunnyvale, California Internet equipment maker, doubled its number of customers in the latest recession, even as the size of purchases plummeted and its operations posted significant losses. CEO Scott Kriens explained his strategy in a San Francisco Chronicle interview (January 16, 2002). "We will not walk awau from or under-compete in this market because of a business cycle." Encourage Decisiveness with the "48-Hour Rule" Most decisions and actions in any business require some input from others. Even in a small business, the employee may need to ask the boss if it's okay to do something. in any business with more than a dozen employees, nobody makes a move without getting input from at least one other person. The problem is, people rarely respond as quickly as they should. They may not answer a question for several days, it at all—leaving the decision-maker hanging and unable to act. To solve this problem, Aperian Inc., an Austin, texas Internet service company, introduced a radical rule: Any employee is allowed to make a business decision without someone's input of they don't hear back wihtin 24 hours. That rule applies not just to peer input but also to an employee who asks permission from a boss to do something. This puts managers on notice that they better respond right away to any question or request from their people. It's a tough discipline but a good one once you get used to it. After all, if you aren't accountable to your people, how can you expect your people to be accountable to you? Solicit Reservations Before Deciding The captain of the nuclear attack submarine the Greeneville ordered the crew to surface rapidly in the waters off Hawaii on February 9, 2001—not knowing that a Japanese boat carrying college students was on the surface above the submarine. The Japanese boat, the Ehime Maru, was sunk in the ensuing collision and nine lives were lost. In this tragic case, the waves were high and the Ehime Maru was not visible through the periscope. Too bad there was no evidence from the sonar examination to warn the captain of the risk. Or was there? Subsequent investigations revealed that a crew member had actually made an accurate plot of the japanese ship's location based on sonar evidence and suspected that the fishing boat was dangerously close to the submarine. But he did not question his captain's order to surface. He kept his concerns to himself. Even worse, a senior officer was on board and he said later that he thought the captain rushed the surfacing drill—but he too failed to voice his reservations. If only the captain had simply asked if anyone had any relevant information before giving his order! When you nake important decisions, decisions you and your organization cannot afford to get wrong, take a little time to stop and ask people if they have any reservations. Vision Is Great, as Long as the Trains Run on Time Leaders are torn between the future and the present, between the big picture and daily minutia. If they focus too much on daily operations, they risk neglecting their role as visionaries who need to explore the strategic options and champion their organization's future. yet if they are too hands-off and disconnected from current activities, they run another risk—their people may feel they do not care about the things the employees care about. Leaders who manage to focus their time on big-picture issues without getting into trouble for neglecting the details are ones who have great people working on daily operations—ones they can trust to make "the trains run on time." Recognize and Reward New Business Initiatives Berlitz International is a far-flung empire with over 300 language centers to keep an eye on. it has always began to recognize and reward good new ideas and initiatives as well. Nominations are now drawn from each division for people or teams who have done something creative to grow the business. Winners in the first year of the program got $3,000 in cash, silver logo pins, and a trip to a special meeting at the Biltmore resort and spa in Phoenix, Arizona. Some of the great initiatives include a new team design for managing customer relationship and a language course taught ober the Internet. This kind of recognition encourages employees everywhere in the organization to make good business decisions and work together to implement them. Create a Coalition of Leaders You Can Talk To To make sure you never have to wrestle with a hard decision in isolation, approach other leaders and build a pattern of asking each other for input. For instance, if you own and run an indpendent retail store, you might call up a friend who is an officer in a local bank and ask if she would be willing to be a sounding board on occasion, in exchange for you doing the same thing. Or you could tap into local groups of business leaders such as you might meet at a Chamber of Commerce or Rotary Club meeting or a meeting of a local chapter of a professional association. Some of them will be trustworthy and experienced and well worth including in your leadership coalition. Foster Employee Involvement in Decisions In general, managers and business owners tend to err on the side of too little employee participation in decisions. Participation increases big-picture understanding, develops employee knowledge and skills, and stimulates internal motivation. The more participation you have, the better. Knowing What You Can and Can't Influence as a Leader Leaders in the US Army are trained to assess each leadership situation carefully before taking action. A key part of this assessment is to identify - situational factors over which the leader has little or no influence, and - situational factors over which the leader does have influence. This is a powerful way to think about any situation. It focuses you on what you need to respond to and it shows you what possible avenues you have available for responding. It might only take 30 seconds to draw up these two lists. Try it next time before you take action. Sometimes a little planning can go a long way when it comes to taking appropriate leadership actions. What Works Best? Janice Drescher, an experienced trainer and executive coach who has helped out with some of my client work in California, likes to ask an interesting question when she visits a new client and does interviews managers and staff. She asks them, "What works well around here?" It usually surprises people and they may take a while to come up with an answer. What you hear when you ask this question is that certain processes or groups are working smoothly and well. You discover what the organiaztion's greatest strengths are. As a leader, you need to know where you strenths lie, if only to avoid making decisions that accidentally mess them up. Book, $10.95, signed by the author, reg price $19.95  |
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