Why Decisions Aren’t Important (and other provocative realities of business leadership)

This article was first published on the Graziadio Business Review blog through Pepperdine University on April 2, 2021.

As someone who has spent many years in the c-suite and been at the helm or at the table for high-stakes decisions related to mergers and acquisition, technology investments, market adoption, and cultural transformation, I have a different perspective.

Decisions, like invention, are 1% inspiration and 99% perspiration. And most of that work happens after the decision is made. As a mentor of mine, Balaji Krishnamurthy from ThinkShift, shared with me, you can strive to make the right decision and then you have to work to make the decision right. Good intentions and even good decision science isn’t enough. You have to make decisions work.

As I have reflected on my experience, interviewed dozens of business leaders, and deeply researched the topic of business decision making and implementation for my upcoming book (expected in August from New Degree Press), I am struck by a few common threads that tie well-made decisions to the creation of well-made companies.

Decisions Have a Context

In your organization today, thousands of decisions are being made by leaders at all levels of the organization. It is true that high-impact decisions that require significant capital investment or human resources have multiple input streams that converge into a choice. My experience and research shows that input and convergence is aided greatly by talented employees, great access to relevant data (both supporting and disconfirming), and a culture of customer-obsession. Without these things, decisions will likely underperform, no matter how much analysis went into them.

When Quaker decided to buy Snapple for $1.7 billion, it intended to repeat the success they previously had with their acquisition of Gatorade years earlier. But it was a series of missteps with the channel structure and brand that lead to the $1.4 billion loss when they sold it to Triarc Beverages for a paltry $300 million. Three years later, Triarc sold it to Cadbury Schweppes for about $1 billion. The difference, according to experts, were factors like alignment of culture, corporate temperament, and the ability of the organization to listen to its customers.[1] In other words, decisions made after the acquisition could have turned the tide.

Decisions Are a Starting Line

Decisions are often seen as the finish line of a host of data-driven analysis, but they are in fact, the starting line for a whole host of follow-on decisions, investments, and actions. If making a choice is an act of convergence, immediately the tasks diverge, into multiple workstreams, across multiple groups, functions, levels, and geographies to make the decision right. If you were to add up the human hours that went into making major decisions with all the work that went into the implementation, it would be a miniscule fraction. Executive time, commissioned research, investment banker fees, and the like are nothing compared to the cost of implementing brand changes, moving factories, investing in new technology, finding synergies in the organization, or implementing a transformational strategy. Yet, leaders often spend more time thinking about what goes into the decision than what might come out of it.

I have been involved in several mergers, acquisitions, and divestitures in my career. In many cases, my role was to create the internal and external communication plans that told the world about the change. I have been a part of planning efforts lasting a few weeks and others lasting a few hours. And I can tell you that thinking through second order consequences and reviewing draft communications with the subject matter experts who were privy to the deal takes time, but is worth it. Leaders shouldn’t cheat themselves out of results by not setting themselves up in the starting blocks. If they fall in exhaustion over the finish line of making a choice, they will not succeed in the race that begins at the moment the choice is made.

Decision Processes Matter More than Decisions

Most decisions are not like picking lottery numbers or finding the answer to a math problem. Josh Stump is a business litigator and the President of Buckley Law in Portland, Oregon. He advises his clients that sometimes making choices is like following the GPS in their car. They come to a fork in the road and can turn left or right. At that moment, there might be an optimal choice, based on the data that is available at the time. To the right might be an accident that is slowing traffic or to the left might be construction. However, no matter the choice, the savvy driver can navigate (perhaps with some expert help) to their destination either way.

The same is true in most business decisions. The process by which directions are set, teams are aligned with great communication, truth is sought out, and teams are engaged in implementation makes all the difference. Even when decisions are reversed and businesses pivot to new strategies, they are doing so with the benefit of hindsight and what they learned.

References

[1] https://hbr.org/2002/01/how-snapple-got-its-juice-back