Jack Welsh, the legendary former General Electric CEO, once said that the difference between great leaders and average ones is that great leaders make far more good decisions than bad ones. But all leaders, including great ones, make bad decisions. So do all employees and executives at every level.
In the end, we are all paid to make good business decisions. So maybe it is worthwhile to spend a few moments pondering the nature of decisions, good and bad. And to think about a new dimension in business decision-making which has the potential to bring more value to our companies and to our careers than decisions that are merely good: the responsible business decision.
Good decisions are seemingly easy to recognize. They are the ones that appear to achieve a company’s goals, at least in the short-term. They make bosses happy, appear to make or save money, and get people promotions and raises.
Bad decisions get a little trickier because there are two kinds of bad business decisions.
The first type of bad decision looks like a winner when made, but only after the fact can be recognized as bad. Unexpected events or forces intervene to change the calculus that went into the decision. These decisions can only be known to be bad with the passage of time and the benefit of hindsight. This is the most common type of bad business decision and is hard to avoid.
The second type of bad decision is an evil one. It is the decision that was bad from the moment it was made, yet is failed to be recognized as such. These bad decisions could have been avoided, which is what makes them so insidious.
There are a myriad of reasons some obviously bad decisions fail to get called out before they can cause damage. Some of the reasons have to do with what happens inside people’s heads. These are the cognitive flaws and traps that humans are susceptible to. Some of the reasons have to do with what happens in corporate cultures, or messages that come down from the top.
Either way, with understanding of the decision-making process the “bad-from-the-moment-made” decisions can be avoided.
I advocate less focus on thinking about decisions in terms of good or bad, and instead thinking about decisions as responsible or not. A responsible business decision is one that genuinely and sincerely takes into account the interests of all stakeholders to the outcome of the business decision, whether they are at the table or not. This means thinking about the impact of decisions on customers, employees, the brand, corporate reputation, vendors and partners, and the community at large.
Responsible decision-making is at the core of corporate social responsibility. But it needs be thought about in every decision, and in every context.
Ultimately, responsible decision-making goes to the heart of a company’s value, and its values. While I don’t have any study to back this up, I am willing to bet the farm that long-term the most valuable and sustainable companies will be the most responsible ones.
Taking that model a step further and making it personal, employees can think in terms of becoming more valuable to their bosses, colleagues, customers, and clients, by practicing responsible decision-making.
One can help one’s career, and certainly their peace of mind, by thinking about decisions in terms of responsible business decisions, rather than merely good or bad decisions.
By Bob Greisman