Are Great CEO's Decisions Really The Best Ones?

“What happens but once might as well not have happened at all”

Milan Kundera

Like life, in management of organizations also these words of

Milan Kundera are apt and prophetic. Do we have a second chance in decision-making? Do great managers really take the best decisions? If yes, how do we know? Many management gurus who write volumes on great leaders and successful managers claim to know why they great or successful – because they always take the right decisions. In reality, however, no one knows. We do not know if we have taken the right decisions because, as Kundera said, “living only one life, we can neither compare it with our previous lives nor perfect it in our lives to come.” To quote one of the commentators on Kundera, “if we can never Compare different outcomes, we can never know if the decisions we made are correct or not, which means we can never judge them properly or take responsibility for them” (Schmoop). To use a familiar management jargon, what is the benchmark to which we can compare our decisions? My previous life? I believe I did not have one; if I had one I do not remember a wee bit about what great decisions I took in that life.

According to Kundera, life gives only one chance. In management also one really does not have a second chance. The critical points of decision-making are lived only once. The decisions we take at that point cannot be compared with any other outcome. It is at one such critical point, for example, that the Wizard of Omaha, Warren Buffet took a decision to invest in TESCO in the belief that it was poised for huge growth, only to find later that he was short changed by the company’s management with regard to accounting disclosures. Buffet’s company lost $700 odd million in the bargain. Can the decision be reversed? Obviously no. Can next time Buffet do better? One does not know because the next time it will not be the same as the last. Next time never is like the last. He may take a better or worse decision in a different critical decision-point. Neither the decision nor the criticality of the point is comparable. Let us think of another example. Jack Welch, former CEO of General Electrics is supposed to have convinced his board to nominate Jeffrey Immelt to be his successor. Nothing wrong in that. Indeed, Immelt proved his worth and no one is complaining that Jack Welch goaded the Board to take a wrong decision. Indeed, he did a laudable choice. But, influenced by Kundera, one asks the question: could there not be a better person than Immelt, who would have done better? How does one prove that Immelt was the best choice? And, how do our management gurus who never tire of applauding successful managers claim that Jack Welch’s was the correct (I am not using the word ‘perfect’) decision? How can they be sure that there could not be a better choice? The craft of management gurus is eulogizing managers who had been successful. Their genius is in predicting the past. As a matter of fact management gurus do not believe in counterfactual history, a form of historiography which attempts to answer "what if" questions known as counterfactuals. It seeks to explore history by asking what if certain key historical events did not happen or had a different outcome than the one which did in fact occur. What if Lincoln and the Union were defeated in the civil war? Perhaps there would have been a compromise; the confederates and unionists would have eventually come together for the country’s sake; slavery would have continued for a few more decades etc. Whatever would have happened, the United States would have been a different place than what it is today, for better or worse. This is true of organizations also.

Can management decisions be subjected to counterfactuals? Yes, and when we do, the answers will be as bewildering as in the above cases. They will open windows of possibilities. Yes, one of the great possibilities is to doubt that whatever the heroes of today are doing may not be the best way; there could have been better ways. But, alas, as with Jack Welch or Lincoln, under the given circumstances, the US or our many organizations would only think about the possibilities, but would not be able to do anything about it. Because, like life, organizational situations do not occur again in the same way!

Organizations do decide to relive their old good lives after blundering. And to make the reliving authentic, some times they bring their slumbering old bosses back from retirement ( a la P&G). They hope that the boss’ magic still has fire left in it. Time only will tell them, if some of them have not already been told loudly and clearly enough, if bygones can be rekindled in the bygone ways.