The coach gets to decide

In a recent survey of the presidents of America's 500 largest companies and deans of the top 100 business schools, Jack Welch was voted as one of three Most Influential Persons to Leaders.

Since the other two were Peter Drucker and Edwards Deming, both management consultants, it would be fair to say that Welch was virtually named the greatest corporate leader of all times. However, even the greatest executives make mistakes.

Welch admitted in a December 2001 interview in BusinessWeek, three months after he retired from GE, that he had his fair share of corporate blunders. He remained blind to the impact of the Internet until late in the game and nearly drove GE down the same slippery slope as Enron.

"I bought Kidder Peabody, which was an investment-banking firm, in the 1980s, and I got into trading and things like that. We had a rogue trader called Joe Jett who had trades that we didn't understand and we reported $ 400 million of false profits because we didn't really get the business,'' said Welch. "We screwed it up. We were lucky it was small enough. We sold it and got out. And got out alive. But it could have eaten us up if it were a bigger thing.''

Leaders make decisions -- good ones and bad ones -- all the time, because that is the job description. Good leaders are those who make more good decisions, that's all. Welch's tenure became a legacy only because he erred on the side of prudent decision-making more times than not.

The opportunity for greatness, therefore, lies before every leader, albeit he or she should be willing to put in the hard work needed to hone their decision-making prowess. For decision-making, like any other acquired skill, requires both practice and technique.

It's the technique part that interests J Frank Yates, professor of business administration and marketing at the University of Michigan Business School, and author of the award-winning Decision Management: How to Assure Better Decisions in Your Company.

When teaching decision management to managers, one of the first exercises he makes the class undergo is to step out of the classroom and onto the tennis court. Managers are asked to hit forehand shots. Then they analyse the critical series of actions that translate into a good forehand stroke.

The grip on the racquet and getting into position. The pivot and drawing back the racquet. The forward swing of the racquet while keeping the arm straight and wrist firm. Finally, the follow-through with a long sweeping motion.

The exercise ends when managers apply the rules to their game: nearly everyone hits a better forehand than when they first started out. Yates' point is that while a tennis player's forehand might look like a single fluid movement, it is actually a series of actions. Management decisions are also a composite of a set of contiguous actions.

Just as in tennis, in decision-making too, success depends on mastering the craft through application and awareness. Says Yates: "Everybody can hit a forehand just as everybody can decide. The big difference is that not everybody does it well.''

Yates has identified 10 issues that can trip up managers making decisions. Need: companies need to recognise when a decision should be made. Mode: there must be clarity on who the main decision-maker will be. Investment: care has to be taken in choosing the resources that will be invested in decision-making.

Options: the decision-makers need to cover as many potential responses to a particular problem as possible. Possibilities: they have to be aware of all the consequences of a particular course of action. Judgement: they have to cull those possibilities that could happen or would happen.

Value: decision-makers have to be aware of how much beneficiaries would care, positive or negatively, if a particular outcome is realised. Trade-offs: they have to evaluate the strengths and the weaknesses. Acceptability: decision-makers also have to worry about getting stakeholders to accept the decision. And implementation: decision-makers must ensure that the decision will be carried out.

Who has time to bother about these issues in the heat of the moment, you might ask. The consolation is that all of us, every time we make a decision, do cover these 10 areas -- one way or the other. That's just the way decisions are made. What Yates is saying is to use the checklist to figure out where past decisions have gone wrong -- and in the case of critical decisions, pause to check if you have covered all 10 bases.

A slip on any one of these fronts can prove to be a costly mistake for the organisation. But here is the irony: there is no surety that addressing the 10 issues will guarantee success. Says Yates: "What a good decision manager will do is examine how the organisation decides each one of those issues habitually and then refine the ones that are especially problematic.'' In other words, leaders not only have to be great players themselves when it comes to decision-making, they also have to coach the rest of the organisation on making decisions wisely. Not all tennis players go on to win Grand Slams, but the ones that do, always have a coach.