Avoiding the pit of wrong decisions

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7 years ago

Sam Walton, founder of Walmart, in his response to a reporter’s question on how he became such a successful person, attributed his accomplishment to his ability to make good decisions. According to the man who built the world’s largest retail outfit, he would have been unable to achieve 10 per cent of what he did if he had not learnt to make good decisions.

Making good decisions is not just central to successful leadership, it is also critical to leading a good life because decisions determine the choices made and choices determine results achieved. So, unless leaders make the right decisions they end up on the wrong side of history. Right leadership decisions improve the society, strengthen the economy, result in the creation of opportunities for individuals to optimize their potentialities, increase access to resources, and build up organizations. But when leaders consistently make wrong decisions, the society deteriorates, organizations are enfeebled, opportunities are narrowed, potentialities are destroyed, and the people are incapacitated. So, making right leadership decisions is critical because leaders who make wrong decisions not only go down, they take many people and organizations with them.

The fall of Nigerian Newsprint Manufacturing Company Limited

As part of its import substitution policy, the Federal Government incorporated the Nigerian Newsprint Manufacturing Company Limited (NNMC), Oku-Iboku, Cross River State, in 1975 as a private limited liability company to produce 100,000 metric tons of finished newsprint per annum. The company effectively took off in 1986. By this time, it was the only newsprint manufacturing company in the West and Central African sub-region. Its operation brought great relief to newspaper and book publishing industries as importation of newsprint, the industries’ major raw material, cascaded drastically. NNMC was doing so well that it was exporting newsprint to USA, Cameroon, Germany, Togo, Ghana and Zimbabwe. So, not only was it saving the country billions of naira hitherto expended on newsprint importation, it was also boosting the country’s foreign reserves by earning dollars from exportation. In addition to that, quite a number of Nigerians enjoyed either direct or indirect employment with the company.

But the bottom soon fell out of the company as a result of bad decisions and it ground to a complete halt in 1993.

After the initial euphoria of setting up the company, the government scaled down its funding of the company, which resulted in its inability to source sufficient foreign exchange to import long fibre, its critical raw material despite the government’s failure to develop kenaf, the domestic substitute. With that, the company was unable to produce at full capacity and had to consistently cut back on its production until it eventually died.

The government later opted for privatizing the company in 2008 and sold it, through the Bureau of Public Enterprises (BPE), to Negris Investment Limited. But since then, not a single roll of newsprint has been produced by the company.

The effect of the demise of NNMC on the country as a whole has been catastrophic. As a consequence of its collapse, hundreds of people lost their jobs. Newspaper houses and book publishing firms have also been thrown into the throes of death as the scarcity of newsprint threatens their continued existence just as the country loses about N400billion annually to newsprint importation.

So, for failing to keep the NNMC running as a result of bad decisions, the government not only took away the livelihood of many Nigerians, it also dug the grave of many Nigerian companies and deprived itself of oodles of money.

Why leaders make bad decisions

A number of factors are responsible for bad decisions by leaders. Here are some of them.

Relying on past experience

Experience is the knowledge or mastery of an endeavour or subject gained through earlier exposure to it. Experience makes it easy for leaders to make decisions because they are familiar with the turf. But over-reliance on experience may be a hindrance to making good decisions because events change faster than many people do. So, if a leader depends on his past experience to make decisions all the time, the likelihood of falling into error will be high for the reason that nothing stays the same forever. As said by John Keynes, proponent of Keynesian economics, when the facts change, I change my mind.

Relying on experience to make decisions is slipping into the comfort zone. For great leaders, decisions are made on a case by case basis because they know that what worked in the past may fail to work in the present. Those who often rely on experience to make their decisions are lured into that because they want to avoid the rigour of the decision-making process. According to Marshall Goldsmith in the book, What Got You Here Won’t Get You There, using an approach that worked in the past without subjecting same to interrogation is a recipe for disaster.

After the completion of the first Harry Potter book, J.K. Rowling sent the manuscript to well-established publishers in the United States of America and the United Kingdom, all of whom rejected it because their experience in book publishing made it clear to them that the book would not sell. Experience had taught them that books of that size would not sell. From experience they had also learnt that books for boys would not sell. The only person who decided to give the manuscript a look-in was the director of Bloomsbury Publishing Company Ltd, who was new to publishing, so he had no experience about what might work or what might not. That decision launched the company into prosperity because as of February 2018, Harry Potter books had sold more than 500 million copies worldwide making them the bestselling book series in history.

Over reliance on experience rather than adopting a case by case assessment of situations made 12 publishing companies to shun a potential goldmine.

Their personal interest gets in the way

Leaders also make bad decisions when they allow their personal interests to get into the decision-making process. The average person is selfish, so when leaders factor their personal interest into the decision making process, they are unable to free themselves from bias. Decisions taken in such situation would be jaundiced because the leader would view the process through the prism of personal interest rather than the spectrum of organizational need. Consequently, he is unable to take the appropriate decision for the organization. When leaders pander to their own interests, they squander great opportunities to make a difference and later wonder why they are unable to hit their goals.

Robert Mugabe presided over a country where everything was going wrong yet he decided to stay on in power at 93 years of age because of his personal interest. He manipulated the electoral process and pocketed the military to hold on to power. He sacked the former vice-president, Emmerson Mnangagwa, to pave the way for his wife, Grace, to succeed him. As far as Mugabe was concerned, governance was about himself and his interest. Little wonder he was disgraced out of office at the twilight of his life. Now, he lives to regret his selfishness.

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Lack of courage

According to Aristotle, courage is the mother of all virtues because without it others account for little. Courage is critical to making the right decisions in leadership because at any point in time, there will be conflicting interests and it takes courage to act against certain interests in favour of general interest. It takes courage to go against what is popular in favour of what is right. It takes courage to decidedly step on powerful toes for the benefit of the majority. It takes courage to take hard decisions that will launch the organization on the path to greatness rather maintaining the status quo.

Leaders who lack courage are unable to make the right decision at the crucial time because they want to play safe. They do not want to upset the apple cart. So, rather than take the right decision, they seek out an easy alternative. Rather than take a decision that may hurt some but help the majority, they choose not to hurt anybody and remain on the same spot.

Another reason they fail to take the right decision is that they value being popular more than getting result. Leaders who want to be popular will always play to the gallery. They will refrain from taking hard decisions required to precipitate the change needed by their organization because they want to be everybody’s friend. They forget that leadership is not a popularity contest. In leadership what matters at the end of the day is the result that is produced not the number of applause given or the accolades earned.

When they lose sight of their values

The list of otherwise respected leaders who destroyed their career because they lost sight of their value is quite long.

Mr Tafa Balogun, former Inspector General, was convicted for stealing public money and taking bribes. Mrs Cecilia Ibru, former CEO of Oceanic Bank, was sentenced to six months in prison after she pleaded guilty to three of 25 counts of fraud and mismanagement. Mr Bala Ngilari, former Adamawa State governor, was found guilty of violating the state’s Public Procurement Act in the award of contract for the purchase of 25 vehicles valued at N167 million and was sentenced to prison. Professor Richard Akindele of the Obafemi Awolowo University was dismissed for demanding sex from one of his students. Mr Mark Hurd, former CEO of Hewlett-Packard, was forced to resign his appointment for submitting false expense reports concerning his relationship with a contractor. Mr Dominique Strauss-Kahn, former MD of the International Monetary Fund, resigned his appointment and was arraigned for sexually assaulting a hotel maid. David Sokol, who was being primed to take over from Warren Buffett, was forced to resign for trading in Lubrizol stock prior to recommending that Berkshire Hathaway purchase the company.

Why did these people, who were high flyers, crash land? They lost sight of the value that got them to the top. When leaders look away from their value, they lose their moral bearing, their ethical compass and fall into indiscretion. When a leader slides into indiscretion, the dividing line between right and wrong becomes blurred; he is goaded only by the urge to get what he wants and ends up making wrong decisions.

Values are like a wall of defence round a leader. If the values should collapse the wall of defence is gone and the leader is exposed to all manner of destructive attractions.

Inadequate information

Leaders are forced to make wrong decisions when they do not have adequate information about a situation. Very often the rightness or otherwise of a leader’s decision is a function of the information at his disposal. So, inadequate information can make a leader to make wrong decisions.

However, not having enough information is a consequence of failing to ask the right questions. Leaders must never fail to interrogate and evaluate situations with a view to getting more informed about them. When leaders learn to ask the right questions, they are able to get the right information and make appropriate decisions.

Last line

When leaders make bad decisions they subject their subjects to agony.