Here’s one reason executives can struggle to make good decisions

Here's one reason executives can struggle to make good decisionsExecutives can struggle to make good decisions for lots of reasons. They’re people, after all. They might let emotions interfere with reason. They might be tired or ill. They might misread the demands of customers, or the strategies of competitors.

But there’s another, particularly mundane reason executives can struggle to make good decisions: they grew up in one part of the business, and their perspective is skewed. 

They can’t fully remove themselves from their old stomping ground. They know one part of the business so well (Sales, Marketing, Finance, Supply Chain, etc.) that they can’t easily think of the business as a whole. They revert to their old lens, the one they used for years (or decades) as they made their most visible contributions. 

Let’s allow the expert, the esteemed Professor Chandler, to explain

Alfred D. Chandler wrote about exactly this phenomenon in his 1962 business tome, Strategy and Structure. (Yes, I’m still slowly but surely making my way through his book.) Here’s what he said on page 296:

Since these multifunction enterprises were managed by men trained to handle single-function units, the final determination of policy tended to be a result of negotiations between interested parties, rather than of an understanding or an awareness of or even consideration of the best interests of the corporation as a whole. This was particularly true when the decisions involved major allocation of funds and other resources. Such policy making by negotiating seems to have an obvious parallel in the making of military and diplomatic decisions in Washington since World War II.

Just before this passage, Chandler explains the predicament of these senior executives, each of whom had ties to a particular part of the company:

Moreover, each was a specialist rather than a generalist. Normally, his whole business career had been in one functional field. Thus he had professional pride as well as institutional responsibility in knowing just how his specialty was being carried on throughout the company.

I want to highlight one part of that. Chandler says that decisions “tended to be a result of negotiations between interested parties, rather than of an understanding or an awareness of or even consideration of the best interests of the corporation of a whole.” (My emphasis added.)

That’s powerful. He was describing the state of DuPont, General Motors, Standard Oil of New Jersey, and Sears, Roebuck around the 1920s. But think about how much of that stuff still happens today.

We think of ourselves as being on teams. Not just at work. But in life. In sports, politics, even entertainment…we align with some groups, and acknowledge conflict with others. It’s in our nature. We’re tribal. And without a moderating influence, these tribal instincts can be destructive.

Even executives, maybe especially executives, are tribal. They come from particular parts of the organization. They sponsored certain initiatives. They championed certain solutions. They have a track record of success, a record that ushered them into the senior role they now have.

Take a room full of these folks, and of course they want to rely on what they know. They have evidence of something that has worked in the past. It worked in a different context, in a smaller slice of the organization. But the bias is to believe that it will work again, across the whole organization. It’s easier to call back a past success than to push more nakedly into an unknown future.

What’s the antidote? Courage and empathy, as usual

Plenty of people, even seasoned executives, fall into this trap. If you have a hammer, every problem looks like a nail. If you have a background in marketing, every problem seems to have a marketing-derived solution.

How do you overcome these very natural inclinations? Courage and empathy. You need the courage to be vulnerable, to admit you don’t know everything you need to know. You need the courage to admit that your instinct might be wrong. Your experience might be misleading or irrelevant. Someone else might be right. You need the courage to admit to yourself that you might need to change course. What got you here may not get you there, as Marshall Goldsmith would say.

And you also need empathy. You need to understand the battles that people fight in other parts of the organization. You need to understand that some of the things that make your life easier, make other people’s lives harder. You need to understand the costs and benefits to the various intra-organizational interactions that continuously unfold.

That’s why executive teams struggle to make consistently good decisions. It’s not that they’re bad people. It’s that it’s really difficult to act courageously and empathetically, particularly when the stakes are high. Defaulting to what’s worked in the past is easy. Considering the best interests of the company, and acting accordingly…especially when it creates more friction, or flies in the face of your personal experience…is hard. 

Chandler describes part of the appeal of an outsider CEO

We hear a lot of stories about homegrown executives leading their company to enormous success. Steve Jobs and Bill Gates certainly qualify, since they were founders. Bob Iger at Disney qualifies (he started his career at ABC, which was later bought by Disney).The same is true for Rex Tillerson at ExxonMobil.

But we also have tons of cases where the board of directors wants a different direction for the company. They want an outsider CEO. Part of the value of an outsider CEO comes from the fact that they didn’t grow up in the organization. They don’t have internal loyalties, or internal conflicts. They’re bringing a more or less blank slate with them.

In a sense, this is ideal. You want your CEO to be a clear, precise thinker and communicator. You want your CEO to be aware of wide classes of best practices. You want your CEO to have experience reading markets, and parsing customer and competitor behavior. All of these skills translate from company to company.

Sure, it’s fantastic if the CEO has a deep working knowledge of the company itself. But that knowledge clearly comes with a cost. They might drag along the “that’s way we do things” anchor. Their past interactions and experiences might bias them, skewing their understanding of the company’s true capabilities.

That’s the real conflict: the bias that accompanies experience. The more experience you have, the more biased you are toward what has worked for you, and against what hasn’t worked for you. The issue is, no two scenarios are identical. Some experiences translate well. Others not so much. It’s difficult to appreciate the different value your experience might bring, depending on your current context. That’s part of the reason executives can struggle to make good decisions.

What does this mean for us, as scientists and engineers?

As scientists and engineers, we face a lot of workplace stereotypes. Possibly the biggest one is that we’re clueless when it comes to business. 

We understand technology. We know how to solve complex problems. But we don’t know how the business works. We don’t understand our customers. We don’t know what customers are and aren’t willing to pay for.

We over-engineer solutions. We live in the weeds. We don’t respond well to ambiguity. We don’t appreciate the constraints of other teams inside our business.

And on…and on…and on. You know all of this. You’ve seen it first hand, just like me.

One way we can respond? Resentment. Get frustrated that people believe this stuff about us. Talk badly about other teams behind their backs. Bitch and moan to people who are sympathetic to our plight.

Another way to respond? Lean into the criticism. You don’t have to take it all at face value. But learn about the business. Learn about your customer base. Learn about workflows inside your company, how work gets to you, where it goes when you hand it off. Speak more fluently in non-technical language. Zoom out, and take the high level executive view of your technical projects. 

In other words, practice taking on another perspective. That’s what Professor Chandler is talking about. If you spend your life in one part of the company, it’s more difficult to see the company as a whole. Your perspective is warped, and rightfully so.

Your career will eventually take you to a place where being the technical expert won’t be enough. You’ll be called to participate more broadly. Have the courage to dip your toes into uncharted waters. Have the empathy to appreciate not everyone is out to get you. Everyone has their own challenges internally. The better you can understand them, the more likely you can make large-scale, career-defining contributions.

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