Do you always have good judgment when you make important decisions for your business?
Do you have biases that might distort your judgment and could put your business at risk?
Making decisions as a leader is difficult. Here’s the story of one entrepreneur who had difficulty putting his wants aside for the greater good of the company. His leadership effectiveness was low due to his decisions.
The story of John, the entrepreneur.
John was a true entrepreneur. He started his telecommunications business with no more than a telephone and an answering machine. The big phone system had just broken up and the communications world was the Wild, Wild West. He was into taking big risks.
He responded to an RFP from one of the national grocery chains to install and maintain all of their communication systems nationwide. At present, his total network of employees and subcontractors was quite small. In fact, he had none. His business was just himself.
He waited to hear back, but no word came. Finally, he realized he couldn’t wait any longer and he took a job as a mid-level manager in a local business. He had to pay his bills. But, he hadn’t disconnected his phone. One day, the call came in. He had won a $1,000,000 contract. Amazing.
He quit his job and began ramping up a nationwide network of communications systems subcontractors.
That auspicious start led to a thriving $50,000,000 per year operation that installed, maintained and refurbished point of sale, inventory and communication systems for some of the largest big box retailers in the country.
As John’s business succeeded and he continued leading high performance teams and leading a high performance company, he decided to get into flying. He took lessons at a local airfield and, before long, had his pilot’s license. He loved the feeling of being in the air and found flying to be a quicker way to get to his vacation home and avoid city traffic. Before long, he decided that he needed his own plane. While he could certainly afford it, this hobby was becoming a hefty expense.
Seeing the merits of flying (and perhaps enjoying the status), John considered the possibilities for his business. If the company had a plane, his sales team could be much more efficient. They could avoid cancelled flights, security lines and could fly direct to customer sites, which would imrpove his sales team’s ability to grow revenue. It wasn’t long before John’s team was crisscrossing the country in the company’s new private jet (well, it wasn’t brand new, but it was certainly new to them).
However, the costs of flying and maintaining the jet were high and it only held five people. John was soon getting advice that the jet was negatively impacting the bottom line. It wasn’t feasible to keep it. If his goals included building effective teams and growing his company, something had to change. But, John had the bug. Instead of selling the plane, he bought an even bigger one. In his mind, the bigger one could hold more people and thus would be more efficient for growing revenue for the business.
Enough was enough. John’s banker contacted John’s executive team and told them they had to reign in their boss. His investment in the jets was eroding the banker’s confidence. He was not going to renew their line of credit with the airplane on the books. The team had to force John to face the reality that his judgment was flawed. He was a victim of his own bias. He was killing the company and couldn’t see it. This was most certianly not the right way to build company morale or the best practice for developing a high performance team.
The story ends well. The plane was sold (at a loss, of course). The balance sheet improved. The banker renewed the credit line and the company continued to grow. But, John came very close to putting the company into a nosedive from which it could not recover. Had he engaged inexecutive coaching to help him see the consequences of his actions, perhaps it would not have gotten to this point.
How is it that smart people can make such stupid decisions?
Each of us is prone of the blindness of our ego when our biases take over our judgment. It is this error that has brought down successful and accomplished people since the beginning of time. And, it is the leader who is most vulnerable simply because there are not many people who are willing to give him honest and open feedback when he strays off course. Part of executive leadership development is involving the entire team.
They say it is lonely at the top. It is also dangerous. It is so easy to be the victim of your own flawed thinking.