How Great Leaders Use Patience To Avoid Decision Traps
Smart, successful business leaders quite rightly pride themselves on strategic thinking, rational decision-making, and stellar insight; and some actually possess these qualities. However, the best leaders have the wisdom to be suspicious when others treat them as though they are infallible, and they are particularly sensitive to signs that they are beginning to believe their own press. Charlie Munger is well-known for his habit of studying failure, including his own, to limit the influence of very real human factors in decision-making. Munger displays uncommon discipline and patience, with respect to his own thinking and decision-making, as does his partner Warren Buffet.
The CEO of Inspire Brands, Paul Brown, commenting on the company’s philosophy said, “We are very patient.” The word patience is not often used by leaders, but it is a critical one. Absent patience, even smart leaders can make rash decisions, get caught up short-term trends, or allow others to have undue and negative influence over them. The New York Times, commenting on Inspire Brands proposed acquisition of Dunkin’, (initially reported to be for $8.8 billion and later $11.3 billion, which includes debt), called out the very real influence the actions of one organization can have on another saying, “…a Dunkin’ takeover could inspire other private equity firms to jump into the fray for pandemic-proof targets.” Even smart leaders are not immune to the effect of emotion on their decisions.
Emotion is fuel
When frustration from lack of opportunity meets a low cost of debt, even smart leaders can be tempted to take actions they may not choose in different circumstances. To complicate matters, the influence of impatience is not only difficult to quantify, it is extremely hard to admit. Leaders are generally reluctant to talk about the role emotion has on decision-making, except when speaking of others. Yet it’s not difficult to see that competitiveness, drive for achievement, desire to “make a dent in the universe” or create change for the common good are fuel for action. Great leaders think about how to use motivation as fuel, when to open up the pipe and when to close the valve to prevent harm. To do that they need to think about their own thinking, decision processes and how emotion affects them.
Make thinking about thinking a priority
How does someone learn about their own habits and processes without going down an introspective rabbit hole? By asking a few good questions and engaging colleagues in the same questions. These will reveal habits, patterns, erroneous beliefs, illogical conclusions, and help leaders side-step decisions that aren’t in the best interest of their organization. The value of the questions rests on three things: 1) The leaders willingness to make their own thinking and decision-making habits and processes a subject of inquiry, 2) Their courage to share what they learn about themselves and, 3) The empathy they show when others subject themselves to similar inquiry. Absent these three things, asking questions and noting the answers yields little benefit.
Three questions that can help:
- Lay out your logic.
Tell the story as simply as possible and then consider it as though you didn’t create it. Can you tell it with a headline and a few bullet points? Could you explain it to anyone in your company in three minutes? How does it create value and for whom?
- Test your thinking.
Lay out the reasons for the decision you propose, then inquire about the assumptions that underlie each. Far better to discover what is solid and what is wishful thinking. However, before throwing out projections as “wishing”, inquire further about what information led to them? The point here isn’t to demand proof, which leads to zero risk-taking, but to interrogate the rationale and identify both logical and illogical inferences.
- Look for triggers.
Humans are subject to external forces, people and circumstances and some can exert great pressure to take particular actions. Leaders are often praised for decisiveness, action-orientation and risk-taking, all of which can create demand characteristics, for good or ill. Bank of America leaders paid dearly for the mess at Countrywide while investors and regulators blamed them for lack of diligence, though the board of BAC had approved many deals prior to it. John Stumpf, former CEO of Wells Fargo failed to show insufficient curiosity when retail results were great but not clearly explained. These mistakes are discussed as failures of leadership and they were but more specifically they were failures of leaders to make their own thinking and decision-making process, and that of their team or board, the subject of examination.
While emotions are often working below the level of conscious awareness, it is possible for leaders to learn about their particular patterns of behavior and decision-making to improve the quality of their decisions. These three questions, when seriously and courageously entertained, can help leaders become aware of the influence of emotion on decision-making and help them and their teams take giant leaps forward.