Making a bold move is risky business. Even when you’ve done the research, modelled the outcome and evaluated the risks, the results of even the most calculated decision can be unpredictable. Having experience as an accountant, I can say there’s some degree of predictability with numbers; but it’s another story when you’re dealing with people.
Last week, I hosted our fortnightly team meeting and focused on one of Slade Group’s core values: Consistently making first rate decisions every day. Of course it’s a no-brainer to always want to make the right choice. Who would aspire to making second rate choices? Flicking through the newspaper on the train on my way to work, I couldn’t help thinking that the benefit of hindsight would be a wonderful thing for the likes of collapsed Dick Smith retail chain (3300 employees now facing job losses) or embattled law firm Slater & Gordon (a $1 billion share market loss in the last six months).
Unfortunately it’s usually not until well after the fact that we know what the consequences of a decision will be. Here is a selection of business examples that our team collated, with a few key takeaway points for decision-makers.
- Gather quality data and information to evaluate which is the right choice.
In 2001, Sir Richard Branson rejected a generous $240 million offer from Singapore Airlines to exit the Australian market, which at the time was 24 times what Virgin had invested in the domestic market after some aviation climate analysis. Within 24 hours of Branson’s decision, Ansett Australia went into receivership and 12 months later Virgin was valued at $2.4 billion.
- Perform a situational analysis, work out the pros/cons and quantify the risk versus reward of the decision.
In 2009, social media giant Facebook turned down two computer programmers, Brian Acton and Jan Koum, in job interviews. A few years later, after being rejected by Facebook, both Acton and Koum sold their once fledgling development company WhatsApp to Facebook for $19 billion.
- Solicit opinions and obtain feedback from people you trust or have appropriate expertise.
In the early 1970s, NBA basketballer Spencer Haywood was offered a shoe sponsorship deal comprising of either $100K or a 10% share in a little apparel company called Nike. Sadly for Spencer, his agent persuaded him to take the cash so he could snare an easy commission. According to Forbes, a 10% stake in Nike would today be worth somewhere around $8.6 billion.
- Carefully consider the consequences of any action (inaction) to make a decision.
In 1975, Kodak developed a prototype for the world’s first digital camera, but decided against unveiling their product for fear of diluting their film market monopoly. Kodak also opted against signing on as the official film for the 1984 Los Angeles Olympics, instead giving new player Fuji an opportunity to gain a foothold in the world market. Due to the booming digital camera revolution in the late 1990s, Kodak’s fortunes drastically declined and forced them to file for bankruptcy in 2012.
- Based on solid experience, sometimes you just have to go with your gut instinct and make the call.
In 1962, a young pop band from Liverpool called The Beatles auditioned at Decca Studios in London. The record executive thought they were out of date and sounded too much like another band at the time called The Shadows. Three months later, The Beatles signed with EMI’s Parlophone label and went on to sell well over two billion albums worldwide.
Whether we like it or not, we all have to make choices every day. What’s an example of a first rate decision you have made recently?