Decisions built to last

OUT OF THE BOX

When it comes to relating stories on outstanding leadership, management guru Jim Collins seldom passes up a chance to make an example of Darwin E Smith "" the quiet, understated company lawyer who was suddenly appointed chief executive officer (CEO) of a stodgy paper company called Kimberly-Clark, in 1971.

Over the next 20 years, Smith transformed the company's fortunes. But the key inflexion point was Smith's brave decision to dismantle the company's core business of coated paper, sell the mills, and divert all resources, instead, to making a success of the consumer business led by brands like Huggies and Kleenex. The rest, as they say, is history.

Is success ever that serendipitous? In reality, the happy endings of business stories hide more than they reveal. In retrospect smart business decisions may seem like no-brainers, but often they are made under conditions that are just as challenging and fearful as your worst corporate nightmare.

There is insufficient data, the options seem unviable, there are more critics than supporters, and the future seems shrouded in a gloomy fog. Says the Colorado-based Collins "" the best-selling author of <i>Built to Last</i> and <i>Good to Great</i> "" in an exclusive interview: "Hindsight allows you to see the key links in the decision-making chain in retrospect. But if you go back to that moment in history it's a much messier picture."

That raises an interesting question: what makes some CEOs so confident of their strategy that they are able to see through the murk and bet wisely on their company's future "" even if the decision seems like sheer madness to everyone around them? How do such leaders make good decisions that in retrospect become great ones?

How do such leaders get the clarity and understanding needed to make unerring decisions in the first place? According to Collins, this is the one question he is asked most often and which he finds the hardest to answer. Says Collins: "The only answer I can give is that it's an iterative, organic process."

Now, three years since the publication of <i>Good to Great</i> "" in which Collins analyses why some companies make the leap and others don't "" the management thinker has forced himself to ponder on the subject and provides a more expansive answer to the dilemma of making great decisions.

The secret, according to Collins: great results happen as an accumulation of good decisions that are implemented with great discipline.

Just as it isn't one symphony alone that makes Beethoven great, but a whole body of work, Collins now urges managers to remember that there is no one flashpoint or miracle, but a series of small, smart decisions that add up to a tsunami of good decision-making over time.

"It's a chain which starts with gaining understanding. Understanding is translated into clarity. Clarity is translated into good decisions. Good decisions get translated into great decisions through the discipline with which you implement the good decision. That then translates into outstanding results for the company "" which when added up one upon another end up with a cumulative outcome far ahead of other companies," says Collins. "It may sound really simplistic but it's true."

As any practicing leader in the hot seat will readily admit, it doesn't sound simplistic at all. But it is comforting, for Collins homily shows leaders how to avoid the pitfalls on the path of greater understanding and clarity. By recognising the elements that cloud their judgment, leaders can ensure that they are not forced to stray from a wise course into a strategic morass.

All leaders have faced one form or more of strategic distractions while making key decisions. Panic about not being able to see round the corner. Fear of failing the company and its stakeholders. Worry about the stock-market's reaction. Or, perhaps, even the terror of losing the top job.

By facing up to the enemies of good decision-making "" and recognising their symptoms early before they can do much damage "" smart leaders can nip trouble in the bud. Rather than battling demons, they can focus on doing the right thing for their company.

Collins has personally experienced how fear paralyses the faculties of decision-making. Invited to teach at Stanford, he began to dread the course he was teaching. He worried that he would not be able to repeat the performance. He fretted that other courses would be considered better than his.

The breakthrough moment came when Collins read about John Wooden, the UCLA men's basketball coach who led his team to win 10 NCAA championships in 12 years. Coach Wooden never bothered about matching performance in the past but focused manically on improving performance in the future.

"It was an epiphany that changed my approach. Instead of obsessing about not losing what I had, I shifted to focusing on making the course better, even if by just a little bit. It was a liberating shift. I had fun again! And most important, the course did improve," says Collins, in the article "Fear Not" published in <i>Inc</i>. magazine, two years before <i>Good to Great</i> was published.

Perhaps, the one key ingredient for making good to great decisions is to simply, enjoy the process more and not be intimidated by it.