One dreary October day in the late 90’s, I sat in my local Fidelity office waiting to shift funds from one account to another, a common practice in an era before online banking and financial services. That fifteen minutes sitting would have remained forever unmemorable, were it not for the fact that I picked up a business magazine sitting on the coffee table next to me and read a brief article on CEO’s and decision-making.

According to the article, researchers studied the decision-making of CEO’s at both successful and unsuccessful businesses, categorizing their strategic decisions along two dimensions — correct/incorrect and fast/slow, as shown in the table below:

CEO Decision-Making Success Fast Slow
Correct    
Incorrect    

As you might surmise from the labels on the table, “correct” was defined as making decisions that accurately gauged the market, adapted to changes in the business environment, and made new expenditures or trimmed costs in ways that helped their businesses to out-perform competitors; “incorrect” decisions were the opposite.  Along the other dimension, “fast” decision-makers were among the first to make a decision–right or wrong–and then act on the decision, while slow decision-makers took their time, often deciding and acting well after the counterparts in their industry.

Not surprisingly, the CEO’s who made fast, correct decisions led the most successful businesses, while the CEO’s who made slow, incorrect decisions were the least successful. However, the second most successful group of CEO’s came as quite a surprise to me, ultimately affecting how I lead and make decisions to this day. It turns out that the second-most successful CEO’s made fast-but-wrong decisions — not the CEO’s who made slow-but-correct ones. The completed table below summarizes this:

CEO Decision-Making Success Fast Slow
Correct 1stMost successful CEO’s 3rdThird-most successful CEO’s
Incorrect 2ndNext most successful CEO’s 4thLeast successful CEO’s

Why were fast-but-incorrect CEO’s the second most successful group? It turns out the slow-moving-yet-correct CEO’s were simply too slow to take advantage of changing business landscape. They waited too long, letting good opportunities slip by and causing their businesses to under-perform. However, the fast-yet-incorrect CEO’s did something that was really not very difficult–they monitored the results of their decisions and, when they determined they were wrong, they corrected their mistakes.

All of this makes thorough, complete analysis and extreme caution – even in the worst of business climates — look like a pretty bad decision-making model.  Sure, we should base our decisions on facts, research and data, weighing the options along with our trusted advisers. But, we shouldn’t wait until the last piece of information finally makes its way to our desk, assuming that having a complete picture is the only way to certain success.  Because if we do, we’ll probably be too late.

(If you’ve read my previous articles, you’ll notice that I’m pretty thorough about citing material appropriately. The article to which I refer needs an appropriate reference, but while I’ve looked and looked, I simply can’t find the original article, published in either Fast Company or Inc Magazine between 1996 and 1998.  Certainly, the publisher and the researchers deserve the credit, so if you know of this article, send me an e-mail and I’ll give credit where it’s due).

Donald Patti is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in project management, process improvement, and small business strategy. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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