Business success depends on good decisions and effective leadership requires awareness of the many factors that can lead to poor choices. While there is no magic formula for making right decisions, one way to improve them is to surround ourselves with able advisors who are not afraid to point out when we are wrong.

The single factor that most consistently brings about commercial failure is making bad decisions.  It is true that factors beyond the control of a business can have a very major negative and at times fatal impact on it, such as economic, political or competitive conditions, and some companies due to their business model or other flaws will not be successful regardless of what decisions they make, but the hard reality is that it is almost always the choices that a business makes that bring about its commercial downfall. 

The realization that most businesses fail because of bad decisions is an important step toward prudent business management.

Bad decisions can be made for as many reasons as there are decisions, including to name a few trying to hastily make decisions under conditions of organizational or economic stress, a lack of information or wrong information, an inadequate organizational decision-making framework and/or character flows of key decision makers.  These and other factors can further combine to or generate conditions that turn sub-optimal decisions into ones that are ruinous.

Since bad decisions pose such a large threat to business success, a vital objective of any company must be to try to strengthen the quality of its decisions and reduce the likelihood of decision-making mistakes.

For one basis for reflection on how to do this, let’s travel back in time to the year 629 AD and visit the court of Emperor Taizong of the Tang Dynasty, one of China’s most famous emperors.

Human Character and Decision Making

One human dynamic that plays out over the incredibly long and fascinating sweep of Chinese history is the relationship between one’s character and one’s decisions.  The Chinese historically have had a very acute sense of human virtues as well as frailty, and this led the wiser of people involved in government affairs to be very focused on a wide range of factors, including character flaws, personal interests and excessive fears and hopes, that could produce flawed decisions and jeopardize State objectives.

Every leader should carefully study the many factors that produce flawed decisions.

The role of potential human weakness in decision making was of course not lost on diplomatic or war strategists, who realized that conspiring to convert an opponent’s character and other weaknesses into bad decisions could bring about victory much faster that using large amounts of forces against a prudent ruler.

Drawing the attention of people involved in warfare to this fact, in Chapter 8 of the Art of War, Sun Tzu says:

A general faces five risks:

Those who are reckless can be killed;

Those who cling to life can be captured;

Those who are quick to anger can be insulted;

Those who are honest and upright can be disgraced;

Those who overly concerned about the people can be made to worry.

Emperor Taizong and Wei Zheng

To try to reduce the risk of bad decisions, many of China’s emperors surrounded themselves with advisors who provided them with counsel on State matters. One of these was Emperor Taizong, an emperor during the Tang Dynasty, who retained for many years as advisor Wei Zheng.

Emperor Taizong’s relationship with Wei Zheng is noteworthy for two reasons.  First, Wei Zheng had previously served a key rival of the Emperor, the Emperor’s older brother Li Jian Cheng. This recruiting strategy illustrates that, in selecting an advisor, Emperor Taizong was less concerned with his advisors’ political affiliations and more concerned with the quality of their counsel.  

This was a wise perspective to take, because as history has proven over and over again mere political affiliations may not be a good indicator of how useful an advisor will be.  In fact, the less someone is inclined to agree with you, the greater the likelihood that they will diligently work to point out flaws in your reasoning or cite contary facts that you otherwise may not have been aware of.

They second reason why Emperor Taizong’s lengthy retention of Wei Zheng as an advisor is noteworthy is because of Wei Zheng’s constant criticism of the Emperor’s decisions.  According to one commentator, Wei Zheng had openly criticized Emperor Taizong no less than 200 times, an approach that with many other emperors in Chinese history would have led at best to an early retirement from palace life and in quite a few cases rapid funeral arrangements.

Not content to limit himself to criticisms of Emperor Taizong’s political policies, Wei Zheng had a sharp eye for character faults and when he saw that the Emperor was dedicating too much time to hunting to the detriment of State affairs he convinced him to stop.  Wei Zheng also delivered a famous memorial to Emperor Taizong, entitled “Ten Considerations for Emperor Taizong”, which set forth principles of self-restraint for a ruler. There would have been little doubt in Emperor Taizong’s mind that the emperor who needed to keep these principles in mind was none other than Emperor Taizong himself.

Yet in appreciation of the fact that Wei Zheng’s constant criticism saved Emperor Taizong from making mistakes that could have been avoided, when Wei Zheng died, Emperor Taizong said: “Using copper as a mirror allows one to keep his clothes neat.  Using history as a mirror allows one to see what is right and what is wrong.  When Wei Zheng died, I lost a mirror.”

Creating a Modern Corporate Decision-Making Mirror

While throughout history there have been many outstanding political advisors, the relationship between Emperor Taizong and Wei Zheng stands out to provide an interesting historical example for reflection about how to strengthen decision making.

The very first reflection is that strong leader/advisor relationships are necessary not only in the political context but also in business.  The types of decisions that businesses make are often complex, fraught with the possibility of error and require analysis by people with different types of expertise and perspectives.  Many cross-border business failures by great companies could have been avoided with stronger advice from counsel in the targeted markets. 

The second reflection is that, although our ego and at times corporate political considerations push us to concentrate on proving to others that we are right, it is wise to assume that it is very likely when we make a decision that we will be wrong.  Once we come to this realization, we can then change our approach from trying to defend decisions that are likely wrong but rather seeking out ways to increase the chances that we are right. 

This includes eliciting criticism of decisions we plan to take, ideally from different sources. Leaders of course must take the final decision on executive matters, which may or may not be consistent with their original point of view, but it is wise to keep in mind when seeking constructive feedback the admonition that the medicine which tastes the worse usually works the best.

The third reflection is that we always have to be conscious of how our own character affects our decision-making process and attempt to counterbalance weak points.  Acknowledging character flaws is a strength not a weakness. Keeping Sun Tzu’s advice in the military context in mind, if we tend to make decisions too quickly, we should set up mechanisms to ensure that proposed courses of action will be given sufficient reflection; if we tend to procrastinate we can put in place faster decision making guidelines, reduce decision-making bureacracy and surround ourselves with people who challenge us to make decisions faster.

Conclusion

While bad decisions are often the cause of the poor performance or ruin of a company even in the best of times, good decisions can on many occasions turn even extremely adverse conditions into a decisive advantage.  To do so we must not try to ignore decision-making shortfalls, including our own, but rather set up internal and/or external advisory relationships and corporate procedures to counterbalance drawbacks as much as possible and increase the likelihood of making the best decision possible under the circumstances. Being less wrong is often the surest path to being more right.