The Moral Maze of Decision-Making

Originally Published in Fair Value

As I sit down to write this article in the solitude of my study, there are people gathering in churches across the United States, encouraged by their preachers to come together for worship. In a secular equivalent, the politically faithful are being urged to attend party rallies over the coming weeks. And all of this in the midst of a Coronavirus pandemic where the clear scientific advice is that public assemblies will lead to the seeding of infection and a significantly greater loss of life.

It’s not my purpose to criticize the actions of those who choose to attend their churches or gatherings. These people are not foolish, nor can we assume they are indifferent to the suffering of others. My tendency to put caution over civil liberties is a personal view, and the public mood is seldom characterized by universal agreement, even if a sober consideration of the facts were possible. When the issues have become politicized, as is certainly true in this case, it’s inevitable that we’ll see passion on either side.

Ethical Trade-Offs Happen

But despite these caveats, I’m still left pondering and troubled by the stark conflict between the near-universal advice of independent experts on the one hand and the actions of those influencers who have an interest in a different outcome, on the other. Perhaps my discomfort is rooted in the notion that this friction is not unique to politics or pandemics. In some form or other, ethical trade-offs are inherent to most businesses of some scale, and the value judgments we make in resolving them are a signature of our leadership.

Tobacco Industry as a Negative example

The behavior of the tobacco industry is a case study of the moral pressures within corporations. Over many decades, the leading firms marketed their products as safe and socially desirable despite clear evidence that smoking was both highly addictive and a direct contributor to premature deaths. A culture of denial fostered resistance to health warnings, restrictions on advertising, or any other measures that might discourage sales. In what has become an archetypal example of ethics vs. economics, the historic practices of the tobacco industry have been rightly condemned.

Packaging with an Eye for the Environment

While this is one of the clearest of cases, there are countless others where the ethical considerations are less obvious and prominent in the public consciousness. In the sphere of logistics, for example, how do we best balance obligations to shareholders with a responsibility for the environment? Should vehicle manufacturers have a duty to lead on low emissions, or is it reasonable for them to wait for legislation that creates a level playing field? And what of biodegradable packaging, fair-trade sourcing, or raising wages above a strictly competitive threshold? When first movers bear the burden of risk, is it ethical to hold back from the morally principled but commercially disadvantageous course?

Long-term View Doesn’t Always Add Clarity

There are some who would seek to deny the existence of the conflict, arguing that an appraisal of long-term costs and benefits will show the right path forward, leading to the appropriate balance in the medium- or long term. Perhaps so, but it’s significant that few of those taking this stance are at the sharp end of business. It’s easy to promote an ethical utopia when all is academic and removed. You’re the third-placed player in a market, pressured on all sides by competition and expectations; try convincing your employees that you should be at the bleeding edge of ethical change.

Doing the Right Thing

Even a lesser goal of playing our part or doing the right thing assumes that the moral course is relatively clear and divisible. In practice, we live in an interconnected world, where our actions-no matter how well meaning-can have a butterfly effect that is beyond prediction. We should be skeptical of supposed solutions that take insufficient account of their own uncertainty. For all of the urgency of those passionate about change (the activist environmental movement is a good example here), history has shown that the messy process of evolution is usually a surer and safer route to success than five-year plans or Arcadian visions of great leap forward.

Competing Virtues and the Moral Minefield

And what about the multiple instances in which we are faced with a choice between competing virtues? My opening example is ultimately a tension between the civil liberties we have come to expect and a desire to protect the health of the wider population. Article 11 of the Human Rights Act of 1998 seeks to guarantee freedom of assembly and association but caveats this with proportionate restrictions that protect the health and freedoms of other people. The critical word in that clause is ‘proportionate,’ but unfortunately there is no strict definition we can turn to. 

So how, as organizational leaders, do we navigate this moral minefield?

5 Principled Pragmatic Maxims to Guide Descion Making

I’d propose that for most of us, the way through is not to become philosophers but to pursue a course of what I call principled pragmatism. As that label suggests, we should focus more on the optimum than the perfect. It’s close to what Aristotle would call the Golden Mean path between deficiency and excess, underpinned by good intentions and care for others.

And more tangibly, I’d offer five maxims that we could all adopt regardless of circumstance. 

Be agnostic

Be agnostic. When considering the thorniest of issues, I find it helpful to ask, ‘what course would I choose if I didn’t yet know how it impacted me?’ Would I, for example, introduce universal healthcare care if my immediate or future requirement for healthcare was not revealed until after I’d made the choice? How would I structure the executive bonus if I didn’t know what position I had in the firm or if I were an employee or a customer? When ignorant of our personal best interest, the most rational course is to choose the fairest for all.

Focus on direction, not destination

Focus on direction, not destination. Most progress is a journey, not an event. Indeed, my belief that markets and their morals evolve means there’s never an end point we can reach. It’s therefore vital that we consider the course and the speed at which we’re traveling rather than being obsessed with our arrival. Don’t be dogmatic. Many ethical judgments and the evidence supporting them, are not as clear-cut as leaders would wish. As with parenting, playing soccer, or, for that matter, mastering an instrument—all of us make mistakes. The important thing is that we correct them, responding to feedback and facts rather than digging in our heels.

Beware of moral myopia

Beware of moral myopia. Publicly prominent concerns can often feel compelling, and at times, it’s vital that we react to these with speed and clarity. The recent Black Lives Matter campaign is a good example of how long-overdue progress can follow from a sea change in sentiment. But we should be wary of being too short-sighted. It’s better to set a course and truly steer it than to react to every twist and turn of public opinion. 

Communicate the trade-offs

Communicate the trade-offs. If you need to make compromises, then be clear on what they are and why you’re making them. Explain the mitigation for any negative consequences and how these might lessen over time. This helps everyone understand that doing the right thing is seldom a binary choice.

Have Confidence In Leadership

Returning to those gatherings that are happening as I write, I must be one of the few people who has spent time throughout this crisis in the US, the UK, and mainland Europe. The divergences I’ve experienced in the public’s attitude and mood are striking. In part they reflect cultural characteristics, but I’d suggest that trust in our politicians and advisors is the critical difference. And it seems to me that to win that confidence, leaders of all types must first and foremost show that while the world and the choices we face are invariably imperfect, at least our intentions are good.

Why is it that companies make bad decisions?

why do companies make bad decisions
Originally Published in Fair Value

In posing that question, I’m not referring to those infamous bad calls like Decca Record’s rejection of The Beatles or Blockbuster’s rebuff of a joint venture with Netflix. These are human mistakes— and with the benefit of hindsight, we can, all of us, believe we’d have made a smarter choice.

Rather, what interests me is why, given all the checks and balances, so many companies appear to make carefully thought-through decisions that actively harm the interests of their stakeholders.

A Harvard Business Report estimated that up to 90 percent of all mergers and acquisitions fail; similar claims can be made for internal transformation projects, especially in the IT and digital sphere. Whatever way you look at the problem, it seems that despite access to the smartest minds, sophisticated forecasting tools, and due diligence warnings, business leaders continue to get it wrong.

Observation has taught me there’s no single explanation. But after twenty years of corporate decision-making and with the scars to prove it. I’ve at least become attentive to some of the warning signs.

What follows are, therefore, my insights from experience. Interpret them as you wish, for every situation will be different, which leads nicely to my first observation, which gets straight to the root of the problem.


The unfortunate reality is that many strategic decisions are not as binary as whether or not to award a recording contract. Rather, they are multifaceted, involving forecasts of markets, competitors, savings, and synergies. And what’s more, many of the situations are particular to circumstance, so references are seldom available or even helpful if they were.

In these sorts of complex situations, we all and organizations are no different; they resort to simplified solutions that allow for a quicker way through the maze. Academics call these heuristics; we know them as rules of thumb, best estimates, benchmarking, and the like.

The trouble with heuristics is that although they are, to some extent, inevitable, we risk addressing a simpler problem than the one we face worse; our biases and preferences creep into the proposed solution to issues that have been framed for our convenience rather than the reality of the situation.

One antidote so far as any is effective, is to be extremely careful when simplifying or estimating significant variables. Any benchmarks we choose, and assumptions we make must also be modeled over a wide range of outcomes. The greatest danger of heuristics is actually a regression to the mean, where risks and opportunities are smoothed into a safe bet, which in the event, turns out to be anything but.


Linked to our tendency to simplify is a pressure to act fueled by a deeply ingrained corporate mindset that regards not doing so as a missed opportunity or cultural failing. Organizations increasingly demand that their leaders move at pace, and while this has its benefits, it can also lead to premature decisions that are ahead of the curve. 

In transformational projects, the term bleeding edge refers to the impact of decisions-typically those involving the early adoption of technology-which lead to unexpected costs and consequences that in turn, harm rather than enhance competitiveness. The underlying assumption is that the supposed “first-mover advantage” inevitably comes with significantly greater risks. In almost any sizable market, the lesson of case study after case study is that a little more patience would often have led to a better outcome.

To some extent, this is as much an institutional as an individual problem. I often sense that companies weigh the regret risk of missed opportunities more heavily than they do the years of successful delivery. Investors—like sports fans-are both impatient for success and quick to point out the triumphs of others. What they are less good at doing is recognizing the potential for pitfalls and giving due regard to the judgment of those who avoid them.

There is no cure-all solution to impulsiveness, but it is good practice to ensure decisions can be made over sensible timeframes, to resist the pressure to lead on every front, and to establish agreed expectations for investment and return over time–and then stick to them!

Reward Versus Risk

At the heart of the type of decisions we’re discussing is the assessment of risk versus reward. Of course, no opportunity of any consequence is a certainty- investors, colleagues, and customers all understand that. It’s also fair to say that most successful executives need to be less risk-averse than, say, librarians. But while that’s a good thing, my experience is that risk and reward assessments are often made in a manner that gives undue weight to one over the other. Think for a moment of all those inspirational quotes you’ve seen at management conferences:

 “Whatever you dream, begin it for boldness has power and magic!” – Goethe. 

“Security is mostly a superstition…” – Hellen Keller)

“Do not fear mistakes; there are none!” – Miles Davis 

Extracts like these can be fine as a means to inspire a sales team or encourage creativity, but their underlying message can in my experience, often contribute to a mindset that lionizes risk-taking. I’m not suggesting that the potted wisdom of Miles Davis is taken too literally by senior executives. But when it comes to major strategic decisions, the notion that boldness equates to virtue remains a powerful force and a significant hindrance to a full and objective assessment of downside consequences.

The Dream of Reason

We should also recognize that objectivity is more of an attitude than a destination we ever arrive at. The belief that we can accurately predict the future through analysis and situational modeling alone has been the downfall of many an economist-or for that matter, a politician.

In practice, we live in a less than rational, often emotional, and certainly disruptive world. Companies and organizations can only partially predict the response of others, or indeed, the impact of change on their people and its consequent effect on many other factors, which is why softer considerations are vital.

Culture and Communications

In analyzing harmful decisions, the diagnosis often points less to the actions we have taken than the way we went about them.

For example, bringing together two organizations might seem straightforward on paper, but as with personal relationships, there’s more to a good match than aligning compatible skills and qualities. Too many mergers are predicated on the assumption that the mores of one party can be imposed on the other-giving scant regard to the importance of culture, communication, and values as drivers of performance.

Successful ventures pay attention to these softer qualities, avoiding the imposition of changes that are diametrically opposed to the past or rewarding individuals with extended remits for which they have little understanding.

The same cultural empathy should apply to our search for synergies, sales growth, or even colleague engagement—we should not assume that crashing together, or worse, imposing one style on the other, will bring success.

Think Borg and McEnroe as exceptional tennis players, but at the height of their careers, not the most compatible doubles pairing.

Imbalance of Stakeholders

This understanding of partnership is never more important than in the balance of stakeholder interests. All commercial organizations have at least three key constituencies: their investors, employees, and customers. And while all of these will want the company to prosper, they each have subtly different needs and emphases.

Successful organizations make decisions in a way that ensures all stakeholders take a fair share of the risks and rewards. This means investors accept there are other calls on cash than paying dividends; employees understand that job security comes from embracing change, and customers have realistic expectations on price and value despite the leverage they may have.

Conversely, if the interests of one stakeholder group begin to dominate, it can be a green light to harmful decision-making. Over the lifecycle of a business, there will, of course, be times of different emphasis on the whole; sustainable decisions are founded on meeting the needs of each constituency while avoiding the ascendancy of any.

And Finally… 

I could go on with a host of other reasons…But I’m conscious there’s a limit to the value of observations from experience, and particularly aware that hindsight makes prophets of us all—or, in my case, the best Monday morning quarterback never to grace the field.

Perhaps the most important thing in seeking to understand why so many companies make harmful choices is to recognize it’s not the corporate entity that makes those decisions at all—it is the people!

And, as human beings, we are all equally blessed and susceptible to the paradoxical mix of talents, frailties, and hubris that drive our exceptional achievements and greatest mistakes.

Navigating the Middle Ground

For the last few weeks, we’ve been bombarded with advice on how to make the best use of this period of lockdown. The internet is awash with potted wisdom on how to be more organized, distracted, or upgraded, while my inbox has personalized suggestions ranging from cleaning up the sock drawer to learning a new language or getting that old guitar down from the attic. Meanwhile, events unfold beyond our control in a way that adds to a sense of disempowerment and ennui.

Business Preparation Strategies 

Much the same is true for businesses. Countless articles offer pointers on planning for a post-Covid future or the best online training tools… In the equivalent of the suggestions to tidy our wardrobes, enterprises are urged to catch up on admin or, at the other extreme, prepare strategies to win market share at the expense of their less diligent competitors. For all that the counsel may be well-meaning, it generally misses the mark.

Businesses Always Have Long To-Do Lists

The reason for this will be obvious to anyone who juggles the daily demands of business or, for that matter, family life. While nobody suggests it’s not a virtue to clear our emails or catch up on personal development, the reality is that most organizations get by perfectly well with a long to-do list. And as for developing radical new strategies, it’s a brave, arguably foolhardy enterprise that places any serious bets on a future that’s beyond its knowing.As human beings, we experience the world and perform at our best when navigating the middle ground. You may like me captivated by those popular science documentaries on astronomy or quantum physics, but for all of us, the extremes of time and space are still impossible to fully comprehend. What’s more, even if we could, the knowledge would make little difference to our everyday lives that we are hurtling through space at a million miles an hour won’t save you from a speeding fine, and if you jump that red light, good luck in arguing that color is only a matter of perception!

Daily Navigating Business Decisions

Something similar is equally true of commerce. The day-to-day reality is that success comes less from having perfectly granular policies or all-embracing strategies than it does from the thousands of judgments that are the warp and weft of our trading relationships. It’s this daily grind and the grit in the oyster that comes with it that we understand best; it’s actually what motivates us, what enables us to feel empowered, and what most allows us to shine.

Practical Reasoning

Our need, then, in exiting this crisis, will overwhelmingly be for pragmatism rather than principle, and certainly not dogma. This doesn’t mean we should abandon all structures or strategic vision, but it does suggest we should focus our minds on the underlying purpose of the choices we will need to make. In this sense, the return to a new normal will require a commercial equivalent of the “practical reasoning” that’s advocated by thinkers such as Peter Singer or the late Mary Midgely. Malcolm Gladwell’s recent podcasts on the pliability of Jesuit thinking and its resolution of issues in the context of the world as we actually live it are instructive guides, too.

Keep Partnerships Strong

In re-establishing our trading partnerships, the call to exercise discretion will be greater than ever; cash flow, refunds, sales targets, or staff bonuses, pragmatic solutions, and reciprocal understanding will be the currency of success. Black Swan events term coined by Nassim Nicholas Taleb for major, unforeseen situations we are unprepared for inevitably leave us with a world that’s changed beyond previous experience. But this pandemic is not an extinction event, and it is only by working through the aftershock-instance by instance, customer by customer-that we will find and shape the opportunities that determine our future.

The reason the current lockdown is so difficult for many of us and for our organizations to bear is that despite all the well-meaning advice, no matter how tidy our socks or how ambitious our vision is, only when this quarantine is lifted can we be truly productive again. The people and the enterprises that succeed will not be those with empty inboxes or even the best-laid plans–they will be those who make the smartest calls in the mucky middle ground of decision-making that is the stuff of business as we know it.

Exploring the Tenets of Servant Leadership Interview

jozef opdeweegh in sitting in a black suit pumping his first

Overview: During a conversation with Jos Opdeweegh, a distinguished CEO based in Miami, the concept of Servant Leadership came to the forefront as a paradigm-shifting approach to organizational management. Opdeweegh provided illuminating insights into the limitations inherent in the conventional top-down leadership model, where decision-making authority is confined to a select cadre of executives, often resulting in the marginalization of talented individuals and their perspectives.

Shortcomings of the Conventional Leadership Paradigm

The deficiencies of the traditional leadership framework were glaringly evident, as it accentuated autocratic leadership tendencies and stifled the culture of creativity and open exchange of ideas within the organizational structure. Opdeweegh emphasized that instead of fostering a conducive environment for nurturing high-potential individuals, the traditional approach frequently perpetuated a culture of mediocrity, bolstered by inflexible performance assessment frameworks that inadvertently alienated exceptional talents.

Deconstructing Inefficient Decision-Making within Traditional Management

The contrast between the customary model and the ethos of Servant Leadership gained heightened clarity when examining decision-making processes. While the former relied on a limited echelon of leaders to shape pivotal determinations, Servant Leadership champions a more dynamic, customer-centric decision-making philosophy. Opdeweegh underscored the significance of entrusting decision-making authority to those in proximity to challenges and opportunities, given their comprehensive understanding of the intricacies and their expertise in the subject matter.

Unveiling the Core Tenets of Servant Leadership

In the course of our dialogue, Opdeweegh unveiled the foundational principles that underpin Servant Leadership: an unwavering commitment to fostering the growth and success of individuals within the organization, with a paramount focus on customers, followed closely by colleagues. This approach nurtures a sense of collective responsibility, wherein each member of the organization is viewed as an ambassador, collectively contributing to the shared objective of achieving success.

Embracing Fallibility and Cultivating Empowerment

One of the salient points of discussion revolved around the importance of acknowledging mistakes and their intrinsic connection to empowerment. Opdeweegh stressed that while making errors is inevitable, they hold value when acknowledged and leveraged as learning opportunities. The Servant Leadership framework advocates for a culture of continuous improvement and accountability, empowering individuals to take ownership of their actions and choices.

Concluding Reflections: Embracing the Philosophy of Servant Leadership

The discourse with Jos Opdeweegh yielded profound insights into the merits of adopting Servant Leadership as an all-encompassing, customer-centric, and adaptable approach to steering organizational trajectories. By challenging the established norms of leadership, enterprises have the potential to cultivate an environment that not only retains exceptional talents but also empowers individuals to flourish and make substantial contributions. Servant Leadership, characterized by its emphasis on collaboration, inclusivity, and the transformative power of learning from mistakes, stands poised to shape a more promising future for businesses and their workforce alike.

Models of Creativity: Analysis or Creativity-Fellows or Foes?

Originally Published in Fair Value

President Ronald Reagan, Speaking after talks with Soviet leader Mikhail Gorbachev at the Reykjavik summit in 1986, infamously said that what was most needed between the superpowers was “Trust… [adding, after a dramatic pause]… but verify!” 

Trust but Verify

The apparent contradiction made headlines around the world, helping to foster an approach that led to the Strategic Arms Reduction Treaty and the removal of around 80 percent of the nuclear warheads in existence.This phrase is actually not Reagan’s at all, but an old Russian proverb that serves to illustrate that a counterintuitive tension is often the most effective way to break down those barriers that impede step-change progress. Its wisdom is now commonplace, aided by the growth of technology that gives confidence to more attitudes: “trust trading,” for example, is a standard practice among progressive retail partners; customs checks are made on random samples; we trust our people but verify their output…

How Trust but Verify Applies to Business

All of this is intended as a prompt to reflect on how we might apply similar thinking to our organizations. What, as business leaders, can we do to foster the relationships and environment that supports the creative progress we need? And how do we balance the need for innovation with the equally necessary reassurance that our actions are founded on more than a leap of faith?Fresh thinking is essential to progress. Without it, we stagnate, our horizons narrow, and our competitors overtake us. At a macro level, the impetus for change is essential for human flourishing-it’s no coincidence that when innovation dries up or is curtailed by dogma, we talk of “Dark Ages” or “closed societies.” History is littered with examples of the damage this causes, just as it also confirms the benefits of freethinking and the open society.We all know this, and yet the reality is that when it comes to our own circumstances, creative leaps can be scary and uncertain, evoking what the historian Robert Hughes brilliantly described as “the shock of the new.” His interest lay in the arts, but the same sequence of “disruption, resistance, and progress” is seen in the scientific and industrial revolutions that preceded our modern era. And today, the pattern continues, most obviously in the digital sphere, which has supercharged the speed and reach-but also the risks-of creative innovation.It is a mistake, however, to think of creativity purely in terms of inspirational genius. As James Dyson, the billionaire UK engineer and inventor, has pointed out-practical progress is seldom made in the manner of Archimedes in his bath or Isaac Newton under the apple tree. Rather, it’s an iterative journey that sharpens our notions and intuition through a process of trial, error, and adjustment. Dyson has filed over 4,000 patent applications, and yet he claims none of his ideas were truly unique. What? Made the difference is his commitment to the hard hours of testing and adjustment that irons out the flaws and solves problems in a piecemeal way.Dyson also argues that innovation flourishes most in an atmosphere of creative tension, where ideas are robustly and competitively challenged, often in partnerships or teams, in pursuit of a common goal. We see this pattern time and again in art and science: Picasso andBraque, Darwin and Wallace, Lennon and McCartney… The relevance for business leaders is that innovation works best when it’s integral to, and not isolated from, the day-to-day realities of the organization. Indeed, research has shown that transformation and development teams work most effectively and come up with the most productive ideas-when subject to the same rigorous critique and analysis as our everyday processes.

Ground Break Creativity Is Rare

Ground-breaking creativity is also a rare event-were it is not; then change would simply overwhelm us. The reality is that most great ideas take the form of an inspirational leap which is then refined through marginal gains that make the bigger difference. As an apt illustration, when Dick Fosbury revolutionized the high jump at the 1968 Mexico Olympics, he won by a mere 2cm, clearing 2.24m for gold-today, after universal adoption of and, critically, refinement to his groundbreaking technique-the world record stands at 2.45m.

Creativity Takes Work

These sorts of gains come not from pondering on the stars but from analyzing what works best, finding ways to improve on the idea, and being open to our failures. The writer Matthew Syed explores this idea in his deeply persuasive and accessible book, Black Box Thinking. Syed cites the aviation industry as the ultimate example of progressively learning from both failure and innovation-its embrace of objective analysis taking air travel from what was once the riskiest to what is currently the safest form of mass transportation.

Analysis Helps Creativity

The analysis is, therefore, the bedfellow, and not the bugaboo, of practical creativity. For by measuring and learning, not only do we sort the wheat from the chaff, we also help the good become great or, more often, just that little bit better. Malcolm Gladwell has a wonderful podcast that explores this process through the evolution of Leonard Cohen’s song, “Hallelujah.” The piece took years to gestate, slowly improving its form and lyrics to become one of the most recognized classics in modern songwriting.

Little Bit Better

The operative phrase in the paragraph above is a “little bit better.” That’s something different from reinvention, and yet ironically, it requires a similar mindset. Though on reflection, maybe it’s not ironic at all for now, I think about it, the most analytic people I’ve worked with are among the best innovators -and almost all creatives I know are deeply analytic in their approach.Which brings me back to my opening example. For Ronald Reagan to make the breakthrough with Russia, he needed a creative leap of the type scientist Edward de Bono described when he wrote about shifting perspectives by throwing off old patterns. But to make it work for the gains to truly stick-he needed something more, something that the great American poet, Henry Wadsworth Longfellow, might have taught him- “The heights by great men reached and kept were not attained by sudden flight, but they, while their companions slept, were toiling upward in the night.”

Relative values – and the Barbenheimer phenomenon.

You’d have to have been in a cultural wilderness this last month not to be aware that the two most talked about films of this summer are almost diametrically opposed in their style and substance. That said, the simultaneous release of Barbie and Oppenheimer is arguably a marketing masterstroke, generating thousands of column inches and an equivalent commentary on social media. Interestingly, the critical consensus is that both movies have their merits, with an appreciation of their differing qualities that are encapsulated by the use of the term ‘Barbenheimer’ to describe seeing them both side by side.

This mutual appreciation of two very different offerings has neatly coincided with my own exploration – indeed, growing fascination – with how we create the best conditions for the growth of happiness and well-being. Or, to be more precise, my awareness that despite the criticality of these goals to the quality of our lives, there are no clear and obvious means to measure and calibrate them other than through internal experience. 

Let me try to explain.

For most of my adult life, and certainly my business career, I’ve held in tension two convictions that have guided my actions and my decisions. Indeed, the strain between them and how we might embrace it is the underlying theme of my book of essays, Fair Value – reflections on good business.

Numbers Don’t Lie

The first assertion is that ‘numbers don’t lie.’ This refers to the need for financial acumen, the ability to correlate and interpret data, and an acknowledgment that we have a duty as leaders to respond to reality as it is rather than how we might wish it to be.  

Values are Critical to Performance

The second is that values are critical to performance.’ Indeed, I’d go further and say that in business terms, values and purpose are today more important than the pursuit of pure profit or return on capital or whatever other fiscal measure we might choose to highlight.  

Does either help with Internal Feelings?

Neither of these convictions, however, helps us to accurately measure those goals which arguably matter most of all, such as happiness and contentment, or their counterparts, sorrow, and anxiety.  Almost by definition, these higher-level concepts are abstractions, resisting the specific quantification that a trained statistician so craves. 
Take, for example, my love of PG Woodhouse, an author whose wit and humor have given me (and millions of others) immense pleasure, without his writing ever being highbrow or having claim to the literary genius of, say, Shakespeare or Steinbeck — both of whom I enjoy too.  Is my pleasure from any one of these authors better or more important than the others, and if so, how do we measure that difference?

We All have Preferences 

All of us will have experienced something similar to the example above, for part of being human is the ability to hold preferences, be they for music, architecture, landscapes, foods, or humor…   Just as we have different desires for less tangible satisfactions such as security, contentment, and personal growth.  We know as well that over time, and in changing circumstances, these wishes will evolve and vary, which explains why one day we might choose to watch Oppenheimer and the next take as much pleasure (albeit in different ways) from Barbie.

My key interest here is less philosophic than it is practical. 

Moral Relativism vs Absolutism

In the 2,500 years since Plato, our best minds haven’t found a watertight alternative to what’s known as the problem of relativism. This perhaps explains why the questions I’ve been wrestling with these last few months don’t neatly fit into one article. But despite our lack of objective measurements, the reality is that most of us don’t truly live our lives in a way that assumes all pleasures to be equal, just as we don’t think there’s no difference in mortality between acts of cruelty and kindness.

Business and Moral Relativism

At its core, what concerns me is the real-world problem of how we best manage our businesses and organizations (as well as our family lives and careers) to align with what we might summarize as our ‘happiness and well-being.’  Or, more specifically, how might better promote the variety of perspectives and preferences that make us who we are and yet are so problematic to rank and measure in any objective way? 

And finally, there is the question that interests me the most.

As businesses and organizations, can we shift our emphasis towards a greater personal fulfillment and yet stay true to the twin convictions of ‘facing reality’ and ‘values inspired performance,’ which remain key to tangible success?  In other words, can we find a Barbenheimer solution that embraces a greater range of aspirations, existing side by side and making contributions that may not be equal, but are collectively beneficial?  
Cracking that conundrum, it seems to me, would be a real breakthrough for the good.

Giving to Ourselves and Others

Giving to Ourselves and to Others

Originally Published in Fair Value

The face looking at me from the newspaper is perhaps six years old. It’s a young boy in a makeshift tent, mud on his cheeks, hands clasped as if in prayer. The caption tells me he’s lost his home and that winter may take his life. I think it’s his eyes that move me most, speaking of a horror that no child should bear. My palms feel sticky as I pick up the phone, text HELP, and make a donation to the Syrian refugee appeal.

Fundraisers Happen Frequently

Fundraisers like these have become part of the fabric of our lives—they are in our magazines, on TV, and even on posters on the subway. So commonplace are these images that we learn to filter them out. In the newspaper I was reading, there were similar appeals for cancer research, wildlife conservation, homelessness, and victims of domestic abuse. At times, it seems there’s no end to the call on our goodwill. And that should not be surprising, for the urge to alleviate suffering is surely part of our humanity. Indeed, to have no sympathy for the pain of others is a mark of a psychopath. And yet we cannot credibly respond to every cry for help. In the United States, there are estimated to be 1.5 million registered nonprofit organizations, and in the UK, around a third of that number, with similar proliferation of social ventures across the developed world.

Nonprofit organizations as the Third Sector

This “third sector,” as it’s sometimes called, has become a significant part of our social infrastructure and, in many ways, it’s as competitive for our attention as the mainstream economy. We choose our causes, and from the natural disorder of what is effectively a market for our hearts, there emerges a growing wealth of charity in the broadest and most generous sense of that term. Or so the theory goes. The notion of charity as the desire to eliminate suffering is sometimes contrasted with a broader vision of philanthropy and the quest to find lasting solutions for the root causes of our problems. We tend to think of philanthropists as a rich few, often historical figures with a social conscience. In liberal democracies, much of their role is now given over to the state, with nonprofits filling the gaps and addressing more immediate and particular needs.

Government vs. Nonprofit: Charity Source

To my mind, the distinction is somewhat academic. All of us are aware that the problems in Syria or Somalia-or even our neighborhood-are the result of forces that ought to be fixed. But we also know that hungry bellies need feeding, and traumatized children will not survive winter in a tent. Those caught in the crosswinds of circumstance are deserving of both our immediate attention and our efforts to make a greater and longer-lasting change. And, mostly, the two approaches go hand in hand. Very few larger charities are focused only on the here and now, and yet, understandably, they will seek to leverage our more visceral responses to raise funds and build awareness-just as they will lobby the rich and famous, be they individuals, governments, or corporations, for larger donations that offer the promise (and reflected aura) of a legacy difference. But for many of us, all of this can seem somewhat removed, which is surely why so many smaller organizations still thrive in the face of what’s become a quasi-corporate competition for our sympathies. A remark often misattributed to Winston Churchill is, “We make a living by what we get, but make a life by what we give.”

Donations and Volunteering are Different 

It nonetheless contains the truth which lies behind our desire not only to donate cash, which-good though it is-can feel like conscience appeasement, but to volunteer and campaign for causes, which-although they may seem peripheral to others-are closest to our hearts. I recall a colleague complaining to me, not unkindly but in frustration, about the fundraisers at his local school. They were so inefficient, he said; hours spent baking cakes and running raffles, when frankly if everyone who cared had simply donated twenty dollars, they’d have raised twice as much in half the time. He was probably right, but of course, he missed the point of the exercise. We get our children involved in community work as much for the lessons it teaches them as the difference they can tangibly make.

Volunteering Helps a Community

Of course, the definition of community is wider now than ever. For some, it remains rooted in their neighborhood, their church, or school. For others, that sense of belonging might come from their workplace, their hobbies, or their ethnicity. This is a good thing, for the diversity of interests leads ultimately to richer lives for us all and, I would argue, a voluntary sector that better reflects our needs and concerns than any interventionist design could hope to do. This is why, wearing my corporate hat for a moment, we should resist calls for overregulation of the nonprofit sector.Instead, we should encourage involvement and giving of different sorts-awarding tax breaks and stipends to those who volunteer, for example—and promoting new models of contribution that draw on our collective efforts as well as our cash. Throughout my career, I’ve had the privilege to work with many gifted individuals and have seen the progress that their flair makes possible. It’s common for the leaders of many different faiths to ask their followers to gift a percentage of their income but consider the impact if all of us offered a percentage of our talents. For some, that might mean baking cakes-and it’s good that they do—but for an academic say, it could be directing a percentage of their research at social issues, or for executives like myself, advising on strategies and governance.

Volunteering Builds Community 

In the US and the UK, nonprofits are typically seen as a substitute for state funding, but there are other approaches that we can learn from. I’ve already mentioned the roles of the churches and faiths, which are prominent in many cultures. Across much of mainland Europe, there is often a more social-corporate model, with close cooperation and even contracting between the state and charities. In Scandinavia and the Netherlands, where high taxes and high-quality services are the norm, the emphasis is on volunteering and participation.

Modern Philanthropy

The pool of our talent is limitless, and it is here, I believe, where the potential for modern philanthropy lies. Lasting social solutions are seldom designed from above; rather, they evolve through an iterative process of progress and refinement underpinned by care for the outcome. This asks more of us than the adverts and appeals that surround us and requires leaders to step forward and encourage others to do the same. But here’s the thing: it pays us back in spades. Short of utopia, there will always be a role for larger organizations, and thank goodness they are there. But to have a wider, more caring society, we need to bridge the gap between ourselves and those in need with something more tangible than simply texting HELP.

Fear and the Price Tag of Trust

Originally Published in Fair Value

As a young boy growing up in Peer, it was natural I’d want to learn to ride a bike. For though Belgium is not awash with heroes, we had all heard of Eddy Merckx, widely regarded as the world’s greatest cyclist.

The problem, at least at first, was that I wasn’t very good. No sooner would I start pedaling than I’d panic and crash to the ground? After yet another painful tumble, my father once exclaimed, “The problem is, you’re so afraid of falling that you forget to push through.”

Fear and Stress are Human

Fear, of course, can be both physical and mental. In acutely stressful situations, we trigger hormones that have their evolutionary root in our ancestral environment. When faced with danger, our bodies tell us to either fight, flee, or freeze. The symptoms include heart palpitations, sweaty palms, and the need to pee! Psychologically, our attention is drawn to the immediate, our focus narrows, and we act according to our instincts rather than any deeper reasoning.

I sometimes wonder if there’s a political equivalent. In the US, as I write, the nation is in the midst of the Trump-Biden presidential campaigns. The anxiety is palpable and, in many ways, more so than any policy differences. Rustbelt America dreads the return of an out-of-touch elite; the graduates of Boston abhor what they read on Twitter; our banks are concerned about a move to the Left; our destitute remain fearful of the Right. It comes to something when even the postal system has been politicized for fear of fraud in what’s regarded as the home of freedom. 

Something similar is happening in the UK. The issue of Brexit has paralyzed British politics for the last five years and arguably longer. Business is disrupted, investment is delayed, and uncertainty and mistrust are endemic. Despite a referendum and a general election, there is no sign of a consensus that might unite the nation in a common endeavor. The schism between those who would fight and those who would flee is as divisive and draining as ever.

Balancing Interests is Fundamental for Business

Imagine if we were to run a business this way-if, there were no requirements to balance the interests of stakeholders but rather to meet only the needs of those who held the most sway. Such a model would tear our companies apart, destroying value for all through the pursuit of a blinkered agenda. If I have learned anything as an organizational leader, it’s that sustainable progress requires a broader and longer-range perspective than the hollow promises of trouble-shooters and partisans. 

This is not to say that decisive action is never required— procrastination can be as deadly as impetuousness. But it is that good business must do more and better than decide by the majority or follow homogenous agendas. That’s why diversity is so important. We thrive, and make better decisions, by considering a variety of perspectives; by ensuring we have not only social, ethnic, and gender balance in our teams but something of the same in our modes of thinking—we need creatives and disruptors just as much as we need hard-nosed operators and cautious finance directors.

The historian Niall Ferguson has spoken of the lack of empathy in contemporary political debate, as if putting ourselves in someone else’s shoes is to concede the unthinkable, to legitimize the other who threatens our sense of safety. Ferguson is an erudite academic, a Stanford fellow who must cringe at the gaucheness or superficiality of any other populist political agenda. And yet, perhaps more than a commentator, he has sought to understand and communicate its appeal, acknowledging that while populist leaders have a loose relationship to facts, they also call out truths that are deeply felt by many. His theme is not that these are noble politicians but that unless we allow ourselves to look beyond their rhetoric and acknowledge the concerns that underlie their appeal, we will not make progress together. We need to listen and try to understand the views and concerns of others than ourselves, even if we are convinced that they are “wrong.”

It’s Important to expect the Best of Our Leaders

To be this generous is difficult. My response to the political decisions I perceive as foolish or unjust ranges from anger to despair –and especially so when there is a disingenuity to those delivering the message. In a sense, it’s a cognitive equivalent of the fight or flight phenomenon. My values tell me there are lines we must not cross, and on these, I am firm. But I also know that politics is not an ethical exercise-that that weighs more heavily than what ought and that the pursuit of power has its own self-rationalizing dynamic. To expect better of our leaders is better held as a hope than an expectation. 

Hope, nonetheless, is a powerful counterforce to the problems of the present. It’s why all leaders trade on vision and why those in business must do likewise-though ideally, with more veracity and sincerity than their political counterparts. Vision-in the sense of laying out a positive future for our companies-is in many ways what modern leadership is most about. To succeed, we must bring others with us, keep our word, and win the trust of more than a slim majority.

The Price Tag of Trust is Fundamental

The cost of fear-or, put differently, the price tag of trust is intangibly vast. In football management, the term “lose the dressing room” means to have lost the confidence of your players. It invariably ends in tears. After the financial crash, our banks spent millions of dollars revisiting their values – a decade later they’re still trying to convince us. The police and other public bodies are under similar pressure- Black Lives Matter is but one example of injustices that are deeply felt by those who’ve lost faith. 

When our fears are most immediate-and most beyond our control-we, seek salvation in simplicity. That’s why in a crash, the demand for gilts and gold will rise-a “Rush to quality” is what it’s known as. We look to authority, too, whether that be through prayers or deference to hierarchies that compensate for our f of impotence. Salvation means, literally, to be saved from ruin-it strikes me the appeal of populist politics is something similar. 

In certain situations, this approach may be appropriate. When faced with a hurricane, most of us know it’s best to follow the advice of the experts. But to resolve more complex problems and overcome discord that is deeply rooted, we must look beyond simplistic panaceas. We must pool our knowledge and ideas and have the courage, as leaders, to give way to the wisdom of others. To overcome fear, we must find what unites us before addressing what divides us.

In his magnificent book, “Sapiens: A brief History of Humankind,” Yuval Noah Harari chronicles the progress of humanity. Eschewing the usual chronology of princes and kings, he examines how, as a species, we have made such remarkable progress-reflecting on what it is about our abilities and psychology that has taken us from a few hundred thousand to eight billion individuals. And at root, his answer lies in our ability to work flexibly together, using language and reasoning to keep faith with ideas that bind us in common causes-be those money, nation-states, laws-and, more recently, in historical terms, companies, and international institutions.

I take strength from his long-term perspective. Not only in the stoic maxim of “this too will pass” but in the knowledge that regressive periods, such as the one in which I believe we’re currently mired, are blips on the curve. There are more millennials in China than the entire population of the United States-no amount of retrenchment will resist that commercial imperative and the opportunities it brings. We are, on the whole, freer today than we have ever been; we are less likely to die from conflict, have longer life expectancy, and have better education. Many of our deepest fears are trivial compared to those our forefathers took in their stride. 

There are exceptions to this optimism-the climate crisis is perhaps the most obvious, and we shouldn’t live on the basis that “all will be well in the Twenty-second Century.” But as I learned as a boy, the surest way to fall from a bike is to focus only on the wheel in front of you. To make collective progress-be that in business, politics, or as people-we must have faith in our future, care for each other, and a trust that extends beyond tomorrow. 

My father was wrong when he said I wasn’t pushing through; the problem was that I wasn’t looking far enough ahead. 

The building of Cathedrals: What it can teach us

There will be precious few children in Europe who have not visited a cathedral by the age of ten. From Notre Dame to Naples, there are over 600 across the continent, tangible reminders of national histories, the indiscriminate power of the church, and the ability of architecture to lift our spirits.

As a young boy, I was awestruck by the efforts that must have gone into constructing these monuments.  At a time when most people couldn’t read, when harvest yields meant life or death when medicine was little more than superstition… here were our forefathers, building these intricate structures with the most basic of tools.  How did they do it? How did they know it would all line up and not fall down? 

Cathedrals began my fascination with mathematics

Medieval masons didn’t use abstract equations, nor did they work to the detailed plans we would expect today. What they did have, though, was a deep understanding of practical geometry.  Using simple tools such as set squares, dividers, and plumb lines, they could calculate the forces involved in complex features like vaulted roofs; column supports, and flying buttresses. Indeed, so powerful were the ratios they discovered that even God was sometimes depicted as a geometer in Christian iconography. 

Decades on from my childhood visits, I remain astonished at the skills of these craftsmen and can’t help but think that their down-to-earth application of mathematics has something to teach us today. It is frankly a shameful disrespect to their legacy that despite centuries of progress, we struggle to embed basic numeracy even in college graduates. Here in the US only one-third of the population rates as having intermediate math skills, and fewer than 10% are classed as numerically proficient. 

Mathematics Matters

And this observation matters. Not so much for the construction of buildings or the development of integrated systems – we don’t need everyone to have those skills. But rather, for a shared understanding of issues that affect us all: for sound finances and planning, for decisions that determine the future of enterprises; for policies that lay the foundations of our public services and healthcare; for the fight against pseudo-science and the deplorable army of social media charlatans; for the understanding of basic concepts of statistics.

Data can be Misrepresented

Today, there are whole industries that thrive on a deliberately misleading presentation of data, promoting all manner of quackery, from transformative beauty products to miracle diets and sure-fire financial investments. They are aided by negligent or insufficiently critical media more interested in clickbait headlines than robust analysis. The standard of financial journalism, for example, is almost criminally poor. But all of this pales into insignificance compared to the politicians who would whip up hate and mindless populism on the back of spurious numbers presented as facts.

Regrettably, the challenge of improving numeracy is not confined to the socially disadvantaged. Over my career, I’ve worked with many brilliant and inspiring people. But I’ve also been in Board rooms with board members and colleagues who lacked the basic understanding of concepts that are necessary to interpret, correlate and extrapolate data. 
Granted, my academic training was in statistics and operations research, so no doubt I may be more alert and attentive to these shortcomings. And I should also be clear that good business is about more than mere numbers. Nonetheless, surely, we can, and we, in fact, must do a lot better.

Data and Mathematics are Fundamental to Understanding Problems

During the recent pandemic, we all became armchair epidemiologists, but how many of us truly understood what the data was actually telling us? I am not sure I did in every regard. Was it any surprise that manipulators and charlatans then exploited the gaps to influence opinions? Much the same is true of the climate change debate, of anti-vaccination crusaders, of immigration, taxation, and welfare, of government spending, and we can go on and on. It is an irony that as we move rapidly to a world that’s likely to be shaped by Artificial Intelligence, we need more than ever to have a greater understanding of the underlying basics. It is these that help to give us the analytical (and indeed often moral) compass we need when confronted with otherwise overwhelming information. 

On my recent visit to the UK, Prime Minister Rishi Sunak launched a campaign to improve mathematics teaching. Then followed an article in the London Times by one of its leading columnists who bravely admitted to having such poor numeracy skills that she struggled to calculate her change when shopping.  Her case is not atypical, nor is her ability to improve (which she did) through better instruction and practical application. I hope the UK campaign succeeds and that, more broadly, governments across the democratic nations are able to address the regression of numerical literacy that’s ultimately of our own making and a big part of the reason for the populist demagoguery and the resulting democratic deficit. 
Returning to the cathedrals I began with, it’s often said that those who built them were laboring for future generations. I wonder, though, what those master craftsmen would make of our world today.  I’m sure they’d be as in awe of us as we are of them, recognizing that so much has changed for the better. But I’m certain too that they would be astonished by our casual loss of what was once a bedrock of everyday knowledge. And that if they set their dividers and squares to many of our analytical foundations, they would find them in need of some urgent underpinning. 

Blending Talent for the Future

Originally Published in Fair Value

Last Autumn, I gave an interview and later wrote about the importance of developing talent in organizations. My claim was that by creating opportunities for people to grow, we reap the reward of their unique and valuable contributions to our overall goal. That much, I said, is mainstream progressive thinking-so, much so that my substantive point was that sticking to the path isn’t always as easy as it seems. Certainly, I’d not expected the core view to be challenged.

Investing in Internal Talent Isn’t Enough

However, some weeks ago, a former colleague put it to me that investing in talent wasn’t enough; what’s more, she pointed out there were numerous examples where I’d personally hired senior leaders in a way that had potentially leapfrogged others in the organization. Surely, she suggested, there were times when building from within was too slow or too haphazard for the needs of a particular situation. And, of course, like all fair challenges, she was right—at least in part.

A commitment to growing and giving space to talent remains fundamental to the health of most companies. It’s especially appropriate in working towards long-term goals when the workforce is relatively stable and, importantly, when there’s sufficient scale and opportunity to allow for regular career progression. Absent some or all of these conditions and the strategy is clearly less productive. But even in the most vibrant and forward-thinking of organizations, there will still be occasions when an injection from outside can be both necessary and beneficial.

Bring In Outside Talent Is Needed

The impetus from fresh perspectives, particularly during periods of change, should not be underestimated. Nor too should the objectivity that external recruits can bring, helping to counterbalance the established cultures and processes which constrain all of our abilities to see things differently. And sometimes, particularly in markets that are changing rapidly, there’s a critical need for skills and insights that simply can’t be developed in-house. Recruitment for these purposes comes at a cost, but if done wisely I believe there’s no inherent conflict with a wider commitment to internal talent and succession plan.

Similarly, there are times when organizations require a short-term injection of skills that would be uneconomic or suboptimal to develop internally. Technology projects, for example, often need experts in coding and system architecture, just as transformation programs will benefit from change management specialists. Even those companies with a depth of internal skills to draw on are likely to have specialist partners to help with areas such as branding, legal matters, or senior recruitment.

Blending Internal and External Talent is Key

This blended approach to internal and external talent is the reality, if not the stated strategy, of most sizable companies. It’s sometimes referred to as the “build-buy-borrow” approach, and the skill is to get the balance right over time while meeting the needs of each situation. Too much emphasis on external recruitment, for example, will lead to demotivation and insufficient embedded knowledge; similarly, outsourcing works best when delivered through trusted partners who understand not only the immediate goals but also the culture and values of the organization, and often its history too.

Temporary, or Interim, Appointments Aren’t Usually Helpful

As an aside, one of the differences I’ve observed over recent years is the extent to which temporary appointments are significantly more common in the UK than in the US. Indeed, in the UK, it’s now not unusual to come across interim specialists whose career is founded on a mix of troubleshooting, project management, and “minding the shop” before the arrival of a permanent appointment. At their best, these specialists can be skilled at driving through the quick and sometimes difficult decisions that a crisis or void demands-but soon as we turn to look at the longer term, the attractions of interim appointments strike me as limited. As a former colleague once put it to me: interims are a very sharp tool to be used for precision and with appropriate care.

Returning to the original theme, while I’ve counter-argued that a blended approach to recruitment is compatible with a commitment to talent, there’s much truth in the suggestion that investment alone is not enough. Even a casual interest in the history of sports will show that the building of great teams is never just about money. Similarly, pouring cash into training and development programs without the appropriate culture and opportunity to support the aspirations this fosters will lead only to roadblocks and frustration; at worst, you’ll end up training colleagues on behalf of your competitors, which is where they’re likely to head.

Two weeks ago, the UK’s Sunday Times published the latest results of its annual “Best Companies to Work For” survey. The poll is a long-established benchmark of employee engagement as measured by colleague opinions to score highly; it’s not enough to have good policies on paper; they must truly resonate with employees across a range of workplace measures. As the “Best Companies” website neatly summarizes, at these leading companies, “… employees encounter inspirational leaders, charitable and environmental initiatives built into work life, a focus on staff wellbeing, fair financial rewards, skills- boosting training and career progression, excellent managers, and teammates who inspire both admiration and fun to lay boys That’s quite a list-and in scanning the results, it struck me that the majority of the businesses which ranked highly were necessarily not simply the feel they have sustained by necessarily the household names we might expect. This suggests it’s not simply the aura of a brand or even scale which makes colleagues feel they have the opportunity; rather, their satisfaction is primarily sustained by an ambition to succeed together, underpinned by values that respect them as individuals.

In-House Skills Isn’t Everything

So, what of the concerns raised by my former colleague? It’s certainly true that there have been occasions when I’ve hired external talent, and in most (though not all) cases, I’d do so again. And I agree that a sole focus on in-house skills, no matter how well-resourced, is unlikely to be sufficient. Indeed, given the uncertainties of commerce and the pace at which change occurs, I doubt any of the leading companies in the Sunday Times survey follow a single-track strategy. But for all that, a blended approach is a more accurate description of what most businesses will follow; without an underlying commitment to progress through people, their options are likely to be more limited and less sustainable.

In many ways, I was pleased to receive the challenge. I enjoyed the discussion, and in truth, our positions were inches apart. Importantly, it was offered in a constructive spirit as an opportunity to explore and learn together. And I’d argue that’s exactly the approach we most need to nurture: a desire to find the best way forward, founded on a commitment to each and all of our abilities, offering scope for personal growth while welcoming newcomers and the skills and perspectives they bring.