• “The American people don’t expect government to solve every problem. They don’t expect those of us in this chamber to agree on every issue. But they do expect us to put the nation’s interests before party. They do expect us to forge reasonable compromise where we can, for they know that America moves forward only when we do so together and that the responsibility of improving this union remains the task of us all. Our work must begin by making some basic decisions about our budget, decisions that will have a huge impact on the strength of our recovery.” – President Obama, State of the Union Address

The news networks typically dub the Presidential campaigns like ‘Decision 2012’. But, really, the decision-making is now just beginning.

Making good decisions is the single most important thing an executive does. What defines a good decision is one that entails trade-offs of risk. If there’s no trade-off, then there’s no decision…just calculation. It’s just an addition-subtraction problem of cost-benefit.

  • “Decisions. You don’t run a punch press or haul iron ore. Your job is to make decisions. The thing is, the farmer who grows corn has no illusions about what his job is. He doesn’t avoid planting corn or dissemble or procrastinate about harvesting corn. And he certainly doesn’t try to get his neighbor to grow his corn for him. Make more decisions. That’s the only way to get better at it.” – Seth Godin postWhat do you make?”

You can come up with all of your definitions and characteristics of Leadership (communicating vision, developing people, etc), but I will assert that none of them measure up to ‘Decision Making’ in terms of criticality with a head-to-head test.

For example, a company with good decision making but bad communication of vision will do better than a company with good communication of vision but bad decision making. A good decision can ameliorate a lot of other bad management, and a bad decision can undermine lots of great management.

The President’s State of the Union address was really a catalogue of the decisions that face the United States. Corporate income versus worker income. Gun rights versus gun regulation. Deficit reduction versus economic investments (“balanced approach to deficit reduction, with spending cuts and revenue”). His call to action wasn’t necessarily to go one way or another, but especially on gun control, to at least make a decision (rather than let inertia and special interests block decision making).

Management guru Michael Porter underscored the inherent difficulty of this balancing in a Harvard Business Review interview ‘The Most Common Strategy Mistakes’ (thanks Chris)

  • “[H]uman nature makes it really hard to make tradeoffs, or to stick with them. The need for trade-offs is a huge barrier. Most managers hate to make trade-offs; they hate to accept limits. They’d almost always rather try to serve more customers, offer more features. They can’t resist believing that this will lead to more growth and more profit….I believe that many companies undermine their own strategies. Nobody does it to them. They do it themselves. Their strategies fail from within.”