Posts tagged: Decision Making

Article originally published in the Philadelphia Business Journal on February 19, 2019

For those of us who have a lifetime of business and leadership experiences, it is an honor to be invited to share those experiences with the future generation of leaders. At the invitation of Dr. Barrie Litzky, associate professor at the Charles D. Close School of Entrepreneurship of Drexel University, I recently spoke to two of her undergraduate entrepreneurship classes, titled Ready, Set, Fail.

Quoting from the Close School course catalogue description of Ready, Set, Fail: “There are many students who say they want to be an entrepreneur, but they are often not ready for the risk that comes with starting and growing a business. Taking risks requires a deep appreciation of failure.” This course is about how to deal with and recover from failure – something we all need to learn. Taking risks with occasional failure is a natural part of life.

Every entrepreneur needs to assess their propensity for taking risks and recovering from failure. If they are taught how to deal with risk by de-risking their decisions, they will have a higher propensity for taking risks.

So, how does one de-risk a decision? The following principles are valid whether one is an entrepreneur, works for a start-up or works for an established company.

How well do you know the market?

Does the market need the product or service you’re developing? If the product or service already exists in the marketplace, does the differentiation between what you are developing and what currently exists in the market provide sufficient incentive to get customers to switch? If the product or service is new and future customers or clients don’t yet know they need what you are developing, how will you convince them that they need it?

Have you performed market research on your new product? Conducted customer focus groups? Sold prototypes and gauged customer acceptance? You should always be asking: “Why will customers buy my product or service?”

Imagine what could go wrong, and how you would mitigate it

Andy Grove, the former chairman and CEO of chip maker Intel, once said, “Only the paranoid survive.” Every business leader thinks about what could go wrong and what the proper reaction might be. In the case of entrepreneurs, they may need to pivot quickly and take a different approach if they hit an impediment.

Can the introduction of a new product to the marketplace be phased in, so the capital and resources required are not invested at once but over time, allowing for adjustments in strategy as more is learned about product acceptance?

When will your business become financially viable?

What is your new product or service worth to those who will be purchasing it? Will that price cover your costs plus make a profit? Build a financial model with which you can determine if and when your new business will become profitable. This will serve as a guide as to how much capital you will need to raise and invest in your business. Your investors will require this information.

Understand the cost of failure

Can the new initiative be undertaken in such a way that failure won’t sink the ship? The higher the risk, the higher the importance of understanding the cost of failure and how failure can be mitigated.

Seek the opinion of others

It is a strength, not a weakness, to ask the opinion of others, even if one has complete authority to make a decision on an initiative. Many times, through discussion, an alternative path on how to proceed emerges, better than the one originally contemplated.

Do your employees have the skills to make your business a success?

Hiring staff is among the most important decisions an entrepreneur will make in their fledging business. Are the employees you hire the right people? If it turns out that they are not the right people, part company with them. The longer they stick around and are not replaced with other, more competent people, the more time and capital you will waste. People and capital are the most important assets of any startup or business initiative.

Walk away from a failed initiative sooner rather than later

It is difficult for an entrepreneur to walk away from their idea if it appears it will not be successful. When to walk away is a matter of personal judgment. Should you push ahead trying to make an idea successful, or cut your losses and move on to something new?

Learn from past experience

Every significant initiative should be reviewed after an appropriate period of time so that learnings can be applied to future initiatives. When I became the CEO of PQ Corporation, the board asked that my team and I review all acquisitions during the past two decades to determine what went right, what went wrong and what we would do differently when making future acquisitions. This was an arduous lengthy process, but very valuable. In the five years I was CEO, we made seven acquisitions, all accretive, which helped drive our strategic and financial performance.

Learn and apply the lessons from your past successes and failures. It will lower the risk of your future initiatives.

Albert Einstein once said, “If you have never failed, you have never tried anything new.” Winston Churchill said, “Success is not final, failure is not fatal. It is the courage to continue that counts.” Both quotes describe the traits of all successful people, especially entrepreneurs.

Failure happens. It is not the end of the world. Learn to mitigate risks. Fred DeVito, author of “Barre Fitness,” once wrote, “If it doesn’t challenge you, it doesn’t change you.” Get outside of your comfort zone. You never know where the future will take you.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com. Follow Silverman on LinkedIn here and on Twitter, @StanSilverman.

Article originally published in the Philadelphia Business Journal on December 11, 2018

In the days following the Nov. 27 publication of my article headlined “America’s traditional values are as important as economic interests,” I experienced a teachable moment – when discussing different viewpoints, we need to listen to the other person’s perspective and understand their reasoning for the opinions they hold which might narrow the gap between our views.

I criticized President Donald Trump for discounting the CIA’s conclusion that Crown Prince Mohammed binSalam of Saudi Arabia was responsible for the murder of U.S. resident and Washington Post columnist Jamal Khashoggi, and for not holding bin Salam accountable. Trump said, “Do people really want me to give up hundreds of thousands of jobs?” in reference to the business the Saudis do with the U.S.

I asked, “What about reaffirming America’s commitment to human rights values, a question asked by both Democrat and Republican lawmakers?”

A reader, Dennis Hathaway, of San Antonio, Texas, wrote an email to me and disagreed with what I wrote. Through a number of email exchanges, we closed the gap in our views – a lesson in civility that we can all learn from.

The following are excerpts from our email thread:

Hathaway:

Thanks for the article Stan. I have to disagree with you though. I doubt any other president would have done much different. Remember the 9/11 hijackers all came thru Saudi Arabia and nothing was done then to sanction Saudi. 

Other presidents may have said they were going to do something, but it would have been PR talk. Trump, I believe, is only speaking reality here. May not like it or agree with it, but it is what it is.

I’ve about had it with the “it’s not who we are” statements. It’s a good line that is used by the Democrats and liberals to criticize the conservative side of American politics. We as a country, are who we are. 

Silverman:

Thanks Dennis, for your comments on my article yesterday. 

Yes, you’re right. Saudi Arabia was not sanctioned after 9/11. I assume no sanctions were put in place because there was no evidence that the government of Saudi Arabia was involved in the 9/11 attack, unlike the CIA conclusion that the Saudi government was involved in Khashoggi’s murder.

You write, “I’ve about had it with the ‘it’s not who we are’ statements. It’s a good line that is used by the Democrats and liberals to criticize the conservative side of American politics.”

Dennis, for the record, I am a Republican and have been my entire life. I am not a Democrat or a liberal and never will be. What I am is a patriot, who strongly believes in country before party.

And, it is who we are as a nation. Senate Majority Leader Mitch McConnell (R-Ky.) has taken the same position as I have, as reported in a news article headlined, “McConnell: Saudi actions ‘abhorrent’ and warrant ‘response.’”

Quoting McConnell, “What obviously happened – is basically certified by the CIA – is completely abhorrent to everything the United States holds dear and stands for in the world. Some kind of response to that certainly would be in order and we’re discussing what the appropriate response should be.”

I have many fellow Republican friends and colleagues who do not support Trump and many of his policies. They are insulted that the far right calls them liberals. They are anything but!

Hathaway:

Thanks Stan. I too believe in country before party. Don’t know that I can agree with your statement of not knowing if the Saudi government was involved in 9/11. I just firmly believe we would not have taken action against them because we need them for various military staging areas, and at that time, for oil to carry out our actions against Al-Qaeda.

I will retract my liberal statement and just have it apply to Democrats. Because I truly believe the Democratic Party has shown itself to not have any ideas except to attack Trump.

I don’t like all that Trump does, but one thing you have to give him is that he has pushed the policies he said he would if he got elected. More than we can say for most of our elected leaders. We have had such terrible candidates from both parties lately. Bob Dole, Hillary, McCain and Gore. Is this the best we can do? 

Bill Clinton started the politics of personal destruction. Now it’s pervasive in the political arena from both sides. I’m afraid that has led us to a point where we will see Trump types on both sides, from now on. 

Silverman:

Hi Dennis. Except for our differing views on whether the Saudi government was involved in 9/11 and some of the individuals on your list of “terrible candidates,” I basically agree with the points in your latest email. If the Democrats run an Elizabeth Warren / Bernie Sanders type candidate, they are foolish. The country will fully reject that type of candidate and Trump will win a second term. 

I want to share with you an article that I write each year on the anniversary of 9/11. Glad we are having this exchange of ideas and views. 

Hathaway:

Very well written article, Stan. I was on a flight from Baltimore to Mississippi during that event. One of my best friends was a NYC fire fighter with Rescue 3. He was off duty headed home and turned around to come help his brothers. He was lost when the towers collapsed. 

My wife was across the river from the Pentagon and right across the street from the State Department. She spent much of the day coordinating Navy medical response.

My son was and still is in the Army. He was in the first raid with the Army Rangers into Afghanistan. Thankfully, he has managed to complete 55 months of duty in Iraq and Afghanistan with just a few scars.

I think you are correct, that’s who we really are as Americans. We just can’t seem to hold that reality once things “settle down” again.

Silverman:

You and your family have been touched in so many ways by 9/11, Dennis. I am so sorry for the loss of your courageous friend. A hero in every sense of the word. Glad your son remains safe (with a few scars) during his time in the military. We are all in debt to him for his service.

Hathaway:

I have no problem with discussing differing views, with anyone who can provide a different set of facts, or another way of looking at the problem. You get better solutions to problems that way.

I think our email conversation narrowed the gap in our views because we listened to each other and acknowledged each other’s points even when we did not necessarily agree with them. We also started to dialogue on a personal level.

I shared the above email thread with friend and colleague Ray De Hont, who generally expresses the political views of Hathaway. De Hont wrote the following to me:

“I truly believe what you and Dennis have done is what is missing in our society today. To close the divide in our country, we need to allow a friendly exchange of viewpoints without name calling, severe criticism, or turning people off all together.”

“Love of Country Leads” is the motto of the Union League of Philadelphia, where I am a member. The League was established in 1862 as a patriotic club to support President Abraham Lincoln and the Union during the Civil War. This motto applies to both sides of the political divide in our country.

We are all patriots. We need to talk to each other and not at each other on issues impacting our nation.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com. Follow Silverman on LinkedIn here and on Twitter, @StanSilverman.

Article originally published in the American City Business Journals on October 30, 2018

Do you have a culture within your company that welcomes input from direct reports and encourages discussion about their views?

In a previous article headlined, “The ABCs of decision-making,” I wrote about the benefits of listening to the opinions of others within the organization. This is an update of that article.

Have you ever worked for a leader who wouldn’t listen to your ideas, or who wouldn’t ask for your opinion? I have. I would verbally share an idea with them and before I could finish, they would tell me that it wouldn’t work.

This type of boss saps the energy out of the organization. Employees turn off any desire to work more effectively, don’t go the extra mile for their customers and don’t put any energy into growing the business. This creates an undesirable work environment, and the best and brightest employees won’t stick around for long.

Learning from this experience, as a young leader, I adopted an open culture with my direct reports that encouraged them to share their opinion and input on any issue, and I expected that they in turn would do the same with their direct reports. I used the ABCs of decision making in order to come up with the best solution to an issue, relying on input from those employees with experience and expertise.

In my leadership roles, including CEO, I would normally ask for opinions on an issue before I shared my own proposals. However, on occasion, I might first propose that we go with solution A on a certain issue. Within our culture, an employee may then share their view that solution B might be the better option. The manner in which I communicated my response would convey how welcome their opinion was, and this would affect their desire to share their opinion on this issue and on future issues.

My approach would be to ask why they thought B was a better option than A. We would then discuss the alternatives for an hour, for a day or for however long was appropriate. We would also invite other employees with expertise on the subject and those with good critical judgment to join the discussion. All opinions were considered and valued before making the final decision.

One of three things would result from this process. I might sustain solution A and thank my employee for suggesting solution B and for creating the opportunity for solution A to be rigorously tested against an alternative. Or, if it became apparent that solution B was the better choice, I would choose B, thank my employee for suggesting it, and make sure they got credit for providing the best solution. This employee would feel empowered because their insights were valued, and their solution was chosen. They would also have a sense of ownership in the solution because they proposed it.

More often than not, however, by going through this process, solution C would emerge — a completely different solution or some amalgamation of A and B — which was far better than the alternatives. This outcome occurred only because we had an open culture that encouraged employees to propose alternatives and work collaboratively to determine the best solution. When we followed this process, we always felt confident that we had made the best decision, and indeed, we found that we rarely made a mistake.

Every employee wants their voice to be heard, to feel valued and have ownership in the decision-making process. The leaders who understand this and empower their employees to be active contributors will set themselves apart with better decision making and higher employee retention.

The same decision-making process holds true for decisions that you have complete authority to make but involve a high level of risk. To mitigate the risk, get other opinions. Many leaders feel that for decisions in which they have complete authority to make, it’s a weakness to ask others for their opinions. It’s not a weakness, it’s a strength.

Remember the ABCs of decision making. Your employees will feel engaged in the decision-making process, you will be a more effective leader and your organization will achieve better results.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com. Follow Silverman on LinkedIn and on Twitter, @StanSilverman.