Bold Moves Bring Bright Futures When Firms Embrace Failing Fast

Tough decisions are critical to business success, and they don’t get any easier the longer they are put off.

“The origin of decide, the Latin etymology, means ‘to cut off,’” Placer.ai Chief Financial Officer Dean Neese told PYMNTS as part of the new series Tough Calls. “It means to take opportunity away. You’re going down one path. That’s why it’s scary.”

“When I think about the tough calls I’ve had to make, there are four categories where the stakes are high: emotional tough calls; personal tough calls; capital allocation or big bet tough calls; and human capital calls where you have a tough choice between candidates,” Neese explained.

“Most executives have been confronted with each of those types of tough calls in their careers,” he added.

In the fast-paced world of business, executives and their companies often find themselves facing decisions that can make or break their success. These decisions require a delicate balance of emotional intelligence, strategic thinking and the ability to assess risks.

“Perceptual acuity is probably the most important when it comes to making a challenging decision because it draws on pattern recognition, which is one of those attributes that’s hard to replicate,” he said. “It takes years to garner from lessons learned.”

Leaders must possess certain abilities to navigate tough calls successfully, particularly because indecision can create organizational paralysis.

The Complex Nature of Tough Calls

Organizational leaders are faced on a near-daily basis with making consequential decisions — it is just a part of the job.

“I’ve done quite a few acquisitions over the years, and organizationally, I think there are big hurdles that you often confront, particularly on capital allocation decisions,” Neese said. “One is that people like the status quo; change is an uncomfortable place to be. And there is this idea of FUD — fear, uncertainty and doubt — and that if you do something differently, you just don’t know, and it’s always easier to postpone.”

“The last big hurdle is really around the personal interests,” he added. “Particularly with acquisitions, you’re bringing on another company. And let’s say it’s a large acquisition. Well, they have a sales leader. They have an R&D leader. How is your current sales leader and R&D leader going to feel about that?”

That’s why difficult decisions showcase the importance of handling pivotal situations with empathy and tact, ensuring that affected individuals are given the support they need.

But to successfully socialize tough calls, executives need to “create a call to action,” Neese said, emphasizing the need for leaders to rise above their own biases and make decisions based on what is best for the company.

“With the idea of an acquisition, in that case, you’d have to suggest [a call to action along the lines of], ‘Hey, we have a vision of the future, and we have a time window of opportunity to get there. This acquisition is really critical to achieve that vision,’” he explained. “I’ve met many CEOs over the years that didn’t want to move forward on an acquisition because they couldn’t get everyone around the table to agree to it.”

Big Decisions Come With Big Consequences

Any tough decision automatically comes with the need for careful analysis, thorough due diligence and a clear vision for the future backed by C-suite buy-in.

“You’ve got to address people’s concerns,” Neese said. “Yes, there are politics, but you have to work through where everyone’s coming from. Sometimes in these tough calls, it’s even getting people to agree that we have to make a tough call is a big part of it.”

He explained that when discussions come to a standstill and the need arises for a management judgment call, it can sometimes be helpful to “time box” the decision and say, “Let’s talk this through as much as we can, but at the end of this meeting, let’s agree that we’ll make a call based on all the information we have, the best information we have.”

Neese explained that two decades ago as a management consultant and firm partner he did research targeted toward defining what makes a successful company.

It boiled down to three questions:

Do organizations get decisions right more than other companies?

Do they make more decisions than other companies?

Are they better at executing the decisions they made than other companies?

“What we found is the pace of decisions that really distinguishes the top performers from the bottom,” he said. “Here’s the thing: If you make more decisions, you get better at it, but you also learn to fast fail, meaning, ‘OK, we tried something out. It didn’t work, and we killed it.’”

And, as Neese explained, that is what makes all the difference.