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The hardest skill

The Greatest Business Decisions of All Time: How Apple, Ford, IBM, Zappos, and others made radical choices that changed the course of business, by Verne Hamish and the Editors of Fortune Magazine.

THE ability to make good decisions is arguably the single most important executive skill.

Anything leaders can do to increase their ability to make good decisions will stand them in excellent stead. Decision-making tools are valuable, but they have limited application.

None of the decisions reported in this book could have been made with “tools” - in most cases they were the outcome of wisdom, the hardest skill to learn.

In 1993 Lee Kun-Hee, son of the founder of the South Korean group, Samsung, took over as chairperson. At the time, Samsung’s products were ubiquitous but uninspiring; they were copycat products selling at extremely thin margins.

Then chairperson Lee made a decision that would reshape his organisation and create a blueprint for globalisation. He decided to send some of the brightest young employees overseas. There they were to immerse themselves in the culture, learn the language, and build networks so that someday Samsung would know how to supply those markets.

This was at a time when international travel was virtually unheard of in Samsung.

His executives opposed this, not only on the grounds of costs - which were close to $100 000 per candidate - but because it meant losing your finest talent for 15 months. This was significant for any company, especially one that was not particularly successful.

The selected talent first spent three months in a “boot camp” training for the assignment. This was followed by 12 months abroad alone; no family members were allowed to join them.

Park Kwang Moo was one of the first to go on the programme. He spent a year in the former Soviet Union, “living, eating, and drinking with Russians”, learning how bribes smoothed the way for everything from airplane tickets to gasoline.

In his 80-page report on the sabbatical, his manager reported: “There is nothing in this about business. It is only about their drinking. Their idiosyncrasies. But in 20 years, if this man is representing Samsung in Moscow, he will have friends and he will be able to communicate, and then we will get the payoff.”

Seventeen years later, Samsung was the best-selling brand in Russia.

Since 1990 some 4 700 employees have served year-long sabbaticals in 80 nations across the globe.

Samsung is the best-selling brand in France and Ukraine, and the 17th most valuable brand in the world.
Lee Lee Kun-Hee's decision reshaped his organisation and created their blueprint for globalisation.

Jack Welsh was General Electric’s (GE's) youngest chairperson and CEO. The global company was struggling with many underperforming companies in the group. Welsh made the decision that all GE’s companies would either be number one or two in their field, or on their way there, or be sold or closed. This led to the termination of over 100 000 employees.

This decision created outrage from many quarters.

For decades, GE had operated a training centre near Crotonville, NY. Over time, Crotonville was used as little more than the venue for delivering technical instruction or companywide messages.

“Managers were being housed in barren quarters, four to a suite,” Welch wrote in his memoir. “The bedrooms had the feel of a roadside motel. We needed to make our own people and our customers who came to Crotonville feel that they were working for and dealing with a world-class company.”

He resolved to create a world-class internal business university for GE managers, and spent $50m on it at the same time as he was dismissing 100 000 employees!

James Baughman, a professor from Harvard, was brought in to establish the university. When he gave Welch a preview of the presentation he was going to make on the Crotonville upgrade to the GE board of directors, there was a figure for “payback analysis”.

Welsh crossed the figure out and replaced it with the word “INFINITE” to underscore his belief in the limitless ROI for Crotonville.

All attendance at Crotonville was now by invitation only. The executive development course was so exclusive that nobody could attend without the approval of the head of human resources, the vice-chairmen and Welch.

The lecturers at Crotonville are now predominantly GE insiders, who themselves were educated in GE’s methods, values and strategy at Crotonville. They were taught - as they now teach others - openness, directness, responsiveness, and the GE way of doing business.

Today Crotonville is rated the finest corporate university in the world, a model for others (including that of Apple) and the engine of GE’s success. This was a brilliant business decision; it was also a tough decision.

Many of the great decisions in business history were not taken once, they were decisions that had to be adhered to for a quarter-century and more. Or, put differently, remade for consistently.

This book records 18 management decisions. Some were counterintuitive, others acts of corporate bravery, others can be attributed to sheer luck - all are interesting.

The wisdom required for decision-making is best learned from studying the decisions of others. The more one is exposed to decision-making, the better one becomes at it - and the better an executive.

Readability:     Light -+--- Serious
Insights:        High -+--- Low
Practical:        High ---+- Low

 - Fin24

*Ian Mann of Gateways consults internationally on leadership and strategy and is the author of Strategy that Works. Views expressed are his own.

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