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July 1, 2009

LOOKING FOR COMFORT

Think Again: Why Good Leaders Make Bad Decisions and How to Keep It From Happening to You 

By Sydney Finkelstein,
Jo Whitehead
and Andrew Campbell,
Hayard Business Press, 2008

When I reviewed several books in the neuroscience field for the March/April issue of Forward, I was trying to figure out how we could have made the bone-headed economic and financial decisions that got us into a recession. What I found gave me comfort that some of the bone-headed decisions we make are not within our control, but I didn’t find a lot of comfort on how not to keep making them. Then along comes Think Again, which takes some of what neuroscientists are learning into corporate and political spheres, so, again, I went looking for comfort.

It’s not a bad read, but it does follow the formula that most business journalism follows: Tell them what you’re going to tell them, tell them and then tell them what you told them. By page 10, you’ve been told what you’re going to be told. There are four “red flag” conditions that “lead us to believe that our point of view is sound when it is not.” They are: misleading experiences, misleading prejudgments, inappropriate self-interest and inappropriate attachments. Each chapter after that takes one of these, starts with an example of how it led to disastrous results, then dissects what went wrong. Misleading experiences: Sir Clive Thompson and the overweening acquisition strategy that brought down business-services company Rentokil Initial. Inappropriate attachments: Paul Wolfowitz and his romance with the senior communications officer at the World Bank—you get the idea.

It’s all interesting if somewhat clinical, and it made me long to have Barbara Tuchman apply this thinking to her classic history, The March of Folly. If you’re not familiar with the 1984 book from the Pulitzer Prizewinning historian, I recommend it more highly than Think Again. Tuchman analyzes four of the most disastrous decisions in history, decisions that ran completely counter to the decision-makers’ best interests, in an effort to unlock that bone-headed dilemma. The Trojan Horse, the Protestant Secession, the American Revolution and the Vietnam War are all examined with ample context, but no dryness, and a writerly grasp of one of the fundamental findings of the three scholars who wrote Think Again. Apparently it took considerable research on their parts to figure out what Tuchman knew instinctively: We make bad decisions because we are fallible beings who base even the largest, most crucial and best-informed decisions at least partly on emotion.

Finally let me say that I feel sorry for Homeland Security Operations Center Director Matthew Broderick. First, he makes the decision not to inform President Bush and Homeland Security Secretary Michael Chertoff about the impending disaster of Hurricane Katrina. Then he has to testify before Congress and take the blame for that. And now he’s the lead in a book about disastrous decisions. Suffice it to say that the night of Aug. 27, 2005, when Broderick went home having decided that things weren’t going to be that bad is probably the last night the man got a decent night’s sleep.

There may not be that much riding on your next big decisions, but Think Again might be worth skimming to ensure that you do not join the bone-headed ranks.

 

By Jacob S. Hacker,
Oxford University Press, 2006
 

The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream

Why did average Americans feel so insecure during the recent economic boom years? How could they have wanted more when we were wallowing in the longest sustained period of economic growth in our history? Columnist Robert Samuelson called them “whiney.” Others blamed negativity in the media and the then-growing fears about the Iraq War. When The Wall Street Journal was running page-one stories headlined “The Miracle Continues,” many Americans weren’t buying it.

The reason? Writes Jacob S. Hacker, “Americans don’t think the economy is all that good because, as far as they’re concerned, it’s not.” The social contract that guaranteed lifetime employment with a single employer followed by a peaceful retirement with a fully funded pension began to fray 20 or so years ago. Over the course of the last two decades, corporations have shifted risk onto workers—risky jobs, risky retirements, risky health care—to the point that the contract has come completely apart. We are each on our own now and government had not—when this book was written—stepped in to help.

Hacker, a political science professor at Yale, updated the book last year, and although it is a deeply Democratic-leaning book, he makes it clear that he is not asking corporations to provide the all-enveloping security net of old. Rather, risk should be shared because, as is always the case, it is the most vulnerable who suffer. IRAs, 401(k)s and health savings accounts are not bad ideas, but they throw a lot of people who have no knowledge of the markets into an environment where they must place bets on their futures. With no guidance, everyone must wade through prospectuses that will determine whether they can retire at a reasonable age and with a reasonable income.

 

By Noreena Hertz,
HarperBusiness, 2001
 

The Silent Takeover: Global Capitalism and the Death of Democracy

This book first appeared in 2001 shortly after the protests at the G- 8 Summit in Genoa, Italy. This was after similar protests, some of which escalated into riots, in Seattle, Washington; Melbourne, Australia; and London, England. The forces of antiglobalization sent e-mails inviting people to the demonstrations, published how-to manuals on dealing with tear gas and held seminars on civil disobedience tactics. Dr. Hertz updated the book in 2003 and continues to be seen as the leading voice of antiglobalization, a seemingly odd calling for the associate director of the Centre for International Business at the University of Cambridge.

It is not so much that Hertz is very selective with her examples and statistics (using ones that support her argument and omitting ones that don’t) nor that she wants to have it both ways (corporations should not play roles that should be played by governments, except when they should), but that the book is outdated. It was written amidst great political apathy, before the Iraq War, before the explosion of the corporate social-responsibility movement. The first few chapters serve as an interesting historical lesson on globalization, but the book as a whole has been overtaken by events.

If you want to read better, more current thoughts from Hertz, who is obviously a very smart, very passionate woman, read her journalism. A recent piece in Der Spiegel called “Is Protectionism Really All That Bad?” makes the much more urgent point “that there is no economic or financial principle that we should not be challenging, interrogating, questioning.”