Is Vikram Pandit a visionary or a scapegoat in the making? Announcing Citigroup’s acquisition of assets from Wachovia, Pandit said that “…great rewards require great risks.”
If Citi survives its balance sheet woes to thrive in a recovering economy, Pandit will be proclaimed as a shrewd risk-taker and brilliant strategist. Probably he will write a book on leadership. But if the $53 billion in new debt and financial instability prove to be stronger, he will be the target of derision and scorn (and probably stockholder lawsuits) for taking unnecessary risk in a time of deep instability. In that case, I guess he will have to write a memoire instead.
How does a leader know whether they are smoking pie-in-the-sky vision weeds or taking a shrewd and calculated risk? In truth, I think that the real call for leadership is not before the decision, but after. Yes, an effective leader will ensure that there is support from the boss and peers (in this case the board as well). But execution is the difference between the hero and the goat. We like to think of leaders as making great decisions. But any decision a leader makes is only proven with time.
That means the best indicator of a good decision is how much rigor went into the execution plan behind the call. There has not been much difference in the research findings concerning big change initiatives over the past twenty years or so. About 70% fail. That means 70% of the time and energy used to create and implement change shows little or no benefit. In a service economy and idea driven environment, it is easy to cut corners and fudge estimates to make a decision look rational because we are emotionally attached to it.
Have a look at the decisions you have to make this week with a rigorous and skeptical eye for the likelihood of successful execution. How would you rank investments you are considering (from a new hire to a new factory to a new IT system) if you took them out of the projected ROI order they normally reside in, and reprioritized them in order of likely successful execution? Remember, a project which only gets 90% of the way to execution usually returns 0% of the benefit.
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