Image by Getty Images via @daylife
At risk of being lost in the collective sigh of relief that is accompanying Washington's apparent settlement of the debt-ceiling crisis, there are a number of significant decision-making lessons crying-out to be heard by leaders from all walks of life. Most important of these is that what we have just witnessed is a situation that none of us ever want to find ourselves in. While we might not be facing responsibilities as profound as running the world's largest economy, wagering such big stakes in the face of almost complete uncertainty, without reliable fact-based guidance, and without constructive conversation, and doing it all at the last minute, is a bad way to make decisions; no matter what type of decision you face. And, yet, that is exactly what we we have just lived through. In retrospect, it's incredible that so many were willing to take such a big chance on the single roll of the dice! Small bets, in the face of uncertainty, are a much better way to test the limits of what we don't know. [Peter Sim's new book Little Bets is a much-welcome exploration of this argument.] Last-minute big bets are almost universally the wrong way to make any decision of consequence.
Big bets are a particularly bad way to approach decisions characterized by high uncertainty. Since we had never experienced a debt-default before in the 235 years of our nation's life, it seems hard to justify that any of the predicted outcomes, be they those of talk-show commentators or economists, could be vested in anything but "faith," and "faith" is probably not the most reliable justification for making a really big decision. Let's make no mistake about it, how to best go about addressing the debt-ceiling crisis was a "big" decision. The conservative Wall Street Journal spoke of the risk of "financial armageddon", & acknowledged that a default would "likely wreak havoc on financial markets", and yet despite even the thought of such dire possibilities, all too many of our leaders were willing to take the gamble on the sole basis of their "faith" in a political ideology, rather than trying to explore the best possible choices for our country. As we watched these goings-on, my long-time collaborator Dr. Myron Cohen, of the University of North Carolina at Chapel Hill, likened it to situtions where physicians ask families to make life and death decisions for loved-ones on the basis of the best expert evidence available at the time. In the absence of prior evidence, the rule is always to try to reduce risk -- first, do no harm -- the first rule of medicine. In the debt-ceiling crisis, there was no prior evidence available, but instead of working to reduce risk, the behavior of those involved in settling the matter gave the appearance of deliberately trying to do just the opposite and, in fact, demonstrated little concern at all about the risks entailed. Would you respect the physician who risked losing a patient merely to prove a point?
In the face of uncertainty, one would also hope that more minds would be invited into the decision-making conversation, and that more different minds would be sought-out. In fact, with the debt-ceiling crisis just the opposite occurred. A small group of ideologically-inspired actors, who appeared to be anything but diverse, seemed to control the dialog. There was no opportunity or welcomeness for others to join in. A single-minded approach is a bad way to go into an unknown future as it almost inevitably limits the choices you can consider.
Finally, when we are approaching decisions that have previously been unthinkable, it would appear judicious to have the capacity to explore, rethink, and revise, as we explore the unknown. This means both the time to test and learn, as well as the courage to reconsider policy positions. With the debt-ceiling crisis, however, the willingness to wait until the last moment removed any chance of learning and, more to the point, there was never much of a commitment to learning on the part of many of the principal actors: over and over again we were informed that such thoughtful exploration was out of the question because of prior campaign pledges made to constituents. Such unnatural and unthinking constraints on decision-making would appear particularly ill-positioned to deal with uncertain situations, and hardly what we would hope for in a decision-maker facing a first-time-ever dilemma.
The debt-ceiling crisis was neither optimal in its settlement, nor elegant in its solution, but it does provide a most vivid set of insights into both choice and leadership and we should at least profit from the spectacle that we have all be watching unfold before our very eyes over the past few months.
________________________________
I'd like to thank Mike Cohen for his suggestion of this topic, his collaboration on the development of the arguments, and his unceasing friendship.
Bill Fischer’s latest book is The Idea Hunter (co-authored with Andy Boynton) (Jossey-Bass, 2011)
Bill Fischer can be followed on Twitter @bill_fischer
