Years ago, I told people I was going to write an article titled, “Wall Street Made Me Do It.” The problem is, we’ve all been living under this unspoken assumption that companies can always grow 25 percent a year, every year. Underlying everything was this driving assumption that growth would always increase. The market would always go up, home values would always rise. Unfortunately, all those high expectations led companies and individuals to do some risky things to meet those expectations. A lot of poor decisions were made by a lot of people.
The economic meltdown offers a classic example of how decisions go bad when people are unaware of the assumptions driving them.
In the beginning, these financial companies may have been offering mortgages that were just under the border of acceptable risk. And, on net, because of increasing real estate values, that was working. Then you change the standard and go down another notch and another. Eventually that strategy no longer works because the risk has become too great, but each step has been incrementally tiny and therefore acceptable. But in the end all those tiny steps add up to a larger risk than you may have originally been comfortable taking.
Leaders are especially vulnerable to errors in judgment, ironically because of the qualities that fuel their climb to leadership: self-assurance and decisiveness. Numerous studies have shown that leaders overestimate their own power and ability while underestimating that of their rivals.
Also, despite the fact that the higher up the command chain, the less accurate the information leaders have, they believe that they know all the answers. At the same time, leaders tend to have an unwavering belief in their own rightness. And that is when they get themselves and their organizations in trouble.
For all those reasons, I believe that behind every successful leader there must be a devil’s advocate. An organization that does not foster devil’s advocates is unlikely to engage in internal debate and likely to be the victim of bad decisions.
Instead of debate, what gets perpetuated is “groupthink.” Without forethought, people adopt a set of unarticulated values, and not much good comes of that.
If you’re ever confronted with an ethical dilemma, but no one is available to serve as devil’s advocate, just look to your mother. It turns out Mom is the best virtual devil’s advocate on the planet.
I tell my students, “Ask yourself if you’d be comfortable telling your mom about the point in question. If the answer is “no,” that’s a bad sign, a stop sign. It’ll save you from doing something you’d regret later.”
Excerpted from “Having coffee with . . . Ann Tenbrunsel: Corporate counsel for a troubling time” by John Monczunski, published in the summer edition of Notre Dame Magazine.