Thursday, 26 February 2009

Prepare to make decisions that are close to random

“In a job like mine… you only really have a 55% chance of being right, now matter how bright you are.” James Crosby (then CEO of a major UK bank).

Bear in mind that 55% right is this Crosby’s self-interested assessment of his own performance. His track record may not in fact be that good.

As you move up the management hierarchy, the laws of chance play a bigger part. On each promotion you must make bigger decisions, but collecting all the relevant information grows harder and/or you get less inclined to do it.

Perhaps the data you need is uncollectable, perhaps it is unknowable. Perhaps your information systems are inadequate. Perhaps you are a gambler by nature, you don’t personally have an interest in collecting data or analysing the data you are given.

Whatever the reasons, promotion tends to require and reinforce a willingness to take bigger risks, make bigger gambles.

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