Tuesday, 10 March 2009

Sideline calculators

When the UK Treasury Select Committee grilled former banking bosses about their role in the financial crisis, their defence was undermined by the disclosure that one former bank CEO (James Crosby) fired his head of risk (Paul Moore) for warning the bank’s strategy was too risky (Ref.)

One alpha characteristic is to have no doubts about your judgement. You don’t believe your decisions are little or no better than random. You don’t invite your decisions to be challenged. You assume the right to push aside anyone who disagrees with you, rather than engage them in dialogue. Be you an alpha or not, this is wise, because you don’t want to risk shallow thinking being shown up. And if your decision turns out to be mistaken, you don’t want people recalling it was questioned.

As a gambler, who prefers to make business decisions without systematic analysis, you don’t want calculators alongside you at the top table. Better to sit with other gamblers, who are more concerned about their own decisions than yours.

You do however want calculators in positions where you can control them. If you fear a decision may be challenged, then employ your calculators to create an audit trail. They’ll usually find it easy to manipulate a decision-making tool (by changing the factors and the weightings) until it supports the direction you first thought of.

Ref. The grilling was February 10th 2009; the events some years before.

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