Anyone who has been in business for any length of time will have made some difficult decisions. It’s no secret that running a business requires you to make hard choices, but the best way to meet and make those decisions doesn’t receive enough attention.
Looking back over some companies’ decision-making illuminates both the difficulties of making decisions in business and the best way to avoid making the same mistake is to adhere to the right process. (And yes, hindsight is always 20-20!)
Steve Jobs and Apple
After founding Apple in 1976, Steve Jobs and cofounder Steve Wozniak led the company to several successes. In the early 1980s, Jobs’ knack for decision-making led Apple to develop some of the most advanced personal computers on the market.
While Jobs directed Apple to create expensive but polished closed-architecture computers, competitors Microsoft and IBM, set about designing far cheaper, open-architecture computers. The low price point of these computers ate into Apple’s market share.
John Scully, Apple’s CEO wanted the company to follow the open-architecture model, while Jobs feared this would reduce the quality of the computers and refused. Apple’s board sided with Scully and Jobs was fired. What seemed like a good the right decision at the time, aggressively pursuing market share, turned out to be disastrous, leading Apple to near collapse before Jobs was brought back on in 1997 to turn the company around.
What can we learn from this difficult decision? First of all, I think it’s important to acknowledge how prudent the decision to ditch Jobs must have seemed at the time. He was holding Apple back from contesting the market share of IBM and Microsoft. Of course, with the benefit of hindsight, we can see that the board made the wrong decision — Jobs was the key ingredient to Apple’s success.
What do we think about when making a hard decision?
So, with the benefit of hindsight, what does this teach us about decision-making?
The first thing it highlights is the importance of taking a wide-ranging and holistic view. Apple’s board was too focused on short-term market share; it didn’t see the value in Jobs’ relentless pursuit of engineering perfection and standards. That short-termism ultimately left Apple worse off; it suffered a long decade of heavy losses.
Standards are important to me in running The Cobra Group of Companies and the individual businesses within it, including Appco Group. Recently, I listened to a talk given by Simon Murphy, a leading entrepreneur in the Appco network, about the importance of standards in business. He urged business owners to make upholding high standards central to everything they do.
I couldn’t agree more. Taking non-quantifiable things like standards into account in business decision-making is, in my opinion, one of the keys to making the right, long-term choices.
Had Apple, in 1985, considered standards in their decision over Jobs, they might not have suffered the decade of heavy losses that they did. As a businessperson, my life is full of hard choices like this one — thinking about them in a holistic and lateral way is the best advice I can give for achieving the right decision-making process, even if it can’t always guarantee the ‘right’ decision.