How to make good decisions under pressure

{"text":[[{"start":5.24,"text":"An old joke has it that “if you can keep your head when all about you are losing theirs, then you have probably failed to grasp the seriousness of the situation”."}],[{"start":14.68,"text":"Losing one’s head is not an option for business leaders though, at least not in public. Mood swings in bosses are a bad thing, no matter how testing the prevailing conditions are."}],[{"start":24.696,"text":"Former US president Barack Obama used to say that only the hardest decisions and challenges made it to his desk. If they were simpler, then a solution should have been found without asking him to weigh in."}],[{"start":35.32,"text":"At a time when checking the news headlines can require a strong nerve, chief executives could be forgiven for worrying whether they can keep their minds calm and their thinking clear. Leaders are watched more than they may realise. Demeanour and body language matter. Any CEO caught adopting a facial expression that recalls Edvard Munch’s painting “The Scream” could send the share price tumbling."}],[{"start":57.4,"text":"Michael Useem, emeritus professor of management at the Wharton School, University of Pennsylvania, wrote a key book on leaders and decision making 20 years ago (The Go Point: When it’s time to decide — knowing what to do and when to do it). “Decision making as a skill is learnt really by making decisions,” Useem says. We should always look back on them “to make certain we don’t make the same mistake twice” and “to have some sense for what went right as well”."}],[{"start":null,"text":""}],[{"start":83.52,"text":"Leaders need also to avoid the paralysis of “decidophobia”. When the mountaineer Joe Simpson wrote his book Touching the Void (later made into a documentary film) he explained that the way he survived his frozen ordeal in the Andes was to keep making decisions on his painful descent (with a broken leg), even if they were bad ones. He could correct his course and adjust. But if he had waited for a perfect moment to act, he would have died."}],[{"start":null,"text":""}],[{"start":108,"text":"In the introduction to her book Mad World: a geostrategy survival guide for leaders, published this month, political analyst Tina Fordham writes: “Geopolitical volatility is now the central scenario and should become a core planning assumption rather than limited to being considered a risk factor.”"}],[{"start":124.04,"text":"It is not an encouraging diagnosis. But leaders will just have to keep calm and carry on."}],[{"start":129.8,"text":"Lesson from the past: do not neglect the fundamentals"}],[{"start":134.12,"text":"Battle scars. This is how Reggie Aggarwal, founder and chief executive of Cvent, the US-based events and hospitality business, describes some of his hard-won experience after more than a quarter of a century running his own company."}],[{"start":147.16,"text":"Emerging initially as part of the dotcom boom of the late 1990s, he has survived the dotcom bust of 2000/2001, the financial crisis of 2008/9, and the Covid-19 pandemic. He is now an interested observer of the froth surrounding AI. And he is keeping a cool head. “You know, you learn more on the way down than on the way up,” he says."}],[{"start":169.76,"text":"Aggarwal’s first lesson in survival came at the start of the millennium. He had raised $16mn for his (then) start-up, a significant sum in those days. The business grew from an initial team of six to 125 people. But then the dotcom bust, 9/11 and subsequent downturn all hit. Aggarwal ended up putting through three rounds of job cuts, taking the staff numbers back down to 24."}],[{"start":null,"text":""}],[{"start":194.52,"text":"He says his mother had warned him: “When you build something, don’t you have to sell it for more than what it cost to build it?” But he had told her: “Ah, mom, that’s old school. It’s all about market share. Don’t worry about that. The economics will come, you know.”"}],[{"start":209.24,"text":"Today he has a crisper view of his youthful optimism: “We all violated fundamentals.” Having promised his team that the first, then the second wave of cuts would be the last, he came back with a third round of redundancies."}],[{"start":209.74,"text":"“Psychologically, that’s very hard,” he says."}],[{"start":225.64,"text":"“I didn’t want to get out of bed because all I had was negative energy . . . People were quitting even after you laid off other people . . . And if you don’t have anyone in marketing left, you can’t feed your salespeople. What happens? You start going on a debt spiral.”"}],[{"start":237.8,"text":"Aggarwal learnt a hard lesson: model out a worst-case scenario. This stood him and Cvent in good stead when the pandemic hit. “97 per cent of our revenue was in-person events, and we didn’t have a virtual offering because people didn’t want to do it virtually,” he says. Luckily, the business managed to reinvent itself even at this highly disrupted moment."}],[{"start":258.12,"text":"His other guiding principles when times are hard and chaotic are: communicate a lot, and do not over or underreact. “Just go back to fundamentals. All firestorms pass at some point . . . whether it’s 2001, whether it’s the 2009 recession, whether it’s the pandemic: the fundamentals don’t shift,” he says."}],[{"start":275.94,"text":"This approach seems to have worked. Cvent has now grown to have more than 5,000 employees and over 34,000 corporate customers globally. After time spent as a publicly traded business on both the New York Stock Exchange and Nasdaq, it was bought by Blackstone in 2023 for $4.6bn and taken private again. The PE giant clearly saw some value there."}],[{"start":297.84,"text":"Or as the old song has it: “The fundamental things apply as time goes by.”"}],[{"start":298.34,"text":"Today’s challenge: minimising risk"}],[{"start":304.8,"text":"Crisis points are sometimes described as a “sink or swim” moment. But one chief executive displayed his coolness under pressure, and faith in his product, by rowing across the Thames river in a boat held together only by his plastic name-tag labels to prove their waterproof properties."}],[{"start":320.32,"text":"Lars Andersen is the founder and CEO of My Nametags, a 22-year-old UK business that exports to more than 140 countries, selling name labels for children’s clothes and school items in six languages via 11 websites."}],[{"start":335.16,"text":"Readers of a certain vintage will recall the annual back-to-school autumn ritual when name-tags were dutifully sewn on to school clothing. Indeed, some private schools in the UK still insist on the sew-on method (even though those name-tags are now manufactured in China)."}],[{"start":349.72,"text":"But when Andersen found himself out of a job after a change in ownership at his finance company, and considering how to get his two (then) young daughters ready to start their time at school, he hit upon the idea of launching a business to help deal with the name-label challenge. He began with iron-on labels, but now sells plastic stickers that survive the washing machine and last for 10 years (as well as helping to keep small boats from sinking)."}],[{"start":375.28,"text":"Calm practicality characterises Andersen’s leadership and has helped steer the business through the upheavals of Brexit and today’s volatile trading conditions."}],[{"start":384.4,"text":"One simple tactic is to keep his stock levels high — “too high to be efficient”, as Andersen candidly puts it. In terms of key materials, “I probably have a year’s stock,” he says. His main investor is, he says, patient — My Nametags is not a publicly traded company — and having those stock levels “keeps a bit of capital locked up, but it allows us not to have to pay silly prices because we have to have something delivered tomorrow.”"}],[{"start":409.8,"text":"Trading in so many countries also provides a hedge against turbulence. “In times of volatility like today, some markets might be difficult,” he says. “There might be a war. There might be delivery problems and so on, or tariffs.” But as long as other markets are healthier “you are effectively de-risking the business by trading internationally”."}],[{"start":428.8,"text":"Brexit forced My Nametags to set up an Irish company which sells labels to other EU countries. Manufacturing still takes place in the UK. The labels are sold to the Irish company before they are shipped further afield."}],[{"start":440.68,"text":"“The world today and tomorrow will be more volatile than maybe it was 10 years ago,” he says, “and we probably have to live with more volatility, more risks of price increases, supply-chain shock, delivery issues. So we have to prepare the business and build it to be even more resilient going forward."}],[{"start":457.64,"text":"“The chief executive has to be the steadying influence in the business,” he adds."}],[{"start":462.12,"text":"“When everyone else panics, you need to be that steadying influence.”"}],[{"start":465.92,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1789745657_5184.mp3"}