Building Business Value | Corporate Management Strategies

The Tyranny of Small Decisions

A classic example of the tyranny of small decisions is the tragedy of the commons, described by Garrett Hardin in 1968 as a situation where a number of herders graze cows on common land. The herders act independently in what they perceive to be their own rational self-interest, ultimately depleting their limited shared resource, even though it is clear that it is not in any herder’s long-term interest for this to happen.

Leaders of business units, division vice presidents, and program managers making decisions of self-interest with little regard for the health of the larger organization can turn a series of small, poor business decisions into a corporate death spiral.  Leaders and decision makers must understand the fundamental and strategic assumptions underlying the operating model as well as or better than the CEO does. Midlevel executives must understand the way the company makes money and the major cost drivers of the operating model. It is the responsibility of the company’s leadership to provide this education.

So the question remains, are you providing your next generation leaders with the skills, knowledge and abilities to avoid a tyranny of small decisions?