I want to tell you two quick stories, one about William Smithburg and another about Alfred Sloan.
Fairly early in William Smithburg’s career as the CEO of Quaker, he impulsively bought Gatorade for $220 million because he liked the taste (as the story goes at least). Quaker quickly grew the Gatorade brand and shortly thereafter their $220 million purchase was roughly valued at $3 billion. Fast forward about a decade later when Smithburg’s taste buds latched on to another delicious beverage; Snapple. Given Smithburg’s success with the Gatorade deal, the board of directors didn’t question his proposal to buy Snapple for $1.8 billion. The purchase would put the company deep in debt.
In house, there was no disagreement, everyone saw the success that Smithburg had with Gatorade and wanted him to recreate it! Quaker soon discovered that the Snapple market was significantly different than the Gatorade market, both in manufacturing and distributing, and after sales tanked and the company was in trouble, Quaker had to sell it. Only three years after the acquisition, Snapple would be sold for one sixth the original purchase price.
Let’s explore another story; Alfred Sloan, the CEO and chairman of General Motors, was leading a meeting at his company. They were making a fairly major decision within their organization. “Gentlemen, I take it we are all in complete agreement on the decision here?” said Sloan. Everyone sitting around the table nodded their heads in agreement. “Then,” Sloan said, “I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what this decision is about.”
Seeing the Other Side
The decisions that we make will not always fall under the “awesome” category. We’ll make quite a few decisions that are quite terrible that could affect us, the people around us, or even our company. When we’ve had good decisions in the past, we often default to the thinking of, “this is a really good idea! I mean, look at all these people, they agree with me…how could all of us be wrong?” If we stay in our own view of the situation and don’t take the time to explore the other possibilities, we open ourselves to the potential for a disaster.
After the Snapple incident, Smithburg would later reflect, “there was so much excitement about bringing in a new brand, a brand with legs. We should’ve had a couple of people arguing the ‘no’ side of the evaluation.”
Where do you need to engage with the “no” side on decisions within your company?
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