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Erika James

Management

How Do You Make a Decision When Every Option Looks Bad?

In a crisis, Patagonia’s founder and his team found a solution. Here’s how you can, too.

Published: Wednesday, November 9, 2022 - 12:01

Patagonia, the sportswear brand, made headlines this summer when its founder and CEO, Yvon Chouinard, announced his intention to effectively give away the multibillion dollar business instead of selling it.

Chouinard, a famously “reluctant” entrepreneur, detailed his decision to an astonished press and media: Patagonia was to be turned over to a nonprofit trust, the Holdfast Collective, and its profits channeled exclusively into efforts to fight the climate crisis.

Although the decision to “go purpose” instead of “going public” has been heralded by many as setting a new standard in corporate citizenship, it was still not an easy one for Chouinard to make. Patagonia explored every option, he says, including selling the company privately—a decision that ran the risk of new owners not sharing his values or vision for the environment. In a statement published on Patagonia’s website, he writes: “Another path was to take the company public. What a disaster that would have been. Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility. Truth be told, there were no good options available. So, we created our own.”

If you’ve led an organization, a function, or a team, you’ll probably be familiar with the dilemma that faced Patagonia’s leadership. There are times and situations—often, crisis situations—where the stakes are incredibly high, and none of the choices ahead of you look good. Whatever decision you make, there’ll be trade-offs to negotiate, risks to navigate; all eyes will be on you as the person whose responsibility it is to figure out the way forward. So what do you do? How can you do as Chouinard did and create your own solution?

There’s a clue, perhaps, in the line “we created our own.” And particularly in the use of the pronoun “we.”

When you’re facing hard decisions as a leader, and especially in a crisis, you’re going to need other people—lots of them. Complex situations are hard for you alone to grasp. It’s hard to see all of the outlines, all of the eventualities—the opportunities as well as the risks—without having as many eyes as possible on the problem. This is because of the way we’re hard-wired as human beings. All of us are prone, as individuals, to hidden biases or cognitive traps that make it all too easy to downplay risks, make the wrong assumptions, or get stuck in the weeds pursuing one course of action when we really need to pivot and try a new approach. And when there’s a lot at stake—when everything is riding on your decisions—you really need to guard against this kind of thinking to see the biggest picture possible. That means seeking out the counsel, the insights, the perspectives, and the expertise of as many other people as you can.

Most of us have recently experienced decision making in a crisis. During the pandemic, you probably faced hard choices in your personal life or your career. I certainly did. Taking up the leadership of the Wharton School in the midst of Covid-19 was immensely daunting—walking in mid-movie as the pandemic shut down our campus and uncertainty surrounded us, and taking up the reins of an unfamiliar organization without the option to walk the halls with new colleagues and take the measure of the situation over time.

For me, none of the options looked good. How could we make the shift to online learning without disappointing the expectations of our students? What would this mean for the quality of the learning experience? What about revenue? And where was I meant to focus my leadership efforts: on the immediate priorities of the pandemic, or the longer-term strategy of the school?

For me, grappling with all of this was made immeasurably more feasible by enlisting the guidance of others, and that meant actively seeking it out. It meant reaching beyond the senior leadership team for counsel from those people with boots on the ground—the broader community of program directors, faculty, students, and others. It meant inviting those people into the room, finding the tactics that meant everyone had a voice, and asking questions—lots of them, and to lots of stakeholders. It also meant purposefully listening to what I was hearing, and channeling that learning back into the decisions that my crisis team and I made.

Five things you can do when every decision looks bad

In the next crisis, however, and whenever it manifests, you’ll need to make critical decisions under pressure. There’s a lot you can do now to be prepared in advance.

Start by asking yourself some serious questions, among them: Am I open enough as a leader to seek out and trust the input of other people and defer to their expertise where necessary? If the answer to that question is no, then ask yourself why not. Think, too, about what kinds of crisis situations you might face. Do some scenario planning, scan your environment, and think about what advice or knowledge you might need should the worst come to the worst, and where you might find that expertise within your organization or beyond.

When—and not if—the next crisis lands, I recommend you do the following five things to optimize your decision making and find the best possible solutions:

1. Articulate and communicate the problem honestly and openly with your team and your organization so everyone has a shared sense of purpose and trust.

2. Ensure that information flows freely across the organization in multiple directions, and ask to hear from those people with boots on the ground and eyes on the problem—even if they’re not part of your senior leadership team.

3. Insist upon and model a culture of ideation, experimentation, and collaboration, where every idea is welcome and failure is both expected and tolerated.

4. Embrace and use real expertise wherever you find it in your organization and your broader ecosystem of stakeholders.

5. Empower your team with the autonomy to step up, to execute decisions swiftly, and to pivot, improvise, or shift course as the situation changes.

The Prepared Leader

I’ve been a researcher of crises and crisis management for many years. The pandemic gave me an opportunity to put my ideas about crisis leadership into practice, and to learn again from this personal, lived experience. Together with Lynn Perry Wooten, my close colleague and lifelong academic sparring partner, I’ve collected some of this learning in a new book that we have co-authored: The Prepared Leader (Wharton School Press, 2022).

We called the book The Prepared Leader because, fundamentally, we believe that you can (and should) prepare for the worst—and that by preparing, you can build the agency to push right through a crisis and emerge better off than before.

I don’t know Patagonia’s Yvon Chouinard personally. But I do believe he is what Lynn and I would call a prepared leader.

When the chips were down, he and his people saw the challenges ahead and looked their company in the face. They did the scenario planning, assessed the risks, and weighed the opportunities. And when none of the options looked good, he and his people forged a new solution—a creative solution that played to the strengths of the entirety of the organization, to its values, its purpose, and its tradition in activism.

Theirs was a bold decision that has bucked trends and raised eyebrows, for sure. But it was a decision that felt true to Patagonia as a business, as a brand, and as a mission. In making it, as Choinard writes, “We have found another way to do our part.”

First published Oct. 14, 2022, on Knowledge at Wharton.

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About The Author

Erika James’s picture

Erika James

Erika H. James is dean of the Wharton School. Trained as an organizational psychologist, she is a leading expert on crisis leadership, workplace diversity, and management strategy. Prior to her appointment at Wharton, she was the John H. Harland Dean at Emory University’s Goizueta Business School from 2014 to 2020. An award-winning educator, accomplished consultant and researcher, she is the first woman and first person of color to be appointed dean in Wharton’s 139-year history. She holds a Ph.D. and a master’s degree in organizational psychology from the University of Michigan, as well as a bachelor’s degree in psychology from Pomona College of the Claremont Colleges in California.