Thursday, 3 April 2008

Sometimes it is about knowing when not to decide

Some time ago I was interviewing Tony Cohen, CEO of Fremantle Media; they own television production companies all over the world. A programme developed in one country (say, "Pop Idols" or "The Price is Right") may also have potential in another country. I asked him, “how do you decide which programme is right for which country?” He said, “I don’t”.

“Why would I know any better than anyone else?” he continued. “I don’t make these decisions”. But he does make sure to set up a system that enables the organisation to arrive at a good set of decisions. For example, each year, they organise what is called “The Fremantle Market”. It is a one-day event in London, for which Fremantle executives from all over the world fly in. They present to each other their new television programmes, which they have just had commissioned or developed pilots for.










I visited the event this year. Country executives really try to do a good job convincing their counterparts to “buy” their new television programme, because Tony has made sure that if the new production of Fremantle’s company in the Netherlands gets shown on television in the UK, the Dutch subsidiary receives a good commission that goes straight into their P&L. Moreover, the UK company is eager to obtain Fremantle’s best new programmes developed in other countries because if it manages to sell them to television broadcasters in the UK, it also gains a good profit.

Hence, Tony (or anyone else at Fremantle’s head-office) does not decide which programme to invest in and promote as their next international winner, but he sets up the organisational system in order for local people to make their own decisions. This will enable their next global hit to emerge, without knowing in advance which programme that will be. Sometimes he expected it; sometimes it’s a programme that he never thought would see the light of day.

But often that is not the role we expect CEOs to assume. We expect them to make the decisions, quickly and without hesitation or even a drop of sweat.

It reminded me of Andy Grove, when he was CEO at Intel. When Intel, in the 1980s, was in doubt whether to concentrate on DRAM memory chips or on microprocessors, people (employees, analysts, shareholders, etc.) were banging on his door, asking “please Andy, make a decision; are we going for DRAM or for microprocessors? Tell me what to do”. But Andy said, “I don’t know yet. No, I am not going to make a decision; let’s see how things play out”:

“You need to be able to be ambiguous in some circumstances. You dance around it a bit, until a wider and wider group in the company becomes clear about it”. Andrew Grove
And that’s what he did. He let individual middle managers make up their minds about what they were going to concentrate on. He gave the manager of their production plant a formula, in which he had to input a bunch of data concerning the market, margins, production efficiency, etc. and said “this formula will tell you what to produce (because I don’t know)”. And gradually more and more middle managers started working on microprocessors (instead of DRAMs), and more and more the plant manager’s formula told him to produce microprocessors (and not DRAM). When basically the whole company had switched and chosen for microprocessors, Andy said “now I am ready to make a decision: we’re going to be a microprocessor company”. And everybody said “duh”, because that’s what they had been doing already.

I’d say his “indecisiveness” served Andy rather well, as Intel became one of the most successful and profitable companies in the world for the ensuing two decades. Not by making a tough decision quickly and decisively, but by not making it at all, yet instead enabling the organisation to do it for him - just like Tony Cohen let's his organisation decide what television programmes to promote.

4 comments:

vlade said...

This is an interesting one.
Of course, if you have the luxury of being able to run ten things instead of one, you'd do it.
I think the internal market is much better than Intel, as they also got a bit lucky - with two items, they could have easily tanked at both.
On the other side, sometimes you need to make a decision - because at those times any decision is better than no decision. Say if you can afford to run only one R&D, it's better to go and run one well and find a year later it's a no go and switch than try to run two badly and find a year later that you still don't know anything and your competitors overtook you in meanwhile.

That said, I think the internal ideas market (which, admitedly, is easier with TV shows than say processes) is something that's worth emulating. I will think some more on that :).

Guillaume said...

Hello Freek,

I have just discovered your blog and it's almost as entertaining and instructive as being in a classroom with you.

This particular post is great insight as it highlights a contrasting view on leadership (vs. dictatorial CEO usually depicted by business press, like Steve Jobs in a recent Forbes issue).

Freek said...

Of course, your first remark could be interpreted in many ways :-) but I am going to do myself a favour and assume you meant it as a compliment - thanks!

Guillaume said...

Yes, it was meant as a compliment :)