The courage of taking “bad” decisions

In today’s dominant paradigm, good decisions are for adults the equivalent of right answers for children at school. If you have a well-functioning mind and a good understanding of the issues at hand, you will take the good decision, that will spare you many of the scourges that arise from bad decisions: waste of money, poor reputation, job losses, plummeting sales, falling share price, …. If you happen to take decisions whereas they will bring about the negative consequences that you will regret, it’s only because you make imperfect rational judgments and assessments. You are being misled by the cognitive biases that obscure your mind and prevent you from serving your own interest. You make predictable mistakes, while being convinced you have chosen the right path.

This vision of the human understanding being blinded by faulty consideration and reasoning is supported by a prolific research stream, that has been rewarded by two Nobel Prizes and probably a third one, if the pioneering work of Herbert Simon is included. Its underlying assumptions are that good decisions exist and that they can be discriminated from bad ones, before they are actually taken and before their consequences unfold. Good decisions just need to be uncovered by the proper mental discipline, by the knowledge of the systematic decision traps that prevent people from being rational and by the right decision processes.

Despite its scientific quality, this perspective is incomplete. The simple and artificial laboratory experiences, used to expose the bounded rationality of human beings, do not translate well in real life. If good answers were as easy to identify as in research settings, decision-makers would spend time finding them (especially as they have, now, at their disposal a list of all the cognitive biases distorting their reasonings) or would hire specialists to do so.

This idealist view which reduces decision-making to a rational maximizing process, may be valid, and only to a certain extent, when decision makers strive to reach one goal (such as maximizing shareholder’s value), but not when they have many ends (or when they try to please various stakeholders). Furthermore, this school of thought does not do justice to the emotional charge decision makers have to grapple with. As “good rational” answers are, more often than not, elusive, weighing the pros and cons of the different options consumes much more mental energy than assumed in theory.

This perspective, which presumes that good decisions exist and that they just need to be discovered, fails not only to capture a significant portion of the real-life of corporate leaders but also three thousand years of intellectual works, which have captivated audiences with poignant dilemmas that have no good answers. Does Abraham have to obey God and kill his son? Does Antigone have to disobey the ruler of Thebes in order to give her defunct brother a proper burial, at the risk of her own life? Does Violetta, the courtesan of the Traviata, have to abandon the love of her life so that her bourgeois lover can keep all his chances of a respectful marriage?

Any executive has been faced with similar tough calls (though probably less dramatic). He found himself having to choose, not between a good decision and a bad one, which would make the choice easy, if not obvious, but between two decisions that could be considered as bad decisions. Let’s consider a few situations which contradict the mythology about good decisions, deprived of any shortcomings or biases. All these situations have in common to be much more complex than the usual investment decision, commonly studied in behavioral economics: whichever option you choose will be a bad one and you will have to sacrifice something.

  • Your price competitiveness is declining, and you must shut down one of the plants located in your home country. Whichever factory you select, the employees on-site, their families and the local community will suffer.
  • You have an uncooperative and selfish sales director with stellar performances. Either you fire him because he does not fit with your team values and your performance will suffer, or you keep him and send a very bad signal to all other employees.

In our personal life too, you may have to make tough decisions. These decisions are tough because precisely, there is no good choice but only bad options.

  • You are offered an amazing job promotion, which entails leaving your home country and forcing your spouse and children to sever cherished family and friendly ties.
  • Your current or childhood dream is to live more like an artist/craftsman and less like a businessperson. Either you choose your passion and you will have to struggle financially, or you choose safety and you give up what is dear to your heart

These dilemmas point to the limits of behavioral economics, which work under the premise that you have a clear and unique goal, such as maximizing return on capital employed. If your end is clear, you can indeed judge whether your decision is a good one, depending on your ability to reach or get closer to your goal. Investment decisions, new product launches, mergers & acquisitions fall into this category because a pretty good unequivocal measure of success is available.

But if you are faced with a set of partly conflicting goals or criteria (such as money and attention to your family or loyalty to a territory and financial optimization), then whichever decision that is serving one goal will harm another one. These difficult decisions make up a substantial part of the daily reality of executives. In these circumstances, there is no such a thing as a good decision which maximizes the ultimate performance criteria on one side and bad decisions on the other side, but rather only bad looking options, which all imply losses on certain dimensions. Unfortunately, economic models, which over-simplify the quandaries faced by decision makers, are not of a big help.

Let’s consider a few iconic examples where the supposed lack of rationality which accounts for the “bad decision” is in fact perfectly rational, and where the knowledge of cognitive biases is not enough to determine with certainty which decision is the good one.

Since the seminal work of Irving Janis, the Vietnam War has been held up as a model of escalation of commitment (the escalation of commitment is a cognitive bias which consists in throwing new resources and pursuing a course of action which leads to a dead end). First, it should be noted that the escalation of commitment on the Vietnamese side, though it led to the death of millions of Vietnamese civilian and military, is not regarded by cognitive scientists, oddly enough, as a mistake.

Then, as historical records show, Lindon B. Johnson was perfectly aware he was caught in a vicious spiral, where more and more troops were sent to the front and more and more money was requested from Congress. Why then, as the chances of winning the war grew slimmer, wasn’t he able to take the “good” decision of stopping the war? Was it, as some analysts of the “fiascos of the American foreign policy” argue, because he did not want to admit that the sacrifice of the first fighters was in vain? Did he really make a major reasoning error by being unable to consider these deaths as a sunk cost?

It is possible and it is also very likely that he stuck to his initial course of action, because stopping the war would entail admitting defeat, showing to the world the weakness of the US, as well as the strength of the communist flood, while betraying its allies in South Vietnam, and condemning them to death. Johnson was torn apart between several conflicting goals: defending the international credibility and strategic interests of the USA, maintaining the popularity of his government and of himself as a potential presidential candidate, as well as saving American lives. However, having made the defence of American foreign interests his priority, the other goals came second. He was ready to sacrifice his popularity and American lives to what he perceived as a superior objective: containing the spread of communism. There was no pre-set limit to these sacrifices. And this was also true for the North Vietnamese forces, except that in this war of attrition, the North Vietnamese had the support of a major section of the population, which turned out to be ready to give anything to win their battle for independence and reunification of the country.

Those who judge the American involvement in the Vietnam war as a complete failure base their judgment on the human cost of the conflict and disregard the geostrategic rationale of the time (the lethal threat represented by the relentless progression of communism). History is indeed on their side. Nowadays, there is hardly any cause that will justify a massive death toll in American lives. It will be impossible to convince public opinion that young American soldiers have to die in large numbers to defend an ideology (liberal democracy) or fight another one (communism or radical Islam).

Lindon Johnson is reproached with not having taken the decisions of progressive withdrawal and “Vietnamization” of the conflict that Richard Nixon took reluctantly during his mandate. Lindon Johnson did not indeed switch his order of priorities and did not subject the defence of the strategic interests of the USA to avoiding war casualties and war crimes. As the defence of the liberal order was paramount, he lacked the courage of yielding and taking what would have looked like at the time, in his eyes and in the eyes of many, as a bad decision.

It takes courage, not brain power, to make such a difficult decision which implies losses on certain extremely valued aspects (such as the strategic interests of a nation). These losses can only be incurred in the name of a greater good (in the Vietnamese case, preserving human life). And this greater good is deducted from a value judgment, not from a rational and factual judgment. The word courage comes from the Latin “heart” (“cor”) precisely because the decision emanates from the heart (what you think is just) and not from the computing mind.

The Vietnam war is not a problem of rational choice but a tragedy of the same calibre as Abraham’s or Antigone’s, where two ends conflict with one another, with no good solution on the horizon. Framing decision-making as a rational process fails to capture the mental and emotional charge leaders face on a regular basis. They are torn between contradictory demands and there is no such thing as a perfect rational answer, that has no costs or no shortcomings.

Another famous example from the corporate world demonstrates the danger of over-simplifying retrospectively the dilemma faced by top executives. Often mentioned as an anti-role model, Kodak leaders are commonly blamed for their myopia and organizational inertia. Having seemingly failed to react to the digital disruption, they are judged victim of the status quo bias. Reality could not be more different. As former Kodak executives recall[1] “senior leaders at Kodak were acutely aware of the approaching storm”: “Management was constantly tracking the rate at which digital media was replacing film”.

Kodak leaders had correctly analysed that the digital technology would provide much fewer jobs, much lower margins and that their huge workforce (90,000) could not be retrained to be successful in the new digital era. They knew that in the new environment, there was no need for their sophisticated manufacturing facilities, their dedicated retail network, and that the barrier to entry to the digital technology was non-existent. They were caught in the turmoil of creative destruction and shouting it from the rooftops would have only accelerated the process: “Kodak management was careful not to talk about the problem publicly to prevent it from becoming a self-fulfilling prophecy (something critics misconstrued as management not grasping the gravity of the situation)”. They did invest billions of dollars in subsidiaries dedicated to digital cameras and printers but there is no way these new highly competitive activities could support the thousands of employees from the legacy business.

In view of these elements, Kodak’s choice of “maximiz[ing] profits from the declining businesses for as long as possible” was quite rational. “Exiting the business […] would have required Kodak to give up billions of dollars in profits and abandon products like motion picture print distribution too soon, without having other products to capture the demand”.

Fujifilm followed nevertheless another path. Thanks to the restructuration and diversification undertaken by its CEO, Shigetaka Komori, the Japanese company managed not only to survive the death of the film business but to grow its top line. In his autobiography, “How Fujifilm Survived (and Thrived) As Its Core Business Was Vanishing”, Shigetaka Komori recounts his efforts for “saving Fujifilm from disaster and ensuring its viability as a leading company with sales of 2 or 3 trillion yen a year.”


[2] 2000 2018
Kodak sales $ 14 billion $ 1.3 billion

(-91% )

Fujifilm sales Y 1.4 trillion Y 2.4 trillion = $ 21.9 billion

(+ 71%)


To achieve this feat, Fujifilm broke away from its legacy activity and redirected its skills toward brand new businesses such as cosmetics, pharmaceuticals, medical diagnosis systems or optical films for the LCD flat-panel screens of TVs, computers and smartphones. This strategic move implied putting its core business behind, something which would have been, in the own words of a Kodak executive, “a hard pill for Kodak leaders to swallow”[3]. Fujifilm ‘s success demonstrates that it was possible to counter the unavoidable downward trend but with extremely audacious and non-conventional bets. Kodak lacked probably the courage of taking the risky decision of abandoning its identity as an image company to become something radically different.

Kodak acquired, for instance, a photo sharing website called Ofoto in 2001 and used it to encourage people to print digital pictures. Instead, it could have turned it into a social network where people share noteworthy stories or updates about their lives. Ofoto could have become the next Facebook, Instagram or Pinterest with hundreds of millions of users. The opportunities of the digital era were however too far away from Kodak’s initial core printing business. Just as Fujifilm CEO had countless “sleepless nights” because of his bold choices, it was hard for Kodak leaders to bet the future on risky ventures where the company had no legitimacy, nor the critical skills and where many things had to be started from scratch.

The Kodak or Vietnam war cases illustrate the inadequacy of explaining real-life failures by cognitive biases and faulty reasonings. What was missing in these two cases is more related to the courage of taking decisions with obvious shortcomings, than with flawless thinking. It would have indeed been courageous for Lindon B. Johnson to preserve innocent lives and forgo the strategic but non vital interests of the USA, just as it would have been courageous for George Fisher and Daniel Carp (Kodak’s CEOs in the 90’s and early 2000s) to develop activities far from the core business and give up Kodak’s identity as an imaging giant.

Our point is not to dismiss rationality. Rationality matters and decisions have to be as informed as possible but spreading the idea that leaders make mistakes because of cognitive dysfunctions is a partial interpretation of reality. Some failures, like the Space Shuttle disaster in 1986, may be attributed to a lack of consideration of all available information (and is still debatable…); but others like the recent Dieselgate, have much more to do with the lack of courage of taking tough decisions with painful consequences (like abandoning the objective of becoming the world’s largest automaker, admitting cheating at an early stage). There are fundamental aspects of life that are not captured in the scientific experiments of the dominant paradigm on decision-making. In sciences such as behavioral economics, good is equated with rational. In real life, good is often synonymous with just. There are in fact two types of rationality : an instrumental rationality (where reason is at the service of a goal) and an axiologic rationality (where reason is at the service of a greater good).



A major part of the human experience consists in exercising one’s axiological reason and in making value or moral judgments, i.e. judging what is good or what is just, and acting accordingly (sometimes at a high personal or organizational price). Moral codes facilitate these judgments by providing a list of actions or behaviours that are recommended. However, moral standards are sometimes unclear or contradictory. Then, the decision maker has to reach a decision by herself and solve a dilemma. The dilemma is compounded when the price to pay or risk to run is high. The courage consists precisely in acting in conformity with what is considered as a superior good, even when the price to pay or the risks to run are high.


According to our experience in executive education, one useful approach to help managers deal with quandaries is to have them define individually or collectively their “Sacred Core”. The concept of Sacred is more effective than the overused term of Value. Values are nowadays so artificial and conventional that they have become meaningless. On the opposite, Sacred still mean something because of its inherent link to the concept of sacrifice. When something is sacred, you are willing to sacrifice yourself for it or sacrifice something to it. So, agreeing on what is sacred for you, as an individual or as a group, forces you to define the top priorities that you will never compromise on and for which you are ready to sacrifice valuable elements (such as sales, profits, power or fame).

Debates around the Corporate Sacred Core leads to beneficial insights and awareness. During a training session with the executive committee of a bank, the respect of the regulation was identified as sacred and as prevailing over customer satisfaction. A consensus emerged to say that clients demands which would require tampering even lightly with the regulation, would be rejected, even if the price to pay was losing the client. In a food company, a strong debate emerged about the sacred character of animal welfare. Should a cost-effective supplier be dropped in case of violation of animal welfare? The group of top executives was not able to agree on this point and the decision was put in the hands of the CEO.

It is preferable for top management to settle this type of issue and not leave the burden of the decision to the employee in the field, as the consequences of these choices will have to be borne collectively. Defining and continuously redefining one’s sacred core as a company helps employees, in their daily job, to take courageous decisions that may have painful immediate consequences but may, not only, avert future disasters but give meaning to their job.


[1] Shih, W. (2016), “The Real Lessons from Kodak’s Decline”, MIT Sloan Management Review, Summer, pp. 10-13.

[2] Source : annual reports

[3] Shih, W. (2016), “The Real Lessons from Kodak’s Decline”, MIT Sloan Management Review, Summer, pp. 10-13