Monday, September 8, 2008

Don't sit around computing the odds

Computing the odds against you is one way to make a rational decision. It's also a good way to lower your confidence. If there's something in life you really want, you won't get it, or experience it, by sitting around doing calculations. By basing your efforts on better criteria than statistical probability, you can save yourself a lot of misery and depression – energy that you can then put into finding ways to make the things you believe in come to fruition. "Why risk your reputation?" is a question exceptional thinkers do not understand. What they hate risking is being complacent, bored, or unfilled. The best in every business are always looking for the next big challenge.

In 1992, when an IBM board member asked Louis V. Gerstner, Jr. if he was interested in running the company, the former CEO of RJR Nabisco and ex-President of American Express passed. IBM's sales were plummeting, its stock had decreased by 50 percent over the past five years. Gerstner was aware that both the Wall Street Journal and the London Economist had predicted that IBM was on the verge of becoming another late, great American company. After he got his first look at IBM's current financials and budgets, he saw that the company's sales and profits were declining too fast for comfort and that its cash position was scary. "On the basis of those documents," he later recalled, "the odds were no better than one in five that IBM could be saved and [they indicated] that I should never take the position." But the board was persistent, Gerstner grew intrigued, and the advice of an old friend also caught his attention: "IBM is the job you’ve been training for since you left Harvard Business School. Go for it!" Gerstner agreed; his track record as "a change agent" might be just what the company needed. These were the variables that played into what Gerstner later called "my gluttony for world class challenges."

- Excerpt from The Big Idea, Donny Deutsch

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