Speculation and Decision Making
There are two quotations of Mark Twain regarding speculation that is interesting and noteworthy.
In one he asserts that “ October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February”.
In the other remark he says that “ There are two times in a man’s life when he should not speculate: when he can’t afford it, and when he can”.
Though both these observations pertain to the field of stocks & investments related to the financial markets, I feel it has wider connotations. The observations are interesting in the sense that it points to the decision making aspect of our mind related to risks and returns. It has a lesson in leadership also.
The ability of leadership to speculate is what interests me here. Leaders do speculate and there is no bar on speculation but there must be some order within that speculation. It is said that even a perfect chaos has a system and so must our speculation.
The Prerequisites of Speculation
The first thing that I feel important is the prerequisites for speculation. The most primary prerequisites which I can fathom from my experiences are :
The situation is such that we have no other option but to speculate
There is not much time for evidence gathering and analysis to make a measured and informed decision.
The gain far outweighs the risks by an astronomical margin
It is once in a blue moon opportunity.
The Risk Formula
Speculations are welcome but it always comes along with higher risks than ever disclosed. We must always remember the simple axiomatic formula in speculation and leadership. It states that “the risks of speculation is inversely proportional to the wisdom, experience and intelligence of the leadership and most of the times risks are so new that it was never imagined”.
The outcome risks must be known to the leader and it must not come as a surprise after the speculation. The outcome risk must not be bigger than comprehended otherwise it would be a complete leadership failure both in mind and action.
For a matured leader there must come rare occasions when the leader must speculate. If a regular speculation scenario is propping up in organizational leadership it is not a healthy sign of leadership. An experienced leader plans out everything through calculated strategy before putting it on the ground. An accomplished leader knows that any planning without a strategy will not be successful in the real world.
The caveat is that speculation should not become the signature style of any leader. This itself is evidence of the failure of the leadership. The end point is that the organization and its people must not start speculating about your capabilities.