Principled Decision-Making in Competitive Environments

As a business manager or sports coach, it is paramount to remain true to your principles; otherwise, people will not take you seriously. Yet, competitive environments often create situations that call for exceptions or for prioritizing short-term survival. How can you reconcile consistency with adaptability?

Take the example of a CFO who enforces a conservative capital allocation policy, avoiding projects with downside tail risk because he believes that organizational survival matters more than upside. In normal circumstances, this rules out bold bets. But when the firm faces an existential threat, such as a disruptive competitor or a regulatory cliff, the same CFO may approve a high-risk investment. This only looks like a betrayal if we focus on the superficial form of the principle (“do not take risky projects”) rather than on its substance (“maximize the organization’s long-term survival”).

There are two takeaways. First, if you choose principles that are truly aligned with long-term success, you will not have to betray them. You may violate their usual form, but not their underlying substance.ShareCopy

Second, for the previous point to work, it requires constant explanation.ShareCopy

People tend to evaluate decisions by looking at superficial aspects and short-term horizons. Unless you explain your principles and reasoning, others will assume you are abandoning your principles whenever your actions deviate from their familiar form.

In short, if you (1) choose your principles well, (2) focus on their substance rather than their form, (3) consistently explain your reasoning, and (4) keep people’s focus on substance rather than form, you will never have to choose between principled behavior and short-term survival.