Boldness is based on the ability to understand the difference between a smart, calculated risk and a foolish gamble. A smart, calculated risk is an action that is not a certain success but one that has potential to deliver extraordinary rewards compared to the risks taken. A foolish gamble is one that delivers a smart reward at the cost of risks bearing dire consequences (p.31-32).
Taking a risk when there is a possibility to have damages that will never be recovered should not be part of the CIO arsenal for his approaches in decision making. The decisions should be participatory if it is possible to use collective team knowledge, and to prevent the CIO from making wrong decisions and creating disasters.
M. Hugos (2007) provides a case from his practice that illustrates this situation. A CEO was not able to recognize the benefits of listening to his team while making a decision whether to replace an old power generator with a new one, or to try to repair the old one. The CEO's frugality was more reckless than rational. The power generator's purpose in the office was to be a source of provision power in case of a power outage. During hot summer days the team realized that their 18 year-old generator was malfunctioning. After numerous unsuccessful attempts to repair and tune it, the team manager requested a purchase of a new generator. The CEO refused to fund this because he didn’t regard it as necessary. He was not willing to evaluate the risk of the current situation to see the magnitude of the consequences. If a power outage was longer then half an hour, then the batteries would be dead because the generator could not charge them. The entire IT system would experience a hard crash, and the damages resulting from the crash would be catastrophic. The off-site disaster recovery facility was not operational at that time, and the on-site hardware was not covered by a warranty for cases like this. It would take weeks to restore the system, and it would cost much more then the purchase of the generator. Some of the company's important customers would experience business losses due to the unavailability of the system and potential data loss from the hard crash.
The CEO's ignorance of these risks was caused by the need to have his budget look good. This was a clear sign of the CEO's incompetence, and created a culture of mistrust among team members. Instead of a readiness to be accountable for their actions, people were forced to cover themselves by writing memos to be safe in case fingerpointing would arise. The team members' voices raised regarding the situation were not trusted by the CEO and their opinions were stubbornly rejected, and the collective wisdom didn't count. A culture like this would result in pushing talent out of the organization and creating a team of mediocrity.
Resources:
M. Hugos. 2007. Harnessing IT to drive enterprise strategy. CIO best practices. p.31-33
