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7 Business Decisions That Looked Bad but Turned Good

Source: Amazon.com

Smart leaders may become wise leaders when they have the foresight or courage to make unpopular and counter-intuitive decisions.

Here are seven leaders who broke classic business rules in order to benefit their company or community--and demonstrated wise leadership capabilities in the process.

Turn your best people into beginners.

(Read More: Killing the 'Sacred Cows' That Are Killing Your Company)

When we're experts in a field, we see limited options, and because we think we know best, we become blind to many possibilities. As a result, our creativity suffers. In the early 2000s, then-CEO of IBM, Sam Palmisano, made his senior executives into general managers of new, emerging businesses with no resources.

Their job was to build them up from scratch and learn everything all ever again.

Rather than reusing pass success formulas, the best among them willingly unlearned big business approaches and experimented with new business strategies using a "beginner's mind," many of which proved to be successful. They sold their personal computer, hard disk, and chip businesses at good prices to other companies in early 2000s while the businesses were still peaking. As a result, IBM went from being a hardware company to being the most successful services company today.

Help your competitors get ahead.

In 1999, when Infosys became the first software company in India to receive the highest level of capability maturity model (CMM level 5) certification from Carnegie Mellon University, co-founder N.R. Narayana Murthy shared the company's experience of the certification process with his Indian competitors. He believed that by helping his rivals receive certification at the same level, the entire Indian IT services sector would become globally competitive. Letting other Indian companies excel led Western companies to pay attention to India--and helped increase the overall Indian market share, including Infosys. India is now a prominent player in the global IT market.

(Read More: CEOs: Act Like aLocal and Avoid Global Blunders)

Cross enemy lines and start working for them.

When Adam Werbach, once the youngest president of Sierra Club, decided to consult for Wal-Mart, his friends and colleagues called him a sell-out. After all, in his book Act Now, Apologize Later, Werbach had described Wal-Mart as a "new breed of toxin" that was wreaking havoc on American towns. Realizing, however, that he could be more effective in changing the system from the inside, he helped Wal-Mart roll out the Personal Sustainability Project (PSP) for the company's 1.3 million employees. Today over 40% of Wal-Mart employees are committed to PSP and have changed their behaviors and lifestyle to embrace sustainable practices.

Let someone else make the hardest decisions.

Teach for America founder Wendy Kopp had to make a tough call in 1999, when her start-up was beginning to struggle for survival. She realized that being the brains and driving force behind the operation didn't necessarily make her the best person to lead her company. So she completely reorganized TFA, bringing in people with more experience than she had to head strategic planning, program development, and fundraising. Her wise decision to let others lead paid off, and today TFA is now a $300 million social enterprise.

(Read More: Five Steps to Brilliant Innovations)

Get rid of your marquee products.

Ursula Burns, current CEO of Xerox, is proud of the company's rich heritage and famous products. Yet she's not nostalgic about the past because she wants to build a new future for Xerox--and avoid falling into the trap that spelled Kodak's demise. That includes outsourcing manufacturing and cutting back or even eliminating marquee products. She's moving her company into new areas, such as business process management, thus reinventing Xerox as a high-tech solution provider for the digital era.

Invest a lot of capital in a really cheap product.

In 2002, Rata Tata, then CEO of Tata Group, got a great idea after witnessing a scooter accident on a busy street in Bangalore, India: design and develop the world's cheapest car. That random idea led to Tata Motors, the automotive arm of Tata Group, and to the Nano, the compact car that costs merely $2,000.

Industry experts criticized this move, saying it wasn't possible to build such a car and profit from it. Because Tata Motors also owns Jaguar and Land Rover on the luxury end of the spectrum, and the Nano project did not make sense for analysts and observers. Now Tata has automobiles for all classes of customers--and other automobile manufacturers are rushing to create cars for the customers at the bottom of the pyramid. India's middle class continues to expand. From being under the radar, Tata Motors is poised to become the world's fourth largest auto market by 2015.

Hire unproven, marginalized people.

Is it wise to populate one's company with people who have no skills and little other hope of employment? Mehul Choksi thought so. He's the chairman of the Gitanjali Group, a $900 million company that pioneered the concept of affordable branded diamond-studded jewelry in India. When he set up a facility for cutting and polishing diamonds in Hyderabad, a South India city, there were no skilled workers available. But there were hundreds of disabled rural youth living in utter poverty. He worked with Youth4jobs founder Meera Shenoy, who set up a program to hire and train these disabled youth. Today, 11 percent of Gitanjali's 2,500 employees are disabled youth and Gitanjali wants to hire another 500 in next year or two. Their productivity level is much higher than other employees, and their turnover rate is much lower.

Want to find out if you're a smart or a wise leader? Take this free self-assessment.


Prasad Kaipa and Navi Radjou are coauthors of "From Smart to Wise: Acting and Leading with Wisdom." Kaipa is a CEO advisor and coach. Radjou is an independent strategy consultant and coauthor of the critically acclaimed book, Jugaad Innovation. Both based in Silicon Valley, they write popular blogs for HBR and Forbes, speak and consult internationally, have been featured prominently in the national business media, and are esteemed thought leaders in the field of leadership development and innovation. Learn more at www.fromsmarttowise.com.

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