“A decision is responsible,” wrote Charles Frankel, “when the man or group that makes it has to answer for it to those who are directly or indirectly affected by it.”
Think about that for a second.
How often does that happen today? In most organizations people don't make decisions — committees do. Responsibility is diffused to a group, not the individual. Everyone is insulated from their mistakes.
The ancients had a way around this. Consider Hammurabi's Code:
If a builder builds a house for a man and does not make its construction firm, and the house which he has built collapses and causes the death of the owner of the house, that builder shall be put to death.
While extreme, that is the best risk-management rule ever. If you have the upside, you have to keep the downside.
The Romans had a similar system. The guy who created the arch stood under it as the scaffolding was removed. And to some extent, we do the same thing today. No one packs your parachute for you.
Charlie Munger, the partner of Warren Buffett at Berkshire Hathaway, puts it another way:
Another thing that is never discussed any more is my idea of one of the great philosophers of America who was Charlie Frankel. He was mugged to death in due course because, after all, he lived in Manhattan in a different time.* Before he was mugged to death, he created this philosophy of responsibility. He said the system is responsible in proportion to the degree that the people who make the decisions bear the consequences.
So to Charlie Frankel, you don’t create a loan system where all the people who make the loans promptly dump them on somebody else through lies and twaddle, and they don’t bear the responsibility when the loans are good or bad. To Frankel, that is amoral, that is an irresponsible system. That is like selling an automobile with bad brakes and you know the brakes are bad. You shouldn’t do it.
We've gotten away from responsibility for our decisions, which allows people to get all the upside and none of the downside. Is it any wonder why things go wrong?
How can we implement better decisions in organizations? Make them stand under their own arches.
The best way to do this is to make the responsible person sign their name to decisions. Simple and effective but not easy to implement.