Last year, healthcare giant Johnson & Johnson (JNJ) was on the verge of buying medical device maker Guidant. JNJ invested lots of resources, time, and money into this acquisition plan. However, in the end, the deal fell through. In JNJ’s annual report, the CEO states:
Unfortunately, a combination of adverse developments in Guidant’s business and competition for the asset forced the price to a point where we concluded it was no longer in the best interest of our shareholders to pursue this business opportunity.
This example gives us some great insight into changing the business decisions you make.
When you first make a decision, the landscape may seem so clear and the outcome almost assured. Surprise! Everything changes. Just remember that most of your decisions should have the disclaimer attached: subject to change without notice.
Due to the constant shifting nature of your environment, you need to keep an eye on things. Don’t make a decision and then ignore the outcome. You may wake up from your Rip Van Winkle-like slumber to realize that everything has gotten away from you! JNJ was monitoring Guidant’s business and was thus able to spot some troubling developments. You need to keep an eye out for similar storms that may be brewing.
Just because you make a decision doesn’t mean that you can’t change your mind. JNJ’s decision was essentially: we want to acquire Guidant, if, after some investigation, everything checks out fine. You may make a decision and start dreaming of all the great things that will come out of a deal. Be flexible so that you can roll with the punches that will come. Flexibility involves doing your homework and reacting according to the facts you uncover.
A key component of flexibility is being able to change your mind completely. Admit your great idea wasn’t all it was cracked up to be. If you hang on to your idea, once it appears to be a bad one, you may follow it all the way to failure. Don’t be so stubborn or prideful that you can’t admit defeat, a mistake, or the need for change.
All decisions you make as a business affect someone. That someone could be you, your employees, customers, shareholders, suppliers, distributors, or even your competition. Be sure to take into consideration the ramifications your decisions will have on others. JNJ avoided a bidding war over Guidant because they remembered their obligations to shareholders.
It is OK to walk away from an idea, design, decision, or plan that doesn’t turn out as you had hoped. JNJ walked away from the Guidant acquisition despite the large investment sunk into its pursuit. Walking away from your decision may be painful, costly, and even embarrassing. Nevertheless, it may just be the best thing you can do for your business.
Keep Your Word
I’m not saying that you should absolve yourself of commitments or obligations you have made. If you’ve signed the contract, made the promise, or closed the deal, you’re under legal and moral obligations to fulfill your part. The JNJ example here illustrates that you need to make sure you’ve got all the facts before signing the contract. You may have made the press releases and done interviews hyping your intent to do something but that doesn’t mean you can’t change your mind. Remember, changing your mind is much easier before you close the deal than afterwards. Just look at JNJ.