Give us the business example

Let's take the story of a company heading into a very uncertain world: Wells Fargo in the late 1970s. Everybody knows the storm of deregulation is going to hit. But nobody knows precisely how it's going to shake out. When is it going to hit? What exact form is it going to take? What impact is it going to have on the banking industry? Dick Cooley, chief executive of Wells Fargo at that time, was very clear with us when we did our research. He said, in essence, I did not know what we were going to have to do to prevail through deregulation, because it was an uncertain set of contingencies. Too many of them. But I did know that if I spent the 1970s building a team of the most capable executives possible, they would figure out what to do when deregulation hit. He couldn't lay down a plan for what was going to happen, because he didn't know what was going to happen. So his decision was actually a bunch of decisions about getting the people who could deal with whatever deregulation turned out to be.

Okay, but once you have great people in place, you still have to make decisions.

Great decisions begin with really great people and a simple statement: I don't know. The research evidence on that is very clear—that the leaders who ended up setting things in place that produced extraordinary results over time, and a series of great decisions over time, really were very comfortable saying "I don't know" until they knew.

And really, they were just being honest. I mean, which is best? Lying—meaning saying you don't know when you've already made up your mind? Or presuming to know when you don't and therefore lying to yourself? Or speaking the truth? Which is, "I don't yet know, but I know we have to get it right."

How do you say that without looking irresolute? Don't people expect leaders to say clearly, "Here's where we're headed"?

That's the typical thing that happens in companies. The CEO has already made a decision, and his definition of leadership is to get people to participate so that they feel good about the decision he's already made.