Let’s be clear: a CEO is responsible for the decisions his company makes. He is responsible for setting the tone at the top. He is responsible for making sure that the appropriate decision processes are in place throughout the company. He is responsible for designing the appropriate incentives that lead to the right decisions. He is responsible for making sure organization structures (functional and cross-functional) are in place for the best decision making. He is responsible to put the right people in place to make major decisions, and to ensure that they are trained and skilled in making these decisions. He is responsible to identify what decisions expose the company to major risks, and ensure that these risky decisions are contained. Tony Hayward failed on many of these.

And this responsibility for decisions is also replicated throughout the organization. The VP of manufacturing is responsible for all of the manufacturing decisions. The VP of oil drilling is responsible for all of the drilling decisions. The VP of finance is responsible for all of the financial decisions. However, this does not mean that those above are relieved of their responsibility as decisions flow down through the organization. They share the responsibility, but it always rises to the top. That’s where the buck (or pound) stops.

In my 2009 book, Business Decisions, I discussed the importance of business decisions and how they should be made. Lately, I’ve been talking about what I call the Decisive Corporation – businesses that consistently make the right decisions. BP is not an example of a Decisive Corporation; they are a case study of what can happen when the CEO abdicates his responsibility for the decisions of his company.

Ford is a good example of what I like to call The Decisive Corporation. The Decisive Corporation knows when and how to make the right strategic and operational decisions throughout its entire enterprise. Like Ford, it makes strategic decisions in anticipation of an opportunity or potential threat. Too many other businesses make decisions only when forced to confront an immediate threat or as part of their annual planning process, which usually only focuses on budgeting decision for the upcoming year. They simply overlook or never get around to thinking about the critical strategic decisions.

Ford also made other important decisions after Alan Mulally joined the company in October 2006. He revamped the organization and some of its major processes to be more decisive. This resulted in getting new products out faster and improving its manufacturing and sales strategies. A leader like Mulally doesn’t make all the decisions – instead he shapes the business into a Decisive Corporation.

I’ve recently completed research on what makes a Decisive Corporation and will be launching a series of seminars on it in October. It is a combination of the right organization structure, effective business processes, and the competencies of groups and individuals to make decisions. Decisive Corporations, such as Ford, will succeed in the future – others will flounder or fail in the face of a much less forgiving economy.

When he was not phoning his general managers and managers with complaints or advice, he meddled in the smallest matters of ballpark maintenance. Mr. Steinbrenner changed managers and general managers with abandon. As the owner of the Yankees, 22 managers have come and gone, many (such as Billy Martin) more than once. Lou Piniella once called him “a great guy, unless you have to work for him.”

George Steinbrenner was well aware of his management style. “Some guys can lead through real, genuine respect,” he told Cleveland magazine. “But I’m not that kind of a leader.” He likened himself to George Patton: “He was a gruff son of a bitch and he led through fear. I hope I don’t lead through fear, and I would hope it was more love and respect, but maybe it isn’t.” He made all of the decisions and everyone knew it, including George.

He even promoted this “I make the decisions” persona as a recurring character on “Seinfeld”. Steinbrenner, the character, had a penchant for making poor decisions, including trading Yankee players unfavorably, cooking jerseys, scalping box tickets, and cancelling an important meeting because he couldn’t get his beloved eggplant calzone (naturally, this was George’s fault).

For more than 30 years, Steinbrenner lived up to his billing as “the Boss,” a nickname he earned and clearly enjoyed as he ruled with an iron fist. In my book Business Decisions (Business Decisions), I write about decisive and indecisive executives. He was decisive – good or bad – and I admired him for that.

So last night’s blown call by umpire Jim Joyce that cost Detroit pitcher Armando Galarraga his rightfully earned perfect game was the “perfect” opportunity to reverse a bad decision and teach the world that you can do the right thing, even after the fact. There was no doubt it was the last out of the game. You did not even need an instant slow-motion replay. The call did not matter to the outcome of the game either way; Detroit had a big lead and the runner didn’t score. Joyce should have reversed his call, even if it took a few minutes to reconsider.

Major League Baseball commissioner Bud Selig had the opportunity to reverse the call and teach everyone a lesson that it’s important to do what is right. But unfortunately he didn’t – at least not yet. Reversing the bad decision would not have set a precedent for other teams and other games. There won’t be any objections. Rules aren’t meant to be broken, but they are not meant to be followed blindly when a clear mistake was made. For years, people will use this as an unfortunate example to defend why they can’t change clearly bad decisions.

Bud, reconsider. Do the right thing: acknowledge the bad decision (and your initial bad decision to not change it), make it right, and set a good example for others.

BP and its contractors also made poor design and construction decisions. The well was designed with tight tolerances, using a 7-inch casing around an 8-1/2 inch hole. Some of the centralizers, designed to prevent voids in cement, were missing because somebody delivered the wrong ones, so BP decided to use only six instead of 20. BP chose the lower cost, but riskier, of two alternatives for the casing, so if the cement around the casing pipe did not seal properly, gases could leak all the way to the wellhead, where only a single seal would serve as a barrier. Using a different type of casing would have provided two barriers. I don’t intend to suggest that every decision must be ultra conservative, but you must consider the cumulative impact of related decisions that influence the same risk. If you cut costs in one place, you should be more cautious deciding on the safeguards – or at least be more cautious deciding to proceed when there are large abnormalities indicated around that risk.

Unfortunately we’ve seen this problem of drastic consequences of bad business decisions before, recently with Toyota and the financial industry prior to the great economic collapse. And this phenomena isn’t just recent. The litany of bad business decisions continues back in history with disasters such as the Challenger and enormous financial losses such as the AOL and Time Warner merger. I study decision making, and inevitably all major problems stem from bad decisions. Period. No exceptions.

The reaction here will be the same: more regulation, procedures, approvals, and policies. Why? Because people and companies simply can’t make good decisions? Sure there are some companies that make great decisions – such as Apple – but the frequency and consequences of bad decisions is becoming extraordinary. We can’t eliminate the need to perform that puts all companies and executives under pressure to make critical decisions. We can’t create more mountains of legislation to prevent companies and individuals from making poor decisions. If you look at the mountains of regulations to prevent companies and people from making bad decisions, they already are enormous.

The cause is actually so clear that it’s overlooked. People, including managers and executives, and companies are never trained on how to make decisions. It’s not taught in high school or college. It’s not taught in management training sessions. The are not qualifying tests on decision making skills before someone becomes a executive or a key decision maker on a deep water drilling rig. I guess that everyone is expected to be born with decision making skills or learn from their mistakes – but some of these mistakes are very costly!  Resources for help in making better decisions are available by visiting DecideBetter.com.

In my book Business Decisions I discuss the how to define the objectives when making group decisions. You need to have clear and specific objectives for a decision. If you try to achieve too many objectives (as Congress is doing), you inevitably get tied up into a decisions mess without consensus (as is the case now) because you lost sight of what it was you were trying to do in the first place. Let’s say that Congress agreed that reducing the cost of healthcare was the objective. The benefits of this would be obvious: lowering the premiums for everyone, reducing the cost of Medicare and Medicaid, and then making it more affordable to expand healthcare coverage as the next objective. After agreeing to the objective, they then could put the alternatives for achieving this objective on the table and discuss how these best achieve the objective of lowering healthcare costs. I believe that they then would have extensive bi-partisan agreement because the bill would be fact-based, instead of being based on everyone’s individual and differing objectives.

The failure of healthcare reform is not based on political differences. It’s a failure of the competency of our leaders to know how to make important decisions.

What are the objectives of the healthcare bill anyway?

First, Japanese companies do not make good product recall crisis decisions. Historically, they tend to overlook product recall problems, even though they are good at quality. There have been several examples of this in the last decade. They generally respond very slowly and tend to minimize the concern of product risks on customers. Either a cause or effect of this is Japan’s product liability law, which limits damages in cases where customers are injured. In the Japanese culture the shame of product problems can loom large, so there is a tendency to hope it will go away. Second, there is more respect for higher authorities in Japanese companies. Workers don’t dare to speak out and challenge superiors. So in cases like this, even though some of the engineering and support people may have known about the sudden acceleration and braking problems, it was not in their culture to speak out. Finally, decisions in the Japanese culture are slow and deliberate. They study an issue like this extensively and build a consensus within the company before deciding what to do. Crisis decisions require a quick response from leaders. Toyota seems to have been studying these problems while customers continued to be killed or injured by the problems they were studying.

The way the Japanese culture influenced Toyota’s response may be an explanation, but it is not an excuse. Global companies must make decisions based on global expectations, not national culture. Otherwise Japanese companies which are now known for high quality because of the way they make decisions will also be known for risky products because of the way they make crisis decisions.

The keys to handling a crisis decision are to identify it early, take it seriously, move quickly, and over react instead of under react. A business needs to make sure that any issue that could become a crisis filters quickly to the top, and executive management needs to be very responsive to these types of issues. This was Toyota’s first big mistake. Toyota first identified accelerator pedal problems with its Tundra early 2007. This should have filtered up to be a potential crisis decision: could this really be a problem and how many vehicles could have the same problem. Toyota should have investigated and tested this extremely thoroughly and changed the pedals in all vehicles, just to be cautious. Being overly cautious (over reacting) is the way a crisis decision should be made. Companies that over react to potential problems like this build a reputation of being trusted; those like Toyota won’t be trusted again for more than a decade. Early in 2009, a Toyota spokesman blamed customers for this sudden acceleration problem, saying that drivers were under a lot of pressure and had many distractions; were busy with the kids, boyfriends and girlfriends; and distracted by pagers and cell phones. Later that year in August, a California Highway Patrolman and his family were killed in a sudden acceleration accident. Toyota kept its focus on floor mats (either they didn’t really evaluate the problem or thought floor mats were a better explanation) and vehicles were recalled to replace/fix floor mats, sometimes they were just tied down.

The day after Christmas last year, four people were killed near Dallas in a Toyota Avalon because of sudden acceleration – and their floor mats were in the trunk. [Note: A commercial for the Toyota Prius just came on TV. We were going to buy one – but not now.] January 21st Toyota recalled 2.1 vehicles in the US, but kept selling them. Now it is required to stop selling them. For Toyota, this crisis is now accelerating and it needs to make better crisis decisions.

So far, Toyota has made all the crisis crisis decision mistakes. It dismissed indications of these problems without taking them seriously enough. Who made that decision? Most likely nobody; it was just ignored. When owners of Lexus sedans began reporting harrowing crashes involving stuck accelerator pedals in early 2007, Toyota told U.S. safety regulators there was no safety problem with its floor mats — but it would send owners an orange warning sticker just to be sure. Maybe Toyota has problems both with floor mats and the accelerator pedal; maybe the floor mats were just more easily blamed. Toyota is still making poor crisis decisions. It needs to really understand the underlying problem, come clean with its mistakes, cease selling vehicles until it overly fixes the problem, apologize for those who were killed or injured and pay restitution, and make it up to all owners of vehicles that are recalled by giving them free loaner cars and big rebates to purchase new Toyotas to offset their losses on the resale value of their cars. This will cost a lot of money, but its reputation for safety and maybe its survival are at stake here and now.

These decisions were single decisions; they were a decision to go down a new path. Each of these was the launch of a new product line in a new market space, not just a product. There are two decision lessons here for businesses. The first is to look at strategic decisions like this as creating a new path, not just a single decision. A new path creates opportunities along the way – opportunities to launch new versions of the product and keep improving it. Apple kept improving the iPod, iTunes Store, and iPhone along the way, creating $12 billion in additional revenue. Businesses should approach strategic decisions as starting a journey on a new path and consider the opportunities it creates.

The other lesson is bold move decisions. Each of these new product lines was a bold move decision. Apple has grown because of bold moves decisions. Too many businesses fail to even consider bold move decisions, let alone have the courage to make them. To be successful in the future, businesses need to make bold move decisions!

These are decision lessons that can also be used in personal decisions. Decide to create an entirely new path for your life, instead of just making individual decisions. Make bold move decisions that can reshape your life.

So look at the Apple iPad not just as a new product but as decision-making lesson as well. Over its history, Apple also provided decision lessons in bad decision making, such as with the Newton. Steve Jobs learned from his good and bad strategic decisions and now is putting that experience to work. We can all learn from him too.

For more insight and guidance with improving decision-making skills, visit DecideBetter.com.

    But, the economics for NBC were not the entire story. Its local affiliates rely heavily on their 11 PM news for most of their revenues, and the lower ratings for the Leno show significantly drove down their viewership. It seems that a lot of TV viewers simply stay on the same station when the local news comes on. This move was killing local affiliates, and they threatened to stop showing the Jay Leno show to protect themselves. The decision was reversed this week.

    So the question is: why was this impact on local affiliates overlooked in the original decision? Was it not considered much at all and became an unintended consequence? Was it an assumption that the impact on local affiliates would be negligible? Was the decision made by NBC in isolation, without any concern about the impact on local affiliates? No matter which of these it was; it was a faulty decision and expensive mistake that could have been avoided if the decision was made more thoroughly.

    The decision to bring Jay Leno to prime time provides a case study in decision making, but not the good decision example I originally thought it was. It provides an example of how important it is to think through decisions better than this.