Tag: George Marshall

The Anatomy of a Great Decision

Making better decisions is one of the best skills we can develop. Good decisions save time, money, and stress. Here, we break down what makes a good decision and what we can do to improve our decision-making processes.

***

Improving our decision-making abilities is a central goal at Farnam Street. Better decisions save time, money, and stress. While it’s an investment now, in the long run, learning principles and developing a multidisciplinary lens that we can apply throughout life is a worthy investment.

As we have said before, a decision should not be judged solely on its outcome. Sometimes good decisions produce bad results. A recruiting process that has resulted in mostly excellent candidates will still occasionally fail to weed out a bad fit. It is impossible to have perfect and complete information for all the variables involved. So we do the best with what we have.

Using a decision journal can move us to that place where we are consistently making better decisions. At its core, the technique of identifying and reflecting on process from beginning to end helps us achieve the two main qualities in better decisions:

  1. Using principles, not tactics
  2. Looking at a situation through a multidisciplinary lens

These qualities are what we need to improve over time. And in the same way compounding interest increases our bank balance, better decisions produce exponentially better results the more of them we make. Hard decisions today, made well, prepare us to make decisions more easily in the future.

When we look around, however, to see what we can learn from others who made great decisions, we often judge based solely on the outcomes. Whether a decision by a family member to buy Coca-Cola stock in the ’80s, or Caesar to cross the Rubicon, we evaluate a decision as good based on how things turned out.

Evaluating decisions on outcomes prevents us from learning. We need to dive into a decision, cut it open and examine its parts. Regardless of what happened, learning how a decision was made is the place to find knowledge. So what does the anatomy of a great decision look like?

The Marshall Plan

After WWII, Europe was in ruins. Much of the infrastructure had been destroyed. Many people were starving, and had lost everything they possessed. Those systems we take for granted, but on which we rely daily—transportation, manufacturing, agriculture—had been devastated. The economies were essentially broken, and the countries that saw a lot of fighting had much to rebuild. But with what money? Many countries were in serious debt. Continued, widespread economic hardships were on the horizon.

In 1947, Secretary of State General George Marshall put forward a plan that has since carried his name, a plan to give a massive amount of money to several European nations. Those countries accepted, the continent was rebuilt, and Marshall is credited with one of the most positive defining acts of economics, politics, and ethics in the last century. But when you look at the thinking that went into the Marshall Plan, the reasoning behind the details, you see that it would have been a great decision regardless of the outcome.

Asking the Right Questions

At the beginning, participants asked questions. What do we want to achieve? What problems are we addressing? What does a successful outcome look like?

From there came the principles, things like: strong economies minimize social unrest; countries that work toward mutual goals are less likely to fight each other; let’s not have another war in Europe anytime soon.

Starting from these principles, decision makers evaluated the situation through a multidisciplinary lens. Economics, politics, humanitarian responsibilities, historical and psychological factors—the plan sought to address issues on many fronts and took a wide perspective into account.

The plan was developed in the State Department of the United States. It was not the work of a single individual, and contributions from many people made it into the final version that Marshall fought for in Congress.

In the end, there were three key decisions made in terms of the structure of the plan:

  1. To give, versus lend, the majority of the aid
  2. To require the nations receiving the aid to work out how to allocate it
  3. To invite Russia to partake

Using Multiple Lenses

The decision to give rather than lend the majority of the aid was the result of looking at the situation through economic, political, and humanitarian lenses. It was also a win-win.

Immediately following the war, the European nations had put significant effort into restarting their economies. But they were doing it with borrowed dollars, needing to import far more than they were capable of exporting. Many economies needed modernization, which was impossible to fund while paying for imports at the same time. Without full economic recovery in Europe, there was great danger of a recession, or even a second depression. Basically, Europe needed money.

But economies are also about people. It is people who produce and consume and develop the economy. So it wasn’t just the countries that needed financial assistance, but the people in them. The designers of the plan knew that hungry, desperate people would only create more social unrest. They saw that if they didn’t give the money to Europe they might very well have to spend it on national security as Europe fell apart.

And we can’t discount the impact of the physical reality of the aftermath of the war that the liberating forces confronted—starving people, towns reduced to rubble. The case for humanitarian assistance was strong.

Letting the World Do the Work For You

The decision to have the participating nations allocate the aid among themselves was the answer to what the historical, political and psychological lenses revealed.

Many people felt that the approach to reparations after WWI was a significant impetus for WWII. The First World War had a similar effect on the economies and infrastructures of the nations involved. In 1918, angry at Germany, France and Britain had demanded huge sums of money. The problem was, it essentially crippled Germany economically, and caused a social and political situation that created enmity among the European nations. Many argue that it was this series of events that produced a situation in which Hitler could come to power.

The creators of the Marshall Plan were aware of this, and it was one of the elements that influenced the design of the terms. If Germany collapsed again, they might be fighting World War III in twenty years.

By asking enemies to work together and approve each other’s share, the plan created a buy-in that defused much of the anger and animosity between the nations. Just a couple of years earlier they had been at war with each other. After sacrificing so much in both lives and money, it was natural that the various peoples were angry over both who started the war, and the many violent and destructive events that were enacted over those six years.

But the US decided to not take sides and extend the alliances of the war. The plan creators realized this wouldn’t help fulfill the principles they had chosen to abide by. Europe working meant Europe working together.

Outcomes Over Optics

Inviting Russia to share in the aid was another important result of applying those political, historical, psychological, and humanitarian lenses.

The end of WWII marked the beginning of the Cold War. More nebulous by nature, starting a couple of years after the liberation of Europe and the dropping of the atomic bomb, this political climate would shape international relations for the next 40 years. The Marshall Plan took into account how best to navigate this complicated territory. Russia had been a valuable ally during the war, holding the eastern front and inflicting considerable damage on Hitler’s efforts. But immediately post-war their actions demonstrated a desire to at least influence, if not control, the political structure of the world. Their version of communism was at direct odds with US democracy, and was thus considered a legitimate threat.

Even though there was very little expectation that Russia would participate, and possibly even less desire to give them money, Russia and its allied countries were invited by both the US and the European nations to participate in the talks involving the implementation of the plan. They chose not to, and followed up with accusing the plan of being a front to American imperialist goals. This was important because it forced Russia’s hand. They could not later claim that the Iron Curtain was something that was thrust on them. It was, instead, something they deliberately chose to build.

The Marshall Plan is remembered as a great decision, not strictly because of its outcomes—though it did contribute to the debatably successful reconstruction of Europe, it did not succeed in preventing the deterioration of relations with Russia—but because it was firmly grounded in principles that were identified and executed through a multidisciplinary lens.

Footnotes
  • 1

    Sutcliffe, Anthony. An Economic and Social History of Western Europe since 1945. London: Longman, 1996.

  • 2

    Unger, Debi and Irwin. George Marshall: A Biography. New York: HarperCollins, 2014.

George Marshall’s 1920 Letter on True Leadership

“I am certain in the belief that the average man who scrupulously follows this course of action is bound to win great success.”

***

George Marshall must be one of, if not the most under appreciated leaders in American history, and certainly of the 20th century.

Not only was he the military genius in charge of the US Army during World War II and the most directly responsible for its success, he was considered the primary leader of the Allied War effort by every major Allied leader. Roosevelt found him indispensable as his Army Commander, Winston Churchill called him the “true architect of victory” in the War, and even Stalin claimed he’d personally trust his life to Marshall. General and future President Dwight D. Eisenhower was his disciple.

It was Marshall who, from a standing start of a few hundred thousand soldiers, raised an army of millions and oversaw the major operations that would lead to the liberation of Europe. (Brilliantly recounted by Rick Atkinson in his three volume series.)

Churchill put Marshall’s best qualities — his leadership in the worst of times — on display when he wrote:

There are few men whose qualities of mind and character have impressed me so deeply as those of General Marshall … He is a great American, but he is far more than that … He has always fought victoriously against defeatism, discouragement and disillusion. Succeeding generations must not be allowed to forget his achievements and his example.

Sadly, outside of military circles, that example does seem a bit forgotten.

Marshall is now mostly known for his genius Marshall Plan, which sought to re-build Europe (including Germany) in the aftermath of the war. But he was much more than that.

Before World War II, Marshall had a long and distinguished military career, including as the primary aide to General John J. Pershing, the Commander of the American Expeditionary Force in World War I. And during this time, Marshall wrote a letter that perfectly exemplifies the qualities of a great leader. It would go on to be included in his posthumously published World War I memoir, Memoirs of My Services in the World War, 1917-1918.

Here, Marshall lays out the four qualities required to be a successful leader in a war situation, and notably two of them overlap with what Warren Buffett looks for in a person.

What strikes us most about them is that they are neither complicated nor available to a select few nor specific to war at all. They are simply hard. And if Marshall’s life is a testament to anything, it’s that the ability to do hard things at the right time is the essence of a great leader.

***

November 5, 1920

General John S. Mallory
15 University Place
Lexington, Virginia

My Dear General Mallory,

Last summer during one of our delightful rides I commented on the advice I would give a young officer going to war, based on my observation of what had constituted the success of the outstanding figures in the American Expeditionary Forces, and you asked me to write out what I had said. A discussion with Fox Conner this morning reminded me of my promise to do this, so here it is.

To be a highly successful leader in war four things are essential, assuming that you possess good common sense, have studied your profession and are physically strong.

When conditions are difficult, the command is depressed and everyone seems critical and pessimistic, you must be especially cheerful and optimistic.

When evening comes and all are exhausted, hungry and possibly dispirited, particularly in unfavorable weather at the end of a march or in battle, you must put aside any thought of personal fatigue and display marked energy in looking after the comfort of your organization, inspecting your lines and preparing for tomorrow.

Make a point of extreme loyalty, in thought and deed, to your chiefs personally; and in your efforts to carry out their plans or policies, the less you approve the more energy you must direct to their accomplishment.

The more alarming and disquieting the reports received or the conditions viewed in battle, the more determined must be your attitude. Never ask for the relief of your unit and never hesitate to attack.

I am certain in the belief that the average man who scrupulously follows this course of action is bound to win great success. Few seemed equal to it in this war, but I believe this was due to their failure to realize the importance of so governing their course.

Faithfully yours,

George C. Marshall
Major, General Staff
Aide-de-Camp

*     *     *

If you’re interested in learning about Marshall, there are several good books written about him including Leonard Mosley’s biography, his own WWI memoirs in which this letter is printed, and Winston Groom’s book about Marshall, Patton, and MacArthur and the winning of the war.

Learning From Your Mistakes … When You Win

“Men ought either to be indulged or utterly destroyed,
for if you merely offend them they take vengeance,
but if you injure them greatly they are unable to retaliate,
so that the injury done to a man ought to be such
that vengeance cannot be feared.”

— Machiavelli, The Prince.

***

In the ancient world, wars were wars of conquest or survival. The Persian, Macedonian and Roman empires were the spear-won fruits of conquest, resulting in the total annihilation of their enemies. By the seventeenth century, however, the increased cost of war made such triumphs nearly impossible. The victors of the Thirty Years War (1618-48) were as devastated as the defeated. Nations lacked the infrastructure to mobilize for total war, and so it became a more limited activity. Small, expensive professionally-trained armies fought campaigns to obtain limited benefits in a series of king-of-the-hill conflicts between dynasties. Total victory, and the accompanying hatred and annihilation of the loser, was rare.

This pattern changed again with the rise of the nation-in-arms. Mass conscript armies, supported by large-scale propaganda campaigns at the home front, fought the wars of Napoleon, the American Civil War, and, approaching the Twentieth Century, the wars of German unification. During the Franco-Prussian War (1870-71), after defeating the regular French army, the Germans had to face a people’s militia; Paris was besieged and bombarded. When the war finally ended, Germany annexed the provinces of Alsace and Lorraine, claiming that they were historically German. But German Chancellor Bismarck himself recommended against the annexation, stating that it would cause continued enmity, and jeopardize any hope for long-term peace between the two nations.

Bismarck was correct; the annexation created resentment that only increased and helped generate the momentum leading to the First World War. (At least someone understood the Hydra.) Four years later, the horrific devastation of the war reinforced the victors’ attitude of debellation – harsh and absolute punishment of the losers to ensure that they are never able to rise again. The Paris Peace Talks were awkward as they tried to balance the ideals of the League of Nations, to create a unified bond of peace and mutual recognition, with the reality of seizures and break-ups of territory, and the reparations to be paid by the losers.

In The Economic Consequences of the Peace, John Maynard Keynes argued that the reparations inflicted on Germany were unjust and would lead to future conflict, the opposite of their intent. Historians continue to debate his arguments. What is true is that the sense of injustice created by the reparations was a major element of Hitler’s rhetoric, and this emotion echoes throughout his speeches in his rise to power. The causes of the Great War had been murky, and it was not clear who was the aggressor. Was Germany forced into aggression by Russian mobilization? Was it right that Germany should have to pay so much, and furthermore, later see the French occupy the Ruhr, the center of Germany’s industry? Hitler used this resentment – an emotion he himself felt to his core – along with the general economic collapse of the 1930s, to create the anger for justice and revenge that brought him public support and the role of Chancellor. Human beings have a strong desire to see justice – that is, our very limited emotional interpretation of it – carried out to restore our belief in fairness in the world.

Fast forward to 1945, and the end of the second global conflict in thirty years, unimaginably worse than the first one. This time the destruction of the defeated was as utter as any nation has suffered since Carthage. The French proposed that Germany’s industrial heartland be annexed, to ensure that France would have the industrial power to always serve as a check on future German ambition. US Treasury Secretary Henry Morgenthau Jr. went even further, proposing to completely de-industrialize Germany, turning it into an agrarian society, incapable of waging modern war.

For the first few years, a variation of Morgenthau’s plan was used to guide post-war policy. However, by 1947, it was apparent that a crippled West Germany was delaying European recovery in general, and the continent would be unable to defend against Soviet encroachment. US Secretary of State George Marshall introduced the plan that bears his name, providing $1.5 billion to West Germany (and over $2.3 billion to France). Between 1948 and 1951, seventeen European nations obtained a total of almost $13 billion ($130 billion in today’s money) in aid through the Marshall Plan. Substantial sums were also provided to Asia, including Japan, during the same period.

Did the Marshall Plan fuel Europe’s post-war recovery? In the two decades after the war, France spent at least the same amount of money fighting two unnecessary wars in Vietnam and Algeria. It’s hard to say that they earned much benefit from the aid. West Germany was better able to invest the money, but economic historians argue that their growth had more to do with their own internal policies on currency stabilization, low taxes for the middle class, and investment in both capital stock and education. But all those polices had to operate in the context of investment, and much of that investment came from the Marshall Plan.

Which was the more peaceful Europe? The Europe of the 1920s or the Europe of the 1950s? Many factors led to the rise of Hitler, the global depression being one of them, but Hitler was molded by his experience living homeless on the streets of Vienna before the First World War, and the turmoil of anger and unemployment that followed the end of the war.

Which Europe are we more grateful for? The idea of a unified Europe was almost unimaginable in the context of the perceived injustice of punishment for losing. Only after the second war did it become real. A Frenchman in 1913, or a German in 1919, would have laughed in disbelief if you described to them how close their two nations are now.

When we win, we often want to be like Machiavelli’s Prince, and win utterly. It is when your opponent is defeated that he is weakest, helpless, and you can take the most from him. And, if somehow he rises to confront you again, then that means you were not severe enough in your punishment, and you should only punish him harder.

But it seems that no victory is complete, now. For every terrorist leader struck down, another pops up to replace him. The Marshall Plan looked at the idea of punition and decided that it wouldn’t work. The only way to make your enemy incapable of revenge would be to wipe them out completely. Or, conversely, rebuild them and take away the cause for anger. Make them more like you, not as a nation, but as a victor.

Still Curious? Check out why win-win relationships are the only ones that stand the test of time.