How Procrastination Can Make You a Better Leader
Strategic patience and the index of desperation.
Leadership often requires quick decisions; however, sometimes the best decision is to wait and see what happens.
In his book Originals, psychologist and author Adam Grant praises procrastination. He explains that “leaders who drive change effectively are those who wait patiently for the right moment.” I like to think of this as “strategic patience.”
Say you’re walking around a new neighborhood looking for a restaurant. You want to choose one before you get too hungry. If you’ve just started looking, it would take a really good restaurant to get you to settle. An hour later, you’ll probably settle for any restaurant that’s not Chuck-E-Cheese (better go hungry than suffer the Chuck-E-Cheese mayhem).
In business, you may be looking to acquire a company within three years or to fill an open position with the most qualified candidate within a year.
Strategic patience should be high if you have a long time to decide. Most leaders have a bias to action and don’t make use of the time they have left to make many decisions.
There’s a mathematical model for this. (If you don’t like math, keep reading...this is a super simple framework and you may be interested in the dating advice that follows.)
Suppose you give yourself ten years to get married, after which you’ll just marry the person you’re dating at the time. Here are the assumptions:
You rank potential mates on a scale of 1 to 100.
The average candidate scores 50.
The population is evenly distributed.
You meet one candidate each year.
The first year you meet someone you like. They’re a 60 out of 100. You might feel inclined to marry them because they’re above average. But, on the other hand, if you wait you might meet a 90 or even a 100 (my beautiful, intelligent, funny, and kind wife, Anne, is clearly a 100).
To solve for the optimal decision rule, you need to start from the endpoint.
In year ten, the expected score of the person you’ll meet will be 50.
So, in year nine, you shouldn’t settle for anyone below 50. Make sense? If you meet a 39 in year nine, why not take a chance at meeting a 50? (This assumes you’re tolerant to risk.)
Your decision in year eight, however, gets more complicated because you have two more chances to meet a 50 before your deadline. Therefore, your threshold should probably be a little higher than 50. Should you settle for a 51 in year eight? In other words, is a 51 better or worse than two more dice rolls?
Using the same logic, your quality threshold should increase as you work backward from year seven to now. The more chances you have left, the pickier you should be.
You can see this charted out with the solution in the figure below.
The marriage problem is described in Smith, D. K. (1997, September). Dynamic Programming: An introduction - plus.maths.org. Plus Magazine. https://plus.maths.org/issue3/dynamic/feat.pdf
This line is your decision rule. In any given year, except year ten, you should marry only if the person you meet ranks above that line. The line decreases with time. The formula is derived from simple probability calculations assuming the population is equally weighted between 1 and 100.
And as you can see from the title of this chart, I like to call this line the Index of Desperation, because, as time passes, you must lower your standards.
Now, we intuitively know that our standards should go down as time passes. That’s not the point I’m trying to make here. Rather, I want to point out that the most common error in judgment with multistage decisions is that most of us don’t take advantage of the time we have left, and our standards go down too quickly because we want to get it done.
Unfortunately, not every decision can be “solved” as simply as the one above, but the lesson remains. The key is to know when you should take decisive action and when you shouldn’t.
The next time you’re faced with a situation that requires you to make a high-stake decision, do yourself a favor and ask yourself: Do I need to make this decision now?
I hope you enjoyed this,
Seb
Check out my interview with Ryan Hawk here!
When he decided to write a book on leadership and self-improvement, Sébastien Page was rejected by over 200 literary agents.
He was asked, “Why would a finance expert write about leadership?” He was told to stay in his lane.
Sébastien has more than two decades of leadership experience. As an author, he believes breakthroughs often happen when experts venture outside their field. That is why, in "The Psychology of Leadership," he went beyond finance and economics to study research in psychology.
He is currently Head of Global Multi-Asset and Chief Investment Officer at T. Rowe Price. He oversees a team of investment professionals actively managing over $500 billion in assets under management.
Sébastien won research paper awards from The Journal of Portfolio Management in 2003, 2010, 2011, and 2022 and the Financial Analysts Journal in 2010 and 2014. In addition to The Psychology of Leadership, he is the author of Beyond Diversification: What Every Investor Needs to Know About Asset Allocation (McGraw Hill, 2020) and the coauthor of Factor Investing and Asset Allocation (CFA Institute Research Foundation, 2016).
Sébastien is also a member of the editorial boards of the Journal of Portfolio Management and the Financial Analysts Journal, and the Board of Directors of the Institute for Quantitative Research in Finance (Q Group). He regularly appears in the media, including Bloomberg TV and CNBC, and was recently named amongst the 15 Top Voices in Finance by LinkedIn.