The politics of decision-making and the "Johnson Treatment" - Avoid with investment decisions

 

Lyndon Johnson was a politician who got what he wanted. He was persuasive not always through the weight of his arguments but through the weight of his personality. He was known to lean into people to make them uncomfortable enough to be swayed to his point of view. It was the Johnson treatment. The photo above shows Johnson giving the treatment to Senator Ted Green from Rhode Island. Newspaper columnist Mary McGrory described it as “an incredible, potent mixture of persuasion, badgering, flattery, threats, reminders of past favors and future advantages”

Johnson was a master legislator in the US Senate, and he used all his skills to get his way. This heavy-handed behavior was an effective process of him, but that is not an effective way to reach investment decisions. 

You see the treatment in investment committee meetings all the time. The weight from authority, the senior portfolio manager, or the committee members that has the strongest personality will win the day. The Johnson treatment is present, and the best arguments are often lost in the debate. 

Are their ways to solve the politics of decision-making? It is not easy, but there are few ways to improve the situation. First, don't have members present opinions. Focus primarily on the facts, what is known. Second, focus on the link between facts and what is the question to be answered. There is a projection from facts to prediction, and a link between facts and market reaction. This link can isolate what is quantitatively measurable and not focus on the weight of personality. Third, there is a focus on the prediction of each committee members within the context of facts and linkage. Everyone has to have an opinion. Fourth, there is accountability for each individual prediction, so the quality of judgments can be measured. The members of the crowd can be handicapped.

The Johnson treatment may work well in building to a conclusion for a politician but investment decisions must be based on the weight of the evidence and the quality of thinking. The treatment for good investment decisions must flow from facts.