Over the years, I've found that leaders (and people in general) are often resistant to facing the tradeoffs that come with the difficult decisions they make.

You see this a lot with public policy. A simple example is governments mandating that tech companies implement encryption to protect user data and sensitive information. On the surface, this is a great thing. However, several tradeoffs come with encrypted data, the most noteworthy being that law enforcement can't access information related to criminal activities by users or the company itself. So regulators will also ask companies to encrypt their data and provide a back door so it can be accessed when required by law. But, of course, you don't have encryption if you have a back door. Regulators are often unwilling to face the natural tradeoffs associated with the regulations they create.

Similarly, I recently talked with a small group about Chapter 11 bankruptcy (the legal process that allows a business to reorganize its debts while continuing to operate). Some were arguing that it shouldn't be allowed. If someone is going to run their company into the ground, they shouldn't be allowed to have a court step in and save them. At first glance, this also makes sense. So perhaps we should do away with Chapter 11 bankruptcy? Maybe, but only as long as we're willing to face the painful tradeoffs.

With Chapter 11, a business leader is incentivized to raise their hand and ask for help before they become completely insolvent and run out of cash so that debtholders can salvage at least some of their money. Without it, if a leader knows there's no way out, they'll keep the company going until it’s down to its last dollar, hoping to survive somehow, meaning debtholders get nothing. Ironically, Chapter 11 protects debtholders. Further, what would happen to innovation in America if founders of companies knew that if they failed, they were done for good? What would that do to the amount of risk entrepreneurs take? How many companies never would've been founded? There's a reason you see a lot more innovation come out of countries that provide some form of protection to risk-taking inventors.

Of course, one of the most common tradeoffs in business is deciding how much to invest in growth versus how much to expand profit margins. If a leader asks their board, the advice is very often to do both. Said differently, ignore the tradeoffs.

A large part of leadership is making difficult decisions, which are typically just a set of tradeoffs that must be managed. Great leaders know that it’s not just about what you gain; it’s also about surfacing and dealing with downstream consequences and what you’re willing to lose.