TGBA #30: The Brink of Armageddon: Lessons from JFK for Today's Financial Advisors

Welcome to the 30th edition of #theGoalsBasedAdvisor Newsletter!

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Sixty-two years ago, the world precariously teetered on the brink of nuclear annihilation. The Cuban Missile Crisis of October 1962, its resolution, and the aftermath illustrates the razor-thin margin between success and failure. And how critical rational thinking and decision-making are in achieving the desired outcome.?

At the heart of this crisis were two pivotal moments in the presidency of John F. Kennedy: the Bay of Pigs invasion and the Cuban Missile Crisis itself. Each event, marked by its distinct approach to decision-making, offers invaluable lessons for financial advisors and leaders in wealth management today.

The Bay of Pigs: A Rush to Failure

The Bay of Pigs invasion in April 1961 was a failed attempt to overthrow Fidel Castro's communist regime in Cuba. A rush to action, a fixed goal, and an inflexible approach characterized the plan, which was initially developed during the Eisenhower administration. The plan ultimately resulted in a disastrous failure. The operation was executed without sufficient critical questioning, leading to many errors. The exile army expected U.S. air support that never materialized, and communication between President Kennedy and field commanders was virtually non-existent. Castro's military and political strength was underestimated, and there was no significant internal support within Cuba to challenge his rule. Allies, both in Latin America and Europe, were not consulted, and the United Nations was misled about the nature of preliminary attacks that was the reported stimulus to action. The secrecy surrounding the operation hindered serious discussion of its risks and ultimate purpose, and the invasion lacked a basis in international law, positioning the United States as an outlier in a system of legal obligations it had promoted since World War II. The aftermath was a diplomatic embarrassment for the United States, discrediting the CIA and pushing Castro closer to the Soviet Union.

The Cuban Missile Crisis: Deliberation and Diplomacy

In stark contrast, the Cuban Missile Crisis showcased Kennedy's evolved leadership style. The Chairman of the Joint Chiefs of Staff, General Maxwell Taylor, told Kennedy that the chiefs unanimously agreed on a surprise bombing attack against the known missile sites. “We don’t have any choice except direct military action,” Air Force Chief of Staff Gen. Curtis LeMay added. The blockade, he worried, would provide the Soviets with time to hide their missiles, and it would even encourage them to move against Berlin. “But what about the Soviet reaction to an attack on Cuba?” the president asked.They will not respond, LeMay assured him. We just have to be clear that “if they make a move we’re going to fight.”

Kennedy resisted the initial calls for a military strike. Instead, he sought a diversity of opinions, engaged in second-order thinking, and strived to understand Nikita Khrushchev's motivations. He proposed that “we ought to think of why the Russians did this.” Kennedy's approach was characterized by a refusal to rush into a decision, a commitment to exploring all possible outcomes, and a determination to find a solution that would allow both leaders to save face. This deliberate and diplomatic approach averted a nuclear war, demonstrating the power of restraint, flexibility, and empathy in leadership.

“These brass hats have one great advantage in their favor,” President Kennedy sardonically remarked to his aide Dave Powers: “If we listen to them and do what they want us to do, none of us will be alive later to tell them that they were wrong.”

And the military advisors WERE wrong. Had the president not insisted on a blockade, had he accepted the Chief’s recommendations (also favored by the majority of his advisers), he most likely would have precipitated a nuclear war. If American troops had assaulted the island, they would have been confronted by four times the 10,000 Soviet troops the CIA had estimated were in Cuba, and an array of Soviet tactical nuclear weapons that American intelligence had not discovered before.

Cognitive biases influenced both the Bay of Pigs and the Cuban Missile Crisis. In the Bay of Pigs, biases such as overconfidence and confirmation bias led to a flawed decision-making process. In contrast, during the Cuban Missile Crisis, Kennedy actively worked to counteract these biases by seeking diverse viewpoints and considering the long-term consequences of his actions.

Tools for Anticipating and Avoiding Pitfalls

To counter cognitive biases and improve decision-making, two tools can be particularly useful: the Six Thinking Hats and pre-mortems.

• Six Thinking Hats: This method, developed by Edward de Bono, involves looking at a problem from six distinct perspectives, each represented by a different colored "hat." These perspectives include facts (white hat), emotions (red hat), negative judgement (black hat), positive judgment (yellow hat), creativity (green hat), and process (blue hat). By systematically exploring these perspectives, teams can uncover a more comprehensive understanding of a problem and develop more creative and effective solutions.
• Pre-mortems: A pre-mortem is a strategy developed by the research psychologist Gary Klein. In this approach, a team (or individual) imagines that a project has failed and then works backward to determine what could have led to this failure. This approach helps identify potential problems and weaknesses in a plan before they occur. By anticipating what could go wrong, teams can take proactive steps to mitigate risks and increase the chances of success.

Lessons for Financial Advisors

For financial advisors and leaders in wealth management, there are lessons from these historical episodes:

• Encourage Diverse Viewpoints: Promote an environment where diverse viewpoints are welcomed and critical thinking is encouraged. Avoid groupthink by fostering open communication and constructive dissent. This is true for team meetings, strategy sessions, or in client meetings.?
• Learn from Failures: Analyze failures to understand root causes and improve future decision-making. Embrace the opportunity to learn and grow from mistakes. Ask why clients left or why a particular growth strategy had no traction. Avoid pointing fingers or assigning blame.
• Remain Adaptable: Stay flexible and open to adjusting strategies as circumstances change. As Mike Tyson said ‘everyone has a plan until they get punched in the nose’. His point is not that you shouldn’t have a plan, but that you should be ready to change it.
• Understand Client Motivations: Deeply understand your clients' perspectives and needs, mirroring Kennedy's effort to understand Khrushchev's motivations. See newsletter edition #22: The Hidden Competitive Advantage - Asking Better Questions
• Use Tools to Anticipate Pitfalls: Employ techniques like the Six Thinking Hats and pre-mortems to explore different perspectives and anticipate potential failures before they happen.

Conclusion

The Bay of Pigs and the Cuban Missile Crisis offer timeless lessons in leadership, decision-making, and the importance of critical thinking and empathy. For financial advisors, these lessons underscore the value of diverse viewpoints, the necessity of adaptability, and the power of understanding client motivations. By applying these lessons, financial advisors can navigate the complex landscape of wealth management more effectively, making better decisions for their clients and their practices.

As Kennedy said: I know few significant questions of public policy which can safely be confided to computers. In the end, the hard decisions inescapably involve imponderables of intuition, prudence, and judgement.

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