The Big Decision

"Whenever you see a successful business, someone once made a courageous decision"

These are the words of Peter Drucker (n.d.), a famous management consultant, which
manifest the effectuation of a good and courageous business resolution even in the midst of crisis.
Such example of a risky but effective decision was made during the 2008 economic recession, also
called as the global financial crisis. These business decisions became the main subject of the 2015
critically-acclaimed biographical film entitled "The Big Short", directed by Adam Mckay. According
to Tunzelman (2016), the film was based on a 2010 nonfictional book named "The Big Short: Inside
the Doomsday Machine" written by Michael Lewis. It stars various multi-awarded actors namely
Christian Bale, Steve Carell, Ryan Gosling and Brad Pitt. The performance of the main characters in
the events that transpired in the film is a good exemplification of an effective decision-making
process.

The film follows the story of various investors prior to the 2008 economic recession. These
investors consists of Michael Burry, Mark Baum, Jared Vennett, Charlie Geller, Jamie Shipley, and Ben
Rickets. Before 2008, through research and analysis, Burry discovered the instability of the subprime
loans repackaged into the collateralized debt obligations (CDOs). This led him to bet against the
housing market through the investment of the money of his investors, amounting to more than one
billion dollars, on credit default swaps. Such actions captivated the attention of Vennet and Baum,
prompting them to follow the decision of Burry. On the other hand, Geller and Shipley of Brownfield
Capital also learned about the discovery of Burry and through the help of Rickets, they have also
invested in short selling the housing market. Eventually, these investors made the right decision and
gain huge profit. However, throughout the events, these investors learned about the fraudulent
system and the corruption in the market. They have also realized the detrimental effects of such
corruption not only on economy but also on the society.

The decisions of the characters were effective because the three principles to a better
decision making of Matthew Confer were evident on their decision making process. According to
Confer (2019), these principles are: challenge the constraints, embracing the pre-mortem, and check
the basics. Prior to 2008, the housing market was seen as stable. Investing against the stocks of this
market was blatantly ludicrous. Despite of this, Burry challenged this constraint and checked the
basics through researching about the subprime loans. He carefully analyzed the risk of these loans
and after the deliberation, discovered the imminent collapse. The principle of pre-mortem, on the
other hand, was seen through the actions of Baum. Because of his initial pessimistic stance towards
the offer of Vennett, his partnership conducted further investigation about the issue. Their findings
basically solidify the discovery of Burry.

In a business context, the decision makings of the main characters, particularly Burry, were
exceptional. The reason behind this is that they have achieved their goal to realize profit and became
firm on their decision even if such decision have met various opposition. However, ethically, their
actions must be condemned because of its opportunistic nature. Instead of making an effort to warn
the government and establish possible solutions, they have exploited the impending economic
recession. Nevertheless, the film explicitly presented that, initially, the characters, excluding Burry,
did not anticipate the global recession. Aside from this, after their realization, the two young
investors of Brownfield Capital did try to reveal the imminent recession and fraudulent system
through the media but were refused. Furthermore, the film implies the negligence and
overconfidence of the large banking institutions and the government toward the early stability of the
CDOs. Such confidence would make them disregard the discovery of Burry and the other
businesspersons.

In conclusion, “The Big Short” not only presented the economic recession caused by the
fraudulent system and corruptive practices of large institutions, but also reflected an effective
decision making process in a business perspective. The film manifested the three principles of Confer
concerning decision making. Hence, excluding the unethical means, the film showcases an example
of a good decision making process.
References:

Peter Drucker. (n.d.). AZQuotes.com. Retrieved February 19, 2020, from AZQuotes.com Web site:
https://www.azquotes.com/quote/459993

Confer, M. [TEDx Talks]. (2019, July 15). Before You Decide: 3 Steps To Better Decision Making |
Matthew Confer | TEDxOakLawn. Retrieved February 19, 2020, from
https://www.youtube.com/watch?v=d7Jnmi2BkS8

Tunzelmann, A.V. (2016, January 27). How historically accurate is The Big Short?. Retrieved February
19, 2020, from https://www.theguardian.com/film/2016/jan/27/the-big-short-financially-
accurate-adam-mckay-subprime-money-bale-gosling-pitt