Best and Worst Decisions (Continued)

In the mid-1970s, executives at the W.T. Grant variety store chain, one of the nation’s largest retailers at the time, made the decision that the best way to increase sales was to increase the number of customers … by offering easy and quick credit.

That put tremendous "negative incentive" pressure on store managers to issue credit. Employees who didn’t meet their credit quotas risked complete humiliation. Factual reports say they had pies thrown in their faces, were forced to push peanuts across the floor with their noses, and were sent through hotel lobbies wearing only diapers.

Eager to avoid such total embarrassment, store managers gave credit "to anyone who breathed," (sound familiar/Fannie-Freddie) including untold thousands of customers who were bad risks.

W.T. Grant racked up $800 million (billions in today’s dollars) worth of bad debts before it finally collapsed in 1977.

Question: How do leading companies like Grant arrive at such decisions?