How Sony Could Have Won a No-Win Situation Sony's reaction to the cyber attack against "The Interview" caused far more harm than anything the hackers leaked.

Life is full of no-win situations. Executives and business leaders face them all the time. And they don't get to just shrug their shoulders and make excuses about being caught between a rock and a hard place. They have a responsibility to make the right call and deal with the consequences. And those can be the hardest decisions to make.

The only saving grace is that dealing with no-win situations can reveal what you're really made of and help build character. Besides, they only appear to be lose-lose on the surface. If you dig deep enough, fully understand the situation, and are completely honest with yourself, you'll usually figure out what the right thing to do is.

Case in point: Sony's initial decision to pull the plug on the Christmas Day release of "The Interview," a Seth Rogen action-comedy about a CIA plot to assassinate North Korean dictator Kim Jong-un, after a massive cyber attack and terroristic threat by the hackers.

Some blasted Sony for giving up its right to free expression and giving in to the hacker's demands, even though Homeland Security said there was no credible physical threat. Sony Pictures CEO Michael Lynton claimed he had no choice, that it was the cinema owners' decision not to screen the movie that forced his hand.

Others said Sony was caught between a rock and a hard place. That it was a no-win situation because, had it released the film and the cyber criminals made good on their threat, Sony would have been sued for negligence and skewered by the media for putting profits ahead of customer safety.

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Meanwhile, Sony then flip-flopped, agreeing to allow some theaters to show the movie on Christmas Day while seeking additional channels to distribute the film. This would seem to contradict its posture of just a few of days ago.

Now let me explain what's really going on here and how Sony's response to a perceived no-win situation was the wrong decision that only made matters worse.

Months ago, Sony Corp. CEO Kazuo Hirai (Lynton's boss) requested that Kim's gruesome death scene be toned down and entirely deleted from international releases. It's unheard of for the chief executive of a $75 billion company to micromanage a $44 million spoof.

So early on, Sony Corp. seemed to have a risk-averse and/or politically correct posture toward the film.

Then came the cyber attack aimed at stopping the film's release, including the leak of several versions of unreleased films, confidential information, and embarrassing emails. At that point, I'd be willing to bet that Sony executives – especially the ones involved in those compromising email exchanges – had wished they'd never made the movie.

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Finally came the threat of 9-11-style violence if the movie was released as planned. At that point, it was Sony's decision to allow theater operators to opt-out of screening the film. And when they of course took Sony up on their offer, that created the perfect opportunity to cancel the release of the troublesome movie.

Clearly, Sony's decision was all about risk aversion. And its response to the backlash from those who rightly felt that kowtowing to cyber bullies hurt the movie industry and American interests was that it had no choice. That it was caught between a rock and a hard place. That it was a no-win situation.

But had Sony stuck to its guns and released the movie as planned, it would have made a strong statement about standing up for freedom instead of giving in to fear and threats as Ben Franklin once wrote, "Those who would give up essential liberty, to purchase a little temporary safety, deserve neither liberty nor safety."

Of course, the company still would have had to alert police, theater owners, and moviegoers to the risk. And the movie would almost certainly have lost money. But that would have been the right decision to make and its consequences would have been justified. That's hardly a no-win situation.

Instead Sony is backpeddling all over the place, reactively whipsawing between the hacker's threats and the public's backlash. It's a PR nightmare that makes the company look weak and diminishes its brand far more than anything the hackers leaked. And the movie will likely lose money anyway. Now that's a no-win situation.

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