Think again
Embracing the unknown
Description
Even experienced leaders can make terrible decisions with catastrophic results. Flawed thinking happens when leaders have past experiences that seem applicable but aren't, when they incorrectly apply previous decisions, when personal interests cloud their judgment, or when emotions unbalance their thinking.
To avoid this, insist decisions be fact-based, encourage group debate to counter biases, set up a separate governance team to approve proposals, and monitor and publicize results. Safeguards tailored to potential distortions can dramatically reduce bad calls.
Standard processes often create bureaucracy and disrespect. Keep the base process simple and light, adding customized safeguards only as needed, to cut costs and build respect.
Table of contents
01How decisions get made
Experienced leaders often make decisions based more on intuition, imagination, and prior experience rather than through deliberate analysis of situations. In general, leaders tend to select a course of action that resembles what they have done in similar past situations, then imagine how applying that same approach to the current circumstances might play out. This process relies heavily on pattern recognition and memory rather than carefully weighing multiple alternatives.
When facing a decision, most people evaluate just one potential plan at a time instead of comparing several options. The thought process typically goes: first, we take in sensory information about the situation. Our brain then scans our memories to find comparable experiences, while also recalling the emotions associated with the outcome of taking a certain action in the past.
Next, we assess what type of response the current situation calls for based on this pattern recognition process. We look for cues to check if our initial assessment seems accurate. Then, we consider the plan of action that surfaces from our recollection of that past situation, including the emotional tags we have linked to the results of that plan. In other words, if taking that action in the past yielded positive emotions, we view repeating it more favorably now. However, if negative emotions arose last time, we may seek an alternative plan. We imagine applying this potential plan to the current circumstances, using our knowledge of how things generally operate in the world. If we foresee any problems arising, we cycle back to select a different course of action to evaluate in the same manner.
02Reasons for bad decisions
Leaders often make poor decisions due to four red flags: misleading experiences, prejudgments, self-interest, and attachments. Awareness and strategies like seeking objective input can mitigate these decision-making flaws.
Misleading experiences
Leaders often draw on their past experiences when faced with uncertain situations, but sometimes these experiences can mislead rather than guide. Experts believe that such misleading experiences contribute to more than half of all flawed business decisions. This happens because leaders might become overconfident, focus on information that supports their existing beliefs, use oversimplified analogies, stick to previously successful actions despite different circumstances, or base their expectations on current performance without considering future changes. Misleading experiences usually stem from three main causes: the brain's pattern recognition system sometimes making false connections, emotional biases affecting judgment, and the reconstructive nature of memory which can lead to distorted recollections.
To counteract the influence of misleading experiences, leaders can ask themselves three critical questions about the uncertainties involved, their own relevant expertise, and which past experiences might be misleading. Discussing these questions openly can help identify and mitigate potential biases. Techniques such as seeking diverse viewpoints, encouraging dissent, looking for evidence that contradicts preconceptions, and exploring new alternatives can strengthen the decision-making process.
Direct feedback from those on the front lines and small-scale experiments can also provide valuable insights. In situations requiring quick decisions, taking a moment to critically evaluate one's judgment can lead to more thoughtful and effective outcomes. Recognizing and addressing the potential for misleading experiences can significantly improve decision-making in uncertain contexts.
Mistaken judgements
Our instinctive response to new situations often involves drawing on personal knowledge and past experiences. This can be efficient but problematic if our memories don't align with current circumstances. Prejudgments, especially those with emotional ties, can skew our thinking by anchoring our perspective, reducing objectivity, limiting potential solutions, and coloring new data with old emotions. These biases can lead to false assumptions about various aspects of decision-making, from the nature of the situation to our ability to predict outcomes.
03Avoiding bad decisions
To mitigate flawed decision-making, employing safeguards like independent reviews, checklists, premortem analyses, and slowing the process can significantly reduce biases and oversights, leading to more thoughtful and balanced choices without excessive bureaucracy.
Experience & data
To mitigate the risk of flawed decisions, it's crucial to introduce counterbalancing measures whenever red flags are detected in the decision-making process. One effective strategy is to bring in new data, conduct further analysis, or seek additional viewpoints. This approach helps scrutinize the assumptions and preferences that might underlie a potential decision more closely. Gathering and integrating fresh information can be achieved through various means.
Engaging in direct discussions with key stakeholders, such as important customers, can provide insights that ensure a new product meets their needs. Additional market research, industry reports, or bespoke analyses can offer a deeper understanding of the market. Employing consultants or experts can introduce objective opinions, and engaging multiple firms with differing views can prompt a more critical evaluation of proposals. Simulations modeling different scenarios, adopting a "blank slate" approach to challenge existing business models, and internal competitions promoting diverse perspectives are other ways to inject new information.
Engaging external groups to challenge prevailing views can also prevent narrow thinking. Tailoring the sources and types of information to the specific decision enhances the effectiveness of these safeguards. By deliberately incorporating additional scrutiny and alternative analyses, decision-makers are compelled to consider data that may counter their biases, leading to more careful and objective evaluations. This array of options allows leaders to select the most suitable safeguards against potential red flags, thereby enhancing decision quality and preventing adverse outcomes.
Debate & challenge
Group debate is a powerful tool for preventing flawed decisions by challenging personal biases and assumptions. It becomes particularly effective when the decision-maker is open to new information and analysis. The success of a group debate hinges on creating the right team dynamic and an environment that encourages open dialogue. An independent facilitator can help steer the discussion impartially, while subgroups can explore specific decision aspects in depth.
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