Who’s Really Calling the Shots?
Being decisive is looked upon as strength in leadership. What is less assumed are the subtle but inherent biases that can creep into the decision-making process. Why should you care? With the accelerated rate of change in today’s business environment, the difference between success and failure is increasingly affected by the rate at which we make creative, cohesive and strategic decisions. A wrong decision costs precious time, allowing a competitor to swoop in and take over or causing your organization to stumble while trying to alter the course.
A recent McKinsey study of more than 1,000 major business investments showed that when organizations worked at reducing the effect of bias in the decision-making processes, they achieved returns up to seven percentage points higher. (“The Case of Behavioral Strategy,” McKinsey Quarterly, March 2010)
Yet the most dangerous thing about these cognitive biases is that we have no real way of knowing that they are happening to us. As a leader you MUST put into place practices to break through the insidious biases. Who in your organization gives you real, honest feedback on your decisions? Who pushes back on you and challenges your thinking? What practices do you have to ferret out cognitive biases and push through to stronger decisions?
The first step to breaking through biases is knowing the common decision-making biases to watch out for. Many of us are familiar with a common bias called group think. This is the tendency of groups to jump in and go along with an idea or decision which seems to be popular. Group members rush to minimize conflict by converging on the first decision that appears to be gathering support. Sadly, though, group think squelches the dialog necessary to come up with creative, collaborative problem-solving or brilliant ideas. Speed becomes the mantra instead of thorough, careful, comprehensive or ingenious thinking.
What are some other common biases? The list is too exhaustive to explain in one post. Behavioral psychologists have studied this phenomenon since the 1970s, when I first started my research into cognitive science. My next post will discuss a few biases I have seen at work and how great organizations are breaking through the biases. Too eager to wait? Check out some of these books below:
Think Twice: Harnessing the Power of Counterintuition by Michael J. Mauboussin
Think Again: Why Good Leaders Make Bad Decisions and How to Keep it From Happening to You by Sydney Finkelstein, Jo Whitehead and Andrew Campbell
Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions by Dan Ariely
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