Why Good Leaders Make Bad Decisions

by Andrew Campbell, Jo Whitehead, and Sydney Finkelstein, The Harvard Business Review; February 2009.

Why do good leaders sometimes make poor decisions? According to this Harvard Business Review article, leaders are just as vulnerable to basic cognitive biases as the rest of us. Additionally, we entrust leaders to make public decisions that affect other people’s lives and livelihoods — meaning the consequences of these decisions are more exposed.

Authors Campbell, Whitehead, and Finkelstein raise awareness of common mental traps that marshal against good decisions. Their analysis is based on decision neuroscience; research into how the brain works when faced with choice.

Most decisions are made through heuristics — pattern recognition and emotional tagging which usually makes for quick, effective decisions. Though they often serve us well, sometimes these shortcuts produce the wrong result. The aftermath of Hurricane Katrina is a classic example the authors point to where leadership decision-making went wrong.

In analysing 83 such cases of flawed decisions by influential individuals, this piece identifies three key factors that distort judgment:

  1. 1. The presence of inappropriate self-interest
  2. Distorting attachments
  3. Misleading memories

In order to safeguard against these sources of bias, the authors design an approach to recognize red flag warning signs:

  • Lay out the range of options
  • List the main decisions makers
  • Choose one decision maker to focus on
  • Check for inappropriate self-interest or distorting attachments
  • Check for misleading memories
  • Repeat the analysis with the next most influential person
  • Review the red flags you have identified

Once a red flag is detected, leaders must introduce more debate, independent assessment and governance. The article makes a strong case for important decisions to be explicitly examined.

To order a copy of the full article see: www.hbr.org

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