She recognized that her judgment might be distorted by her attachment to her colleague and by her vested interest in keeping her workload down during her transition. To guard against distorted decision making and strengthen the decision process, get the help of an independent person to identify which decision makers are likely to be affected by self-interest, emotional attachments, or misleading memories.Įxample: The about-to-be-promoted head of the cosmetics business at one Indian company was considering whether to appoint her number two as her successor. This blunder was influenced by his belief that IBM had cheated him early in his career, which made him reluctant to consider using a system linked to an IBM product.
Bad decisions Pc#
Most of the time, the process works well, but it can result in serious mistakes when judgments are biased.Įxample: When Wang Laboratories launched its own personal computer, founder An Wang chose to create a proprietary operating system even though the IBM PC was clearly becoming the standard. Leaders make quick decisions by recognizing patterns in the situations they encounter, bolstered by emotional associations attached to those patterns. Brigadier General Matthew Broderick, chief of the Homeland Security Operations Center, who was responsible for alerting President Bush and other senior government officials if Hurricane Katrina breached the levees in New Orleans, went home on Monday, August 29, 2005, after reporting that they seemed to be holding, despite multiple reports of breaches. The strategy contributed to Russell’s early departure from the top job. It turned out, though, that Boots managers did not have the skills needed to succeed in health care services, and many of these markets offered little profit potential. Steve Russell, chief executive of Boots, the UK drugstore chain, launched a health care strategy designed to differentiate the stores from competitors and grow through new health care services such as dentistry. Nine years later, Daimler was forced to virtually give Chrysler away in a private equity deal. He led the merger of Chrysler and Daimler against internal opposition.
By using the approach described in this article, companies will avoid many flawed decisions that are caused by the way our brains operate.Ĭonsider Jürgen Schrempp, CEO of Daimler-Benz.Managers need to find systematic ways to recognize the sources of bias-what the authors call “red flag conditions”-and then design safeguards that introduce more analysis, greater debate, or stronger governance.These processes usually make for quick, effective decisions, but they can be distorted by self-interest, emotional attachments, or misleading memories. Leaders make decisions largely through unconscious processes that neuroscientists call pattern recognition and emotional tagging.Rather than rely on the wisdom of experienced chairmen, the humility of CEOs, or the standard organizational checks and balances, the authors urge, everyone involved in important decisions should explicitly consider whether red flags exist and, if they do, lobby for appropriate safeguards. Using a global chemical company as an example, the authors describe the steps leaders can take to counteract those biases: inject fresh experience or analysis, introduce further debate and more challenges to their thinking, and impose stronger governance. In their analysis, the authors delineate three “red-flag conditions” that are responsible either for distorting emotional tagging or for encouraging people to see false patterns: conflicts of interest attachments to people, places, or things and the presence of misleading memories, which seem, but really are not, relevant and comparable to the current situation. In this article, Campbell and Whitehead, directors at the Ashridge Strategic Management Centre, together with Finkelstein, of Dartmouth’s Tuck School, describe the conditions that promote errors of judgment and explore how organizations can build safeguards against them into the decision-making process. But in certain circumstances, either one can trip us up and skew our judgment. Both are normally reliable indeed, they provide us with an evolutionary advantage. Modern neuroscience teaches us that two hardwired processes in the brain -pattern recognition and emotional tagging-are critical to decision making. In part, that’s due to the way our brains work. Yet the daunting reality is that enormously important decisions made by intelligent, responsible people with the best information and intentions are nevertheless hopelessly flawed at times.
Bad decisions professional#
Decision making lies at the heart of our personal and professional lives.