Monday, June 1, 2009

How Leaders Avoid the Eight Errors of Poor Decision-Making in Tough Times

Errorj0104748 The eight errors of poor decision-making (and problem solving) are all related to the mental blinders leaders wear, especially under pressure.

1. Not knowing what to expect

Researchers from Harvard Medical School replicated in a lab the process of screening for weapons at airports. Study participants screened bags for dangerous objects after being told how often these how objects would appear. When they were told that the objects would appear 50% of the time, participants had a 7% error rate. But when they were told that the objects would appear only 1% of the time, the error rate skyrocketed to 30%. (1) We tend to see what we expect. Tell me what a leader believes and I'll tell you what he sees.

2. Refusing to question what you know

Professors at Columbia and New York University tested leaders’ perceptions about their industry. (2) They surveyed 70 managers about sales growth, sales fluctuations, industry trends and so forth. The researchers then compared the leaders’ answers with published market reports and statistics. More than half of the executives made grossly inaccurate statements about sales in their very own business units. About one third of them underestimated sales, while 25% overestimated sales. They thought they monitored their environment closely, they didn’t. To paraphrase Will Rogers, what you don't know may hurt you, but it's what you do know that it isn't so that'll kill you!

3. Not knowing what you are looking for.

When Secret Service agents scan a crowd, they can easily detect an individual reaching into the pocket or moving forward in the crowd because they know what they are looking for. How about you?

4. Failing to solicit outside perspectives.

It's always best to assume you're missing something and to ask questions about it. If you have too many yes-people around you, pay for outside perspectives (and “deselect” a few of the yes-people).

5. Rejecting disconfirming evidence.

When you listen to arguments or read a report without contradicting data, watch out. That should raise a red flag. Invite others to play the devil's advocate and argue contrary positions.

6. Lack of information diversity.

Make considering numerous points of view the norm for your team. One executive I coach makes it a habit to go to the front lines and ask those who are doing the work for their input. Another has made one person responsible for assembling information from multiple sources.

7. Applauding only those with answers.

Many of the meetings I attended as an executive involved people in the meeting trying to look good in front of each other. I can't believe I was caught up in that silly game, but I was. The problem with trying to look good is that people think that admitting you don't know makes you look bad. As a leader, if you start saying “I don't know, let’s find out,” and applauding those who do, others will follow. Cultivate and celebrate truth tellers.

8. Conducting “home on the range” meetings.

I once consulted with an organization that conducted meetings where “seldom was heard a discouraging word.” They were afraid to engage in any conflict. Cognitive conflict actually improves decision-making and results. It's emotional conflict that causes difficulty. Teach your team the difference.

Former CEO of Citicorp, Walter Wriston says that he has driven through his share of rainstorms, listening to some radio announcer in a windowless room telling him that it's a sunny day. He says that the biggest mistake a leader can make is not recognizing the changing economic climate. His advice, never stop looking out the window.

My advice, use this article to help you avoid the deadly sins and let me know if you need help.

Keep eXpanding,


1. Cited in Max Bazerman and Dolly Chugh: Decisions Without Blinders, ‘Harvard Business Review,’ January 2006, 88 - 97.

2. John Mezias and William Starbuck: What Do Managers Know, Anyway? ‘Harvard Business Review,’ May 2003, 16 - 17.

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