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By Ellen Pearlman
Strategic Thinkers:
Sydney Finkelstein, Jo Whitehead, Andrew Campbell
Credentials:
Finklestein is the Steven Roth Professor of Management at Dartmouth's Tuck School of Business and Director of the Tuck Executive Program. He is also the author of more than ten books, serves as a consultant for global companies and is considered an expert on strategy and leadership. Whitehead is a director of the Ashridge Strategic Management Centre and has global experience as a consultant working with The Boston Consulting Group. Campbell is a director at Ashridge Strategic Management Centre, previously he was on the faculty of the London Business School and a consultant at McKinsey & Co. He is also the author of more than ten books and numerous articles on business strategy.
Big Idea:
Past experiences and the judgments and emotions attached to them can lead to poor decisions.
Book:
Think Again: Why Good Leaders Make Bad Decisions and How to Keep It From Happening to You, published by Harvard Business Press, February 2009.
Website:
http://www.thinkagain-book.com
How many of you have lost sleep over a decision you made that turned out to be wrong? I have. And I know I replayed that situation over and over again in my brain wondering how things might have worked out if I did X instead of Y.
A new book-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-tackles the subject of flawed decisions by analyzing 83 situations that involved decisions that were flawed at the time they were made (not situations that just turned out badly). The findings and case studies from this research are very revealing and provide advice on how to anticipate and avoid making bad decisions.
The authors say two factors are involved in all flawed decisions: "an individual or a group of individuals who have made an error of judgment, and a decision process that fails to correct the error." First let's look at how errors in judgment occur.
Our brain plays a major role in how decisions get made. The brain uses pattern recognition to assess the inputs it receives. Sometimes the brain misinterprets unfamiliar incoming data-the authors call this "the problem of misleading experiences"-and makes us think our past experiences are a good match with the current situation. This can lead us to the wrong conclusion. Sometimes previous judgments get connected to the new problem we are solving-the authors call this "misleading prejudgments"-but are inappropriate to help us solve it. Emotions also get tied to our thoughts and memories-the authors call this emotional tagging-and get triggered when past situations seem similar to the current one. Emotional tags can disrupt our thinking due to "inappropriate attachments" to people, ideas, places, and projects or to "inappropriate self-interest" that colors our decision-making and is in conflict with our responsibilities for other stakeholders.
So while you and I think we are carefully analyzing a situation to come to the best conclusion, our brain is busy at work pulling up previous situations and the emotions attached to them to propel us to a result that may be inappropriately influenced by our attachments and self-interest. It's a wonder any decisions come out right! "Much of our mental processing is unconscious," the authors say, "which makes it hard to check."
Next: Increasing Our Ability to Make Good Decisions
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