I hear about bad leadership decisions in the work I do, and have found a book that sheds light on what happens. This one is excellent:

Authors Sydney Finkelstein, Jo Whitehead and Andrew Campbell have studied how smart leaders make catastrophic decisions. In Think Again: Why Good Leaders Make Bad Decisions and How to Keep It From Happening to You (Harvard Business School Press, 2008), these experts show how the brain’s thinking processes can distort judgment.

No matter how smart leaders are, everyone is subject to faulty thinking. Sometimes it occurs because of emotions that interfere with rationality. We assign emotional tags to the memories of significant events.

Here are four sources of emotional tags that can interfere with sound decision making:

  1. Intense emotional experiences: We may have powerful memories of successes, failures, fears or pleasures that we’ve experienced in the past. These emotions usually help us, but strong memories can also mislead us.
  2. Previously made judgments and decisions: We can tag previous judgments and decisions with strong emotions. When these judgments are sound, our emotions help us focus. But if the judgments are misleading, our emotions can cause us to cling to them.
  3. Personal interests: We often have personal interests at stake in the decisions we make. If these decisions affect only ourselves, our emotional tags will help us reach the right answer. But when our personal interests conflict with our responsibilities to others, our judgment can be unbalanced.
  4. Attachments: As social animals, we are designed to become attached to other people. We can also become attached to a group, places and even possessions. If the decision we’re about to make is likely to affect one of our attachments, the emotions generated can impair our thinking.

When one of these sources of strong emotional memories comes into play, it’s a red flag warning. When no red flags exist, the decision-making process can be fast and simple. When we spot red flags, however, we can design appropriate, effective safeguards that are less likely to demotivate everyone involved in the decision process. Here are four ways to build in decision safeguards.

  1. Experience, Data and Analysis: In business, there are many ways data can be collected and experience broadened. Discussion with key customers can provide valuable feedback. Consultants can be hired to offer objectivity and outside perspectives.
  2. Group Debate and Challenge: The process of debate can help expose assumptions and beliefs. It’s vital to choose the right participants, as the group must identify appropriate challenges that meet organizational goals.
  3. Governance: It may be necessary to set up a separate governance team if one doesn’t exist apart from the decision-making team. The new team should be designed as a vital backstop to stand in the way of any flawed judgments that make it past the decision team.
  4. Monitoring: The monitoring process tracks the progress of the decision. Awareness of monitoring encourages decisions makers to think carefully before making their recommendations. If decision makers know the outcome will be recorded and publicized, they will be motivated to think—and rethink—their positions.

What do you think about these ideas? I’d love to hear from you.