decision makingEach day, intelligent leaders make mistakes, with devastating consequences.

Our daily decisions are generally small and innocuous. Others are incredibly important, affecting people’s lives and well-being. I hear about such bad decisions in the work I do, and have found a book that sheds light on what happens.

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 and contribute to bad decisions.

In studies of more than 83 flawed business and political decisions, the authors identify two major factors at play:

  1. An individual or a group has made an error of judgment.
  2. A decision process fails to correct the error.

Normally, when an influential person makes an error of judgment, the decision process will bring the error to light. People speak up. People with different views will challenge the flawed thinking. The facts get exposed and erroneous views corrected.

Complex decisions always involve personal interpretations and judgment. That’s what makes them difficult to get right. You need debate and consensus—but even with both, two important questions arise:

  1. How do you know when you or those debating your premise are coming from a biased position?
  2. How do you know when your consensus is nothing more than groupthink?

Traditional decision-making processes are supposed to follow several logical steps:

  1. Lay out the problem.
  2. Define the objectives.
  3. Generate options.
  4. Evaluate each option against the objectives and other relevant criteria.
  5. Choose the option with the best outcome.
  6. Monitor progress and change course, if necessary.

Many people work under the illusion that if these steps are followed, little can go wrong. But these steps do not take into account what goes on in people’s brains when they weigh options and make judgments.

You probably guessed what happens: we aren’t always logical or rational. It doesn’t mean we’re not smart, it just means we’re human and our brains are prone to faulty thinking.

What have you seen in your work group that has contributed to poor decisions? I’d love to hear from you.