The Fog Of Decision Making


Think | Act


One in a series of Leadership Articles to cause you to think and perhaps to act. Read other articles.


I attended the most recent session of the Rotman’s School of Business training program for Corporate Directors over the past year. During the course of the program I had time to both read and think about senior level leadership decisions.

How hard could it be?

From both this program, and my experience as a consultant, I find it incredibly hard to understand and then influence change within the process of effective decision making for the most senior level management of corporations. There is a reason for that and it goes like this; complex decisions made at the top level of a corporation are always difficult because those making the decisions are quirky, fallible, normal humans.

Decisions and Devices

In researching this topic for a written article I summarized a few points as an overview. You, my faithful reader, will get the data dump and hopefully some insight into the process of making good decisions.

There are many cognitive biases which work toward derailing decisions, in fact there are probably hundreds of things that affect decision makers, but here are a few that I think need special attention when it comes to decisions at the board or senior level of an organization;

  1. Group Think—is a type of thought process experienced by group members who amicably work though conflict and reach consensus without being objective or critical of the underlying process by challenging, analyzing, and evaluating ideas.
  2. Risk Asymmetry—wherein we seek risk aversion for positive prospects and risk taking for negative prospects.
  3. Availability Bias—causes decisions to based upon information that is in our memory rather than relevant data more difficult to find.
  4. Hindsight Bias—humans attach a lower probability to an event prior to it occurring than after it occurs.
  5. Induction Flaws—the tendency to formulate a set of rules based upon little known data (e.g. one point on a graph does not itself make a trend).
  6. Confirmation Bias—we seek and utilize data that supports our position rather than address data that conflicts with it.
  7. Contamination Effects—irrelevant or unrelated proximate data is allowed to influence decisions.
  8. Scope Insensitivity—wherein we do not proportionally adjust what we would be willing to trade for harms of different orders of magnitude.
  9. Bystander Apathy—as part of a crowd we will more likely neglect to take a stand that requires individual responsibility.
  10. Overconfidence effect—is a bias in which subjective confidence consistently exceeds the objective accuracy of predictions.

Act on analysis

As a leader is is up to you to determine the tone in the room and establish whether any of the above factors are unduly influencing decisions. No group of leaders will ever be free of their biases but they can address and deal with them constructively.

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