We are quick to pass judgment and make snap decisions. The smarter and more educated we are, the more overconfident we are about our conclusions.
Humanity doesn’t have a good track record for decision-making. Businesses are even more notorious for failed product launches, mergers and acquisitions.
Clearly, our brains are flawed when it comes to making sound choices. We are easily biased, prone to influence from emotions and at times irrational without conscious awareness.
Researchers have long studied failed business decisions to identify common stumbling blocks. Given that we’re more irrational than we’d like to believe, how can we improve the quality of our leadership decisions?
Many business leaders are skeptical about the value of a decision process over hard-number analyses. The research is nonetheless clear: A better decision process substantially improves results and associated financial returns.
After examining outcomes (revenues, profits and market share) of over 2,200 business decisions, one study found that “process mattered more than analysis—by a factor of six.”
This article explores the reasons business organizations are prone to decision errors, and suggests a decision process for making great leadership decisions.
This is a brief synopsis of a 1,400-word and an 860-word article and Article Nuggets,*suitable for consultants’ newsletters for executives and leaders in organizations. It is available for purchase with full reprint rights, which means you may put your name on it and use it in your newsletters, blogs or other marketing materials. You may also modify it and add your personal experiences and perspectives.
The complete article includes these important concepts:
- Decisions: Based on Analysis or Process?
- Avoiding Errors
- Confirmation Bias
- Status Quo
- Loss Aversion
- Sunk Costs
- Planning Fallacy
- The WRAP Process
- Fast and Slow Thinking
- Organizational Thinking
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