Even with great experience, talented teams, and trusted advisors, there are times when all leaders need to bite the bullet and make lone-wolf decisions. Facing tight deadlines, intuition usually takes the place of other guidance—but it certainly isn’t always correct.
Psychologist and Nobel Prize winner Daniel Kahneman doesn’t think you should take intuition at face value. "Overconfidence is a powerful source of illusions, primarily determined by the quality and coherence of the story that you can construct, not by its validity," he told the McKinsey Quarterly.
How can you know when you are making the right decisions? Recent research about the influence of feelings and memory on decision-making helps us better understand how to make informed rather than emotional decisions. Following is a checklist for applying those findings and preventing good leaders from making bad decisions.
Think about how much you really know—and don’t know—about the decision.
Let’s face it. We are biased in every situation. So the first thing to do is identify those areas in which you are potentially biased. Realistically assessing your knowledge of the situation can help avoid an overconfident conclusion. Overconfidence can create illusions about the infallibility of your intuition, and steer you to select data that just supports your initial conclusion. You can avoid this trap by bringing different data sources to the table.
Have a pre-mortem. Imagine you have made a decision and it’s failed.
List all the reasons why it happened. This keeps you from avoiding anyone or anything that challenges your narrative about the competency of your decisions and instead dealing with potential pitfalls before they happen. The beauty of pre-mortems is that they’re easy and help you tweak decisions in beneficial ways.
Put past experience in the right context—is past experience reliable feedback?
In Think Again: Why Good Leaders Make Bad Decisions and How to Keep It from Happening to You, Andrew Campbell and Jo Whitehead, directors of London’s Ashbridge Strategic Management Centre and Sydney Finkelstein, explain that actions already taken—whether driven by rational decision making or not—are filed in our brains with "emotional tags" that serve as markers that can anchor subsequent thinking. When we must make a decision, our brain will recall past situations that seem similar to the current one and access the emotions that are tagged to them. These emotional tags can seduce us into thinking that our past judgments were good, even though objective assessments would record them as bad. For example, Andrew Mason may rely on the past experience of not accepting Google’s offer to buy Groupon as the right decision—but in the aftermath of all that has happened, this may not be the best experience to draw on when facing a new situation.
Determine the level to which emotional or external factors might sway your decision.
We are social animals and become attached to people, places, and things. Ask yourself, "Do I prefer this decision because it better serves those with whom I am closest or me? Are my personal interests interfering?" You have to uncover the source of your feelings of attachment. If the decision you are involved in is likely to affect one of your attachments, these emotions can unbalance your thinking. Being aware of them will greatly aid your objectivity.
Emotions are woven into all decision-making processes in many ways in which we are not conscious. Leaders who see themselves as making decisions in a purely rational manner could be setting themselves—and their organizations—up for potential disaster because they may end up believing that they are right when they are wrong. However, you can gain control over some of these emotions by becoming more aware of their source and more analytical and fact-based in your approach. And you’ll feel a lot surer in your gut.
[Image: Flickr user Bruno Pedro]