Why Good Managers Make Bad Decisions

Excerpt from an WSJ Interview of Sydney Finkelstein.

• Leaders tend to rely on past experience that seems useful, but is actually sometimes dangerous.  

•  A second reason has to do with self-interest. Most people don't realize self-interest operates at a subconscious level. 

•  The third one is what we call prejudgments. Leaders make prejudgments about their businesses that sometimes turn out to be wrong. 

•  The fourth one is what we call attachments -- attachments to people or places or things. 

And on  "What are some of the ways leaders can avoid making bad decisions?"

People need to recognize that we are biased in every single situation. There's no such thing as objectivity.

The first thing leaders should do to reduce their odds of making bad decisions is walk into an important decision situation saying, "Ok, I know that we are potentially biased in a variety of ways. Let's try to identify what those are."

Second is to avoid the "yes man" trap. You have to bring different people and different data sources to the table. You want to add a "no team" to argue against the proposal, and put some teeth behind that no team.