How To Make Better Executive Team Decisions

Groups of people can do extraordinary things when they come together...like go to the moon, build the Pyramids, invent the MRI scanner and play great symphonies.

And on the other hand they can do some pretty unwise things when they come together, like decide to launch the faulty ill-fated Challenger space shuttle, use spurious data to justify invading a country or make costly doomed takeover bids (the Co-op's bid to purchase over 630 Lloyds Bank branches in the UK in 2013 comes to mind).

So groups...Executive Teams...can do some great things together...

....but they can also unwittingly make unwise decisions by falling into some common psychological traps.

Simply becoming aware of some of these psychological traps will help you spot them when they surface...and hopefully enable you to avoid them when you make day-to-day and strategically important decisions in your Executive Team.

Let's take a brief look at some of them:

Base rate bias:  Failure to pay attention to information about general tendencies.

Shared information bias: The tendency for groups to spend more time discussing information they all know (shared information) and less time examining information that only a few executive team members know (unshared).

Belief perseverance:  Reliance on information that has already been reviewed and found to be inaccurate.

Law of triviality:  This is Parkinson's second law and states the amount of time a group spends on discussing any issue will be in inverse proportion to the consequentiality of the issue.  How much time does your Executive Team spend on less important matters?

The anchoring trap: When considering a decision the mind gives disproportionate weight to the first information it receives.  Initial impressions, estimates, or data, anchor subsequent thoughts and judgements.  A trap used to their advantage by many seasoned negotiators.

Sunk cost bias:  Reluctance to abandon a course of action once an investment has already been made.

The status-quo trap:  We have a strong bias towards options that maintain status-quo.  A reason many change initiatives fail.

Confirmation bias: The tendency to seek out information that confirm's our own preferences rather than disconfirm them.

Mind guard:  When an executive team member shields the team from negative or controversial information by holding it back and so suppressing dissent.

Group think:  Where closed mindedness and conformity prevent debate and effective decisions being made.  A tendency I have observed in many Executive Teams.

General group dysfunctions:  Individual dysfunctional behaviour typically leads to executive team dysfunctions and poorer quality decisions being made. 

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Moving forward, start to observe how your Executive Team may be falling into some of these traps when making strategically important decisions for your business.  You may be surprised how frequently some of them surface.

References:

 Hammond, Keeney, Raiffa (1998) The Hidden Traps of Decision Making, Harvard Business Review

Russo (2001) Winning Decisions: Getting It Right First Time, Publ: Crown Publications

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