A Better Process for Better Decisions
Leaders who act “from the gut” are often swayed by a host of biases. One Nobel-winning psychologist has come up with what he thinks is a better way.
Leaders are decisive—part of the reason why they’re in charge is because they’re comfortable making firm decisions amid complex arrays of options. But that doesn’t mean those leaders are always decisive in effective ways.
By now we’ve moved well past the notion of seat-of-one’s-pants leadership. Data matters, we know. In 2017 I spoke with a number of associations that spent time fine-tuning their decision-making processes, using colleagues in the C-suite to decide on appropriate inputs and metrics when it came to big-picture strategic issues. Even so, any leader can be subject to the kind of bias that can lead to poor decisions.
That’s a key message of a recent article in MIT Sloan Management Review that points out some holes in leaders’ processes. Consider hiring, say the three authors of “A Structured Approach to Strategic Decisions,” who include Nobel-winning psychologist Daniel Kahneman. Organizations gather plenty of information about candidates via resumes and application questions, but the make-or-break moment is still an unstructured job interview.
Such interviews “lead to biased evaluations that have very little predictive value,” the authors write. “That’s because the interviewer forms a mental model (colloquially known as an ‘impression’) of a candidate.” We tend to tune out the information that challenges the narrative we have in our head about a candidate, trust first impressions too much, and give too much weight to cultural biases.
As with hiring, so with many other decisions organizations face. Leaders can be subject to confirmation bias, the authors write, looking for the narrative that best supports their mental models—complicating information be damned. And they can be subject to availability bias, leaning too much on the most recent information or the information nearest at hand. All the research reports and well-delivered presentations are meaningless if they fall victim to such subjectivity.
The solution that Kahneman and his colleagues Dan Lovallo and Olivier Sibony propose is called the Mediating Assessments Protocol (MAP), which recommends breaking up each big decision into a set of smaller assessments about the issue’s individual parts. Their example is a company that’s considering making an acquisition, where MAP would require separate studies on cultural, financial, and legal implications. The separation is key because it demands “explicit assessments of each aspect and to use those assessments as the basis for a decision.” Those exploring cultural fit are charged with setting impressions about money and liability aside, and so on. From there, each attribute is assigned a percentile score; those scores are then assessed during a final decision-making process.
You’re groaning. I can tell. The last thing your organization needs is more layers to your association’s agenda, which can already feel overly bureaucratic and time-consuming. But for the past few years the Association of American Medical Colleges (AAMC) has been employing a somewhat similar system. It’s assigned a three-person team to scrutinize new product ideas and larger strategic decisions, which are run through “gates” designed to assess their viability. Rather than add time and expense, the process is structured to avoid wasting time and resources on poorly-thought-through ideas and to create a culture where those proposing ideas understand the need to gather relevant data.
None of this is meant to make a CEO into a robot; ultimately a decision needs to be made.
“One of the essential purposes of MAP is basically to delay intuition,” Kahneman recently told The Washington Post. Delay, not eliminate. Our brains are wired to create coherence when it’s not necessarily warranted, Kahneman argues—and creating a process that breaks up that sense of coherence, separating a challenge into constituent parts, can help steer you away from your biases, which everybody has. What you do with all that information is still up to you.
How has your organization changed its decision-making processes to avoid biases and snap judgments? Share your experiences in the comments.
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