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The illusion of smart decision making: the past is not prologue

Article Information:

Title:

The illusion of smart decision making: the past is not prologue

Author(s):

Sydney Finkelstein, Jo Whitehead, Andrew Campbell

Journal:

Journal of Business Strategy

Year:

2009

Volume:

30

Issue:

6

Page:

36 - 43


ISSN:

0275-6668


DOI:

10.1108/02756660911003103

Publisher:

Emerald Group Publishing Limited


Acknowledgements:

This article is based on the book, Think Again: Why Good Leaders Make Bad Decisions and How to Keep it from Happening to You (Cambridge: Harvard Business Press), by Sydney Finkelstein, Jo Whitehead, and Andrew Campbell.

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Abstract:

Purpose – The purpose of this paper is to study the role of misleading experiences, and how decision-makers' experience can sometimes lead them to think they are right when they are really wrong.

Design/methodology/approach – Literature was reviewed in neuroscience, cognitive psychology and decision theory on how people make decisions and what decision-making biases influence thinking. A total of 83 strategic decisions were studied to understand what potential biases existed and how those biases affected the quality of decision making.

Findings – Decision making is more often an emotional than rational process, in large part because of how our brains are wired. This process works most of the time, but not always. As a result, it is critical to identify those red flag conditions where our decisions are most vulnerable to error, with misleading experiences being one of the most central of these red flags. The paper discusses how to identify whether misleading experiences are potentially dangerous.

Research limitations/implications – While the paper relies on multiple literatures and the authors' own original empirical work, a topic as complex as how our brains make decisions clearly cannot lead to definitive conclusions. Future research might investigate more of the contingency situations where misleading experiences might be dangerous.

Originality/value – This study is the first that highlights how central misleading experiences can be to mistaken decision making. It is based on significant original research, and has implications that are clearly practical for business leaders.

Keywords:

Bias, Decision making, Leadership, Management strategy, Quality control


Article Type:

Research paper


Article URL:

http://www.emeraldinsight.com/10.1108/02756660911003103

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