Decision-making can be understood better with an awareness of the brain processes involved in it. There are certain ‘red flag’ conditions that can lead to distortions in judgement, in turn leading to bad decisions being made. The authors provide examples of where this has been the case, and highlight safeguards that can be adopted to avoid them.
Decision-making is at the heart of all leadership. Sometimes leaders make good decisions, but sometimes they make less good decisions. The authors set out to understand why bad decisions are made, and what causes them. They propose that in certain situations, the brain processes that normally get us to good decisions, lead us instead to less good decisions. As such, there are two processes we need to understand: pattern recognition and emotional tagging.
Based on the processes above, the authors highlight four ‘red flag’ conditions that are likely to lead to distortions in the judgments executives make:
Throughout the article, they cite examples where companies have fallen victim to one or more of the above red flag conditions.
The authors urge all those involved in important decisions to consider whether Red Flags exist. If they don’t, decisions perhaps need fewer checks and balances. But if they do, the decisions with the highest stakes should be protected with robust safeguards.
They group the safeguards that can reduce the risk of red flag conditions leading to bad decision making into four categories:
However, the authors also acknowledge that inevitably, decisions will often still be based partly on the judgment and gut instinct of a senior decision maker—particularly if they are not major strategic decisions. Nevertheless, they advise leaders that are prepared to be more reflective and are part of a decision process that they can identify Red Flag conditions in advance of the decision. They can then apply safeguards to the decision process.
Those working on their own can use some simple tests to check whether or not their gut instincts are likely to lead you are astray. If they are it may be wise to involve someone else in the decision.
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