Why Leaders' Thinking Is Often Wrong
Business Journal

Why Leaders' Thinking Is Often Wrong

You can't always trust your brain to make the right calls. It's much better to develop solid data and use them to inform your decisions.

We like to think the decisions we make are good ones, based on solid reasoning. And when you're in charge of a function or selecting leaders for a company, you need to believe that. Second-guessing every judgment can lead to paralysis. And in a state like that, nothing gets done. Yet research into decision making shows that everyone is prey to serious cognitive flaws.

Be aware of what and how you are thinking -- and recognize that you may be wrong.

"Feeling that you're right or wrong doesn't always correlate with being right or wrong. Certainty in these things is a very dangerous feeling," says Barry Conchie, Gallup senior scientist and coauthor of Strengths Based Leadership. "It would be far better to know where you might be wrong -- and to recognize why."

Conchie says that research conducted by Gallup and many eminent scientists, including Nobel Prize winner and Princeton Senior Scholar Daniel Kahneman, shows that evolution has predisposed people to think quickly but not deeply. That sort of reaction is fine when your problem is evading immediate bodily harm, but it's a bad basis from which to run a company -- and leaders may not even realize they're doing it.

Conchie says there are a handful of cognitive flaws that everyone -- executives included -- are particularly apt to fall prey to. Among them are:

  • Confirmation bias: We tend to search for things that confirm what we believe and ignore things that don't.
  • Overconfidence effect: Our confidence in our judgment is generally higher than the actual accuracy of that judgment.
  • Hindsight bias: This is the feeling that we "knew it all along" -- that our successes or failures were more predictable before they happened than they actually were.
  • Bias for action: We tend to want to act or make decisions before we analyze or plan.

"This kind of flawed thinking is very dangerous in a leadership context," says Conchie. "We make bad decisions and then don't understand why they fail. More typically, our brain rationalizes the error. The flaws in our processing can lead company leaders to an internal obsession that prevents focus on topline growth. As a result, companies can't identify or exploit strategic imperatives."

Gut instinct doesn't work either

If you can't trust your brain, what can you trust? "Not your gut," Conchie says. "Gut decisions tend to be very superficial. They synthesize lots of different information that looks right but can be completely wrong."

Yet some of the systems that companies establish to prevent errors in judgment just systematize them. Developmental tools like 360-degree feedback programs, for example, can penalize or marginalize people who are different because we all tend to prefer people who are like us. Problems can also occur when companies build leadership teams: If leaders select people with similar experiences and thought processes, teams self-replicate, and executives with different talents and strengths -- even badly needed ones -- can be pushed aside.

It's much better to make leadership decisions based on data that are rigorous, objective, and have predictive validity -- in other words, data proven to improve business outcomes. When choosing a leadership team, for example, evaluate people using criteria that are scientifically proven to predict success in a leadership role rather than selecting people you're comfortable with because they look or think like you do. When hiring managers, base decisions on a validated talent assessment and promote for strength, not stretch.

Most of all, be aware of what and how you are thinking -- and recognize that you may be wrong even when your brain is telling you you're right. "It's so easy to make cognitive mistakes and so hard to realize you're doing it," says Conchie. "But that's not a new idea -- Baruch Spinoza laid to rest the idea that humans are rational 450 years ago. But it's taken us a while to come around to it."

Jennifer Robison is a Senior Editor of the Gallup Business Journal.
Gallup http://www.gallup.com/businessjournal/162812/why-leaders-thinking-often-wrong.aspx Gallup World Headquarters, 901 F Street, Washington, D.C., 20001, U.S.A +1 202.715.3030