Why top leaders get it wrong

BUSINESS CLASSIC: Even good leaders make bad decisions; this book will help you choose the right call, says Stefan Stern.

by Stefan Stern
Last Updated: 24 Feb 2015

You must be smart if you got to the top, right? And because you are smart, it means you are usually good at making decisions, yes? It is possible that neither of these statements is true. The second certainly isn't.

New and emerging brain science is helping academics understand better why we make bad decisions. This book offers one of the best summaries of what is going on in our heads.

We deceive ourselves. Something called 'pattern recognition' leads us astray: we think we recognise a type of situation when perhaps we don't. And 'emotional tagging' stops us from being objective and rational about data. We think fast, as Daniel Kahneman has said, but we also think wrong.

The authors say there are four things you can do to guard against this. First, give decision-makers new experience or data to reduce the risk of failure. Second, test and challenge the prevailing view in group discussion. Third, use better corporate governance to make sure decisions are tested. And, fourth, keep better track of ongoing decisions.

This book won't stop you making some bad decisions but reading it will shift the odds in your favour.

Stefan Stern is visiting professor at Cass Business School. Follow him on Twitter: @StefanStern

Think Again: why good leaders make bad decisions and how to keep it from happening to you by Sydney Finkelstein, Jo Whitehead and Andrew Campbell is published by Harvard Business Press, 2009

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