Harvard Business Review Special Issues Winter 2015

LEADERSHIP AND DECISION MAKING go hand in hand. Someone has to set a strategic direction. Someone has to prioritize one project over another. Someone has to make the tough calls. With such a forward-facing position comes the responsibility to use sound judgment—because those decisions can lead to serious business and personal consequences. One theme in this collection of articles is that decision making is a process rather than a one-time event. During this process it is wise to consider more than one option and to take active measures to eliminate preconceptions. In “Outsmart Your Own Biases,” Jack B. Soll, Katherine L. Milkman, and John W. Payne highlight that we all rely on intuition, which sometimes leads to flawed reasoning. To arm you against this, they offer research-based techniques for making stronger…

THINK ABOUT a time when you were weighing an important decision at work or considering a big expense such as buying a house, making a hefty financial investment, or starting a new business. Such decisions are inherently complex, and—no matter how much experience you have making them—working through the pros and cons of each choice can be overwhelming. Your emotional reactions to these choices may help direct your attention and energy toward what you feel are the most important aspects of the decision. Yet intense emotions may lead you to make misguided—or outright disastrous—decisions. An amusing example comes from the 1991 movie Defending Your Life. In one scene, the character Daniel Miller (played by Albert Brooks) is preparing for a salary negotiation the next day with his boss. To try out…

WE OFTEN use mental shortcuts (heuristics) to make decisions. There is simply too much information coming at us from all directions, and too many decisions that we need to make from moment to moment, to allow us to analyze every single one in detail. Although intuition can sometimes backfire, in many cases it is a perfectly fine shortcut—but only under certain conditions. The most important condition is expertise. If I am a novice mountain climber, my intuition about whether a given route is safe will not be accurate— I have no previous knowledge on which to base that decision. Similarly, if a financial history professor is making an investment decision, her academic expertise does not automatically extend to financial investing, so she should not rely on intuition for that activity. It takes…

I RECENTLY worked with an executive who was keen to persuade his colleagues that their company should drop a longtime vendor in favor of a new one. He knew that members of the executive team opposed the idea (in part because of their well-established relationships with the vendor), but he didn’t want to confront them directly, so he put together a PowerPoint presentation full of stats and charts showing the cost savings that the change might achieve. He hoped the data would speak for itself, but it didn’t. The team stopped listening about a third of the way through the presentation. Why? After all, it was good data, and the executive was right. But, even in business meetings, numbers don’t ever speak for themselves. To influence human decision making, you have to get…

TIP-OFFS IN business are surprisingly common—and (except for stock market insider trading) legal—and often make people on the receiving end feel special. They now have information that others don’t and can be among the first to act on it. For example, in private your boss might tell you about an upcoming organizational change and how it might affect you. Or a client might mention a not-yet-public decision, one that has consequences for your company’s relationship with the client’s firm. Initially you may feel privileged to receive secret information. But being an insider may actually cause you to unconsciously bias the quality of this information because your brain is unable to distinguish between what is important and what is simply dramatic, and then mistakenly encodes the dramatic information as “important.” I call…

WHEN A company’s planning and decision-making process involves a lot of meetings, discussions, committees, PowerPoint decks, e-mails, and announcements, but very few hard-andfast agreements, I call that “decision spin.” Decisions bounce around the company, from group to group, up and down the hierarchy and across the matrix, their details and consequences changing as different stakeholders weigh in. Often, the underlying problem isn’t an inability to make decisions—it’s a tendency to avoid conflict. Managers have a human desire to be liked. Decision spin doesn’t prevent decisions from being made altogether. But the decisions often don’t stick because people hesitate to express their disagreements during the discussion. There is a lot of head nodding, smiling, and camaraderie— which is undermined later when participants don’t follow through on the decisions they didn’t really accept. Decision spin…