Why good leaders make bad decisions
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Transcript of Why good leaders make bad decisions
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GOOD DATA OR GOOD LEADER DO NOT GUARANTEE GOOD DECISION
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Why good leaders make bad decisions
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Jurgen Schrempp, CEO of Daimler-Benz
Led the merger of Chrysler and Daimler against internal opposition
9 years later, Daimler was forced to virtually give Chrysler away in a private equity deal
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Mathew BroderickResponsible for alerting President Bush if Hurricane Katrina breached the levees in New Orleans
Reported they seemed to be holding, despite multiple reports of breaches
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All these executives were highly qualified for their jobs and yet they made decisions that soon seemed clearly wrong
Why?How can we avoid making similar mistakes?
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How the brain trips up
Our brains assess what’s going on using pattern recognition
We react to that information, or ignore it, because of emotional tags that are stored in our memories
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Much of the mental work we do is unconscious
Hard to check the data and logic we use wen e make a decision
Our brains leap to conclusions and are reluctant to consider alternatives – Gary Klein, psychologist
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Distort emotional tags
Encourage to see a false pattern
Red Flag Conditions
Factors that either
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Presence of inappropria
te self-interest
Presence of distorting
attachments
Presence of misleading memories
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Identifying Red Flags
Red flags are useful only if they can be spotted before a decision is made
Seven step process
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Lay out the range of options
List main decision makers
Choose 1 decision maker to focus on
Check for inappropriate self-interest or distorting attachments
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Check for misleading memories
Repeat the analysis with the next most influential person
Review the list of red flags you have identified
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Good data won’t guarantee good decisions
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Large amount of money is invested in gathering, storing and analyzing data.
Completely useless until employers utilize this data into practical decision making.
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Unquestioning Empiricists
Visceral decision makers
Informed skeptics
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The first one(43%) value consensus and trust analysis over judgement.
The second one(19%) seldom trust analysis and generally go by guts.
The third one(38%) apply judgement over analysis and are willing to dissent with others.
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Major Identifiable Problems
Analytic skills concentrated in too few employees.
Shortage of anthropological and behavioral skills in IT.
Reliable information hard to locate.
Information management in bad state.
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Solutions to the Problem
Train employees to increase their data literacy.
Workshops and coaching to be given.
Deploy improved information filtering and visualization tools.
Incorporate information into decision making.
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ConclusionRed flags to be recognized and
eliminated.Decision making style to be analyzed
and necessary steps to be taken to improve it.
Proper data analysis tools to be incorporated for better individual efficiency.
Regular training to be given to employees on how to incorporate data into decision making process.
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