why good leaders make bad decisions

GOOD DATA OR GOOD LEADER DO NOT GUARANTEE GOOD DECISION

Why good leaders make bad decisions

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

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

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?

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

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

Distort emotional tags

Encourage to see a false pattern

Red Flag Conditions

Factors that either

Presence of inappropria

te self-interest

Presence of distorting

attachments

Presence of misleading memories

Identifying Red Flags

Red flags are useful only if they can be spotted before a decision is made

Seven step process

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

Check for misleading memories

Repeat the analysis with the next most influential person

Review the list of red flags you have identified

Good data won’t guarantee good decisions

Large amount of money is invested in gathering, storing and analyzing data.

Completely useless until employers utilize this data into practical decision making.

Unquestioning Empiricists

Visceral decision makers

Informed skeptics

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.

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.

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.

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.