Outsmarting Our Biases: A Guide for Leaders

As leaders, we steer our organizations daily through high-stakes choices. But even the most seasoned among us fall victim to biased thinking that distorts judgment. By understanding common biases and applying smart strategies, we can optimize decision-making.

“Flawed mental patterns feel comfortable, but undermine the smartest leaders’ choices,” explains psychologist Daniel Kahneman, Nobel laureate and author of Thinking, Fast and Slow.

This article answers the questions:

• What are the most common biases even seasoned leaders exhibit?
• What harms do biased decisions impose on organizations?
• How can diligent leaders detect and redirect biased thinking?
• What research-backed strategies help counteract distorted judgment?
• How can teams provide collective wisdom safeguarding major choices?

Let’s examine frequent mental pitfalls, their business impacts, and how vigilant leaders can course-correct toward objective analysis. With awareness and practical steps, we can optimize decision-making despite internal flaws hardwired into all of us.

The High Costs of Biased Decisions

A survey by cloud company Domo drives home the prevalence and risks of distorted thinking:

• 67% of 500+ executives admitted cognitive biases routinely lead to poor strategic decisions.
• 60% said biases significantly delay achievement of key company goals.
• 55% indicated biases negatively impact revenue and growth.

“Despite best intentions, leaders undermine success through mental blind spots,” concludes Domo CEO Josh James. “Awareness helps detect when our thinking goes astray so we can course-correct.”

Biased choices waste resources, sink morale, spur unproductive team dynamics, and throw off strategic planning. As leaders steering our organizations’ trajectories daily, we must recognize distorted thinking and correct course to optimize how we leverage strengths.

Watch for These Common Biases

Confirmation Bias

We notice and overweight evidence backing up our existing beliefs and assumptions, while ignoring contradictory information.

A product manager might focus only on data showing strong sales for a new feature, discounting user feedback about bugs. Without the full picture, she proceeds with a biased view.

Sunk Cost Fallacy

We continue investing time, money, or other resources based on past efforts, rather than a realistic cost-benefit analysis.

A director might persist with an underperforming training program, believing past investments justify throwing good money after bad. In truth, past efforts should not guide future decisions.

Overconfidence Bias

We overestimate the accuracy of our knowledge and forecasts, assuming our plans are bulletproof and we know better than expert advisors.

An executive might insist an ambitious project rollout will go smoothly, dismissing warnings from experienced colleagues. In reality, we often misjudge risks.

Planning Fallacy

We underestimate the time and resources needed to complete projects, assuming our estimates are sound even with little data, past failures, or expert warnings.

A leader might insist their team can launch a major new initiative in 6 months, despite research showing it typically takes over a year. We chronically miss the mark.

Outsmart Biases With These Strategies

Entertain Multiple Futures

Develop best case, worst case, and moderate scenarios when the future is uncertain. Don’t rely on a single projection.

Take an Outside View

Compare your plans to similar historical efforts, rather than assuming you are an exception immune to problems.

Set Decision Tripwires

Publicly commit to re-evaluating if certain thresholds breach, like going 15% over budget. Don’t ignore warning signs.

Note Emotional Signals

Watch for frustration, defensiveness, or overconfidence when receiving feedback. Our feelings can indicate biased thinking.

Survey Wider Objectives

Get input from across your organization to illuminate possibilities beyond obvious goals. Ensure you are weighing choices against a full range of opportunities and risks.

Jointly evaluate options

Consider trade-offs between choices instead of assessing in isolation. What unique pros and cons does each present?

With diligence, leaders can detect biased thinking and redirect teams toward more objective analysis. While flawed patterns may be comfortable, stepping back provides needed perspective when the stakes are high.

Still Thinking Too Narrowly? Try This Team Exercise

When facing major decisions, flawed mental patterns limit perspective, even for the sharpest leaders. But by involving your team in the following research-backed exercise, collective wisdom can safeguard against blind spots:

Map Out Multiple Scenarios

• Develop 3-5 possible scenarios ranging from best to worst case outcomes.
• Get diverse input from across functions to illuminate different possibilities.
• Push past obvious futures to imagine a full range, including unlikely but high impact scenarios.

Check Assumptions

• Clearly note your existing assumptions and beliefs before assessing evidence.
• What lens are you viewing information through? How could that distort your interpretation?
• Ask others to call out assumptions you may be overlooking. Our blind spots are invisible to us.

Gather Outside Perspectives

• Ask 5+ objective advisors across functions to critique your plan and illuminate risks.
• Consider including trusted external partners. Fresh eyes see flaws we routinely miss.
• Prevent groupthink by ensuring contributors reflect diverse viewpoints and don’t fear speaking up.

Research History

• Audit lessons learned reports on 3 similar historical projects or decisions.
• How did their projected vs actual timelines and budgets differ? What risks emerged?
• Look for patterns across comparable efforts rather than assuming yours is unique.

Evaluate All Options Evenly

• Don’t fixate only on sunk investments already made as you weigh choices.
• Consider pros, cons, risks, and opportunities equally for each option through joint evaluation.
• What unique trade-offs does each present if chosen?

Commit to Checkpoints

• Establish clear decision points to pause and re-evaluate if metrics exceed targets.
• Don’t ignore breached tripwires. Be ready to change course if new data suggests the need.

Note Emotional Signals

• Watch for anger, urgency, defensiveness, or overconfidence when discussing plans.
• Our emotions often indicate when biased thinking is interfering with objective analysis.

Getting collective input provides more data, checks assumptions, and reveals blind spots. While biased thinking may seem comfortable, leaders can course correct for optimal decision making when they actively involve their teams.

Conclusion

Leaders face no shortage of high-stakes decisions with uncertain outcomes. It’s only human nature to default to comfortable mental shortcuts that seem efficient but lead us astray. Yet we have a responsibility to our organizations to approach key choices with eyes wide open. By understanding the biases we are prone to, bringing in diverse perspectives, and committing to re-evaluation checkpoints, we can minimize blind spots. With vigilance and wisdom safeguarding our trajectory, leaders chart the optimal course forward. There are no perfect decisions, but we have the power to vastly improve the odds by purposefully expanding our view. Our teams and stakeholders deserve nothing less than our very best thinking.