Bob's Gutsy Leadership Blog

Beware: You’re Biased and You Can’t Detect It!

Our ability to make good decisions is a critical determinant in our long term success in both our personal and professional lives. A few years ago a group of academic researchers got interested in why good leaders occasionally make some very bad decisions.

They got on to this topic when a very high profile example got a lot of news attention. Specifically, when Daimler Chrysler sold off Chrysler to the private equity company Cerberus for $7 billion back in 2007. It had been only nine years earlier that Daimler paid $36 billion for it. Hence there was a lot of press coverage concerning why the very talented Jurgen Schrempp, CEO of Daimler Benz back in 1998 would have led the charge to purchase Chrysler.

The researchers analyzed 83 cases of historically talented leaders who mad surprisingly bad decisions and found three factors that they concluded have the ability to distort judgment:

1.) Self-Interest – Our interests or motivations can cause us to perceive patterns we want to see and modify the level of importance that should be placed on certain kinds of information. The researchers emphasized that this is not intentional behavior; it happens to well-intentioned professionals without them being aware of it.

2.) Emotional Attachment – We become attached to people, places, and things and these relationships can impact our assessment of facts and the opinions we form, and hence the actions we take.

3.) Mis-Leading Memories – The fact is that with time, bad memories become less detailed in our minds, and somewhat distorted, while good memories often remain strong and in fact become embellished. Consequently, giving significant weight to past experiences when making decisions is dangerous.

There are three key ways that leaders can make sure they are not being biased by these kinds of factors:

1.) Surround Yourself with Strong-Willed People – It is very dangerous for a leader to have only weak, subservient individuals as direct reports. You need to place high value on thinking, problem solving abilities, and stubbornness in selecting personal.

2.) Inject Fresh Views and Analyses – There is nothing better than getting talented folks with no vested interests in the decision to look over the fact and execute different kinds of approaches in analyzing a situation

3.) Encourage Active Debate – Every leader needs to create an environment where contentious debate is strongly encouraged and high value is placed on taking a different point of view. This kind of behavior needs to be rewarded by the leader.

Net, the wise leader is humble enough to realize their innate biases and takes these kinds to steps.

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