"Why Smart Executives Fail"

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Peep this: Sally's going through rough stages in her business. Her business has lost money for the fifth straight quarter, after a record run on profitable quarters. Her managers are seeking outsiders to replace her. The Board is tempted to pull the switch. Investors are angry. Yet, she's confident in her approach to solving the current business issues. After all, she was the person who led those profitable quarters, right? If she'd just continue what she did, she thinks she'll be okay. Not quite. Because one thing correlates (i.e. her leading & record profitable quarters), it doesn't mean causation played a factor (i.e. her leading causing the company to attain record profitable quarters). Sally is blinded by her own biases. She's taking the "I'm right--you're wrong" approach, which rarely is true. Says Sydney Finkelstein in Why Smart Executives Fail


In fact, though, nearly every decision maker is eager to collect data that support his or her point of view and slow to seek information that contradicts it. Psychologists consider this part of the vexing "bounded awareness" problem. Max Bazerman and Dolly Chugh, in "Decisions Without Blinders" (HBR January 2006), catalog the cognitive characteristics that "prevent a person from seeing, seeking, using, or sharing highly relevant, easily accessible, and readily perceivable information during the decision-making process."

To avoid this if you're a leader, leave your biases at the door. Then, as Finkelstein encourages, have and listen to a devil's advocate at all times. They'll transition you from what you want to think, to what you should think. Word.

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Posted on June 25

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