How can we make better decisions? Premium
1. Don’t underestimate the role of intuition in your decisions.
Decision makers rely on their intuition more than they realize, reports Daniel Kahneman, winner of the 2002 Nobel Memorial Prize in Economic Sciences and author of a new book summarizing his decades of award-winning research into decision making and cognitive bias. This fact makes all leaders — no matter how highly trained or wise — prone to over-simplification and the influences of emotion and fatigue.
2. Don’t overestimate your ability to think and decide rationally.
In general, decision makers are too trusting of their own judgment, remaining convinced their decisions have a rational basis even when they’ve actually been influenced by powerful emotions (in particular, fear) and inaccurate perceptions, such as an underestimation of the role of luck or randomness in unfolding events. How can even the most highly trained experts fail to recognize their own flawed logic? They craft highly convincing but inaccurate and overly simplistic causal explanations in defense of their decisions.
3. Use collective intelligence to overcome individual cognitive biases
Historically, the greatest triumphs and most important decisions have been attributed to individual leaders, who are followed by the majority — the “sheep.” Today, however, a shift is taking place towards a more balanced and complex recognition of the contribution of all employees. More companies are leveraging Web 2.0 and data analysis tools to include and empower more participants to speak up and challenge the opinions of others in organizational decision making processes.
Expert opinion: Dominic Barton, CEO, McKinsey & Company
How do some of the most esteemed problem solvers in the world — the consultants at McKinsey & Company — make decisions? In the following interview, Global Managing Director Dominic Barton describes the role of company culture in the firm’s rigorous decision-making processes.
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Using collective intelligence to make better decisions
Based on Thinking, Fast and Slow, by Daniel Kahneman, Judgment Calls and the Teams That Got Them Right, by Thomas H. Davenport and Brook Manville (Harvard Business Review Press, 2012) and Dominic Barton, CEO, McKinsey & Company, January 2013.
Business Digest nº 233, february 2013
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Thinking That We Know
Daniel Kahneman shares his insights into decisionmaking bias at the Sackler Colloquium, “The Science of Science Communication”. Here, he recounts many of the key anecdotes and premises of his book Thinking, Fast and Slow, summarizing decades of research into cognitive bias.