Cognitive and organizational biases worsen everyone’s judgment. Such biases contribute to many common performance shortfalls, such as the significant cost overruns that affect 90 percent of capital projects.
We also know that biases cannot be unlearned. Even behavioral economist Dan Ariely, one of the foremost authorities on cognitive biases, admits, “I was just as bad myself at making decisions as everyone else I write about.”
Nevertheless, CEOs sometimes feel as though they’re immune to bias (after all, they might ask, hasn’t good judgment gotten them where they are?).
Excellent CEOs endeavor to minimize the effect of biases by instituting such processes as preemptively solving for failure modes (premortems), formally appointing a contrarian (red team), disregarding past information (clean sheet), and taking plan A off the table (vanishing options).
They also ensure they have a diverse team, which has been shown to improve decision-making quality.
Source: McKinsey