SEPTEMBER 2017 / NO. 1
TAGS: BIASES, DEBIASING

Six reasons why managers have it often so wrong

“In making of strategic decisions, optimism not only generates unrealistic forecasts but also leads future challenges to be underestimated because of human biases”
Biases are predispositions of a psychological, sociological and physiological nature that can influence decision-making. We may acknowledge their existence, and yet we often believe that we are not prone to bias; in itself this is a type of bias – ‘overconfidence’. Below are six reasons why so many people get this so wrong so often:
  1. We are overly confident and optimistic by gathering data to support our hypotheses
  2. No one ever got promoted for forecasts that do not purport to show an increase?
  3. We create ambitious visions to inspire great performance
  4. The phenomenon of ‘attribution bias’, whereby missed targets are blamed on the most convenient cause available
  5. Strategic reviews are lacking: in too many cases, the strategy process becomes simply the way towards next year’s budget and KPIs
  6. We fool ourselves trying to achieve better results next year by trying to do roughly the same thing as we did this year, however just a little better
Every year after the summer, organizations often activate again their strategic business plans for the following year, in what therefore becomes a calendar-driven activity. Another way to do this is to go to a pleasant and remote area to discuss next year’s strategic issues with SWOT-analysis as a centralized tool. Does ‘strategic’ mean ‘important’ in this case? Yes. You can see this as an ‘inside view’ and a breeding ground for all sorts of biases that consistently give more weight to facts that back the prevailing management view rather than the inconvenient ones that do not! The only powerful effort way to overcome this is to get into the world of strategic intelligence.
In ‘debiasing’, we recommend using the most-effective tools, those of structured analysis. In our International Master Class Strategic Intelligence, we teach managers how to deal with strategic planning and strategic intelligence by presenting our toolbox with the most crucial and most-effective structured analysis tools. Here we list some of these: SWOTI 2.0, Strategy under Uncertainty, Strategic War-Mapping, Grey Swan Analysis, Where-To-Play and How-To-Win, Identifying the SSS (Strategic Sweet Spot), Pre-mortem Analysis and others.
“An inside view is a breeding ground for all sorts of biases that consistently give more weight to facts that back our view than the inconvenient ones that don’t”
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