How to Minimise Bias in Strategic Decision Making

How to take Bias out of Strategic Decision Making

As a leader, it is critical to make decisions. But how do you limit biases when looking for solutions? In this article, we will explore techniques to tackle bias and improve strategic decision making.

What research tells us…

In 2010 Dan Lovallo and Olivier Sibony, advisors to McKinsey & Company published a fascinating article on behavioural strategy in decision making.

Their research found that subconscious biases will undermine strategic decision making if they are left unchecked by the decision makers. To be efficient, leaders will understandably rely on the judgement of a team to provide them with advice. But unfortunately, biases can creep into any team’s reasoning and distort this advice.

A team can subconsciously dismiss evidence that contradicts something they strongly believe, or it can give too much weight to certain data sets, leading to faulty comparisons. By adopting a behavioural strategy to test the processes that lead to a recommendation, leaders can counter this subconscious bias and improve their strategic decision making.

Four steps to adopting a behavioural strategy in decision taking

1. Decide which decisions warrant the effort
   It can be counterproductive and divisive to apply this review to all decisions. It can demotivate and even have an effect on the team’s overall performance. The strategy is better applied to rare critical decisions and to those important decisions that shape a company’s strategy over time.
2. Identify the biases most likely to affect critical decisions
   Discuss and surface biases that may be undermining the decision making process. Evaluate past decisions and look at current decision processes. Repeated biases can become cultural traits creating dysfunctional patterns.
3. Select practices & tools to counter the most relevant biases
   Select and put in place “debiasing” practices and tools. Decide on the specific tools that will work best for your company and its culture. Use mechanisms that are appropriate to the type of decision you are taking, to your company context, and to the decision making styles of your leaders.
4. Embed practices into formal processes
   Good decision-making requires continual practice by all members of the management team. Instinct isn’t a good way to decide, it is important to embed these practices and processes in your company’s culture; that way you can ensure that the practices are used regularly and not just when someone feels uncertain about which way to go.

Conclusion

This behavioural strategy path requires the commitment of the whole management team. You may not be able to completely eradicate bias from your decisions, but by applying the techniques highlighted in this article you can at least minimise them.

“You need internal critics—people who have the courage to give you feedback. This requires a certain comfort with confrontation, so it’s a skill that has to be developed. The decisions that come out of allowing people to have different views are often harder to implement than what comes out of consensus decision making, but they’re also better.” Anne Mulchay, chairman and former CEO of Xerox.

Attend the one-day course on Strategic Decision Making to discover other ways to take strategic decisions.