#1 The leader problem

R8hw4zs38zo-robson-morganA big reason organizations make poor strategic decisions is the leader, Too often leaders engage in autocratic, leader-centered decision making rather than harnessing the power of the group.

In the soon-to-be-issued report for the 2016 Strategic Leaders Study, conducted as research for our upcoming book, Big Decisions: Why we make them poorly, how to make them better, we have identified 18 categories of biases and poor practices that can produce bad strategic decisions.

First on the list is autocratic, leader-centered decision making. It’s a problem because of:

  • Inability to self assess. Our self-assessment skills are often flawed, overstating our abilities, competencies and characteristics.
  • Illusory superiority. Leaders, like the rest of us, tend to overestimate their desirable qualities and underestimate their undesirable qualities relative to others, leading them to think they can make better choices than others can.
  • Illusion of control. Leaders can overestimate their influence on events and mistakenly think their actions will be effective.
  • Power. The powerful have a sense of control that can make them overconfident in their ability to make good decisions and to overestimate what they think they know. This can lead to excessive risk-taking.
  • Self-serving bias. Leaders tend to evaluate ambiguous information in a way more beneficial to their interests than to the organization. An executive paid on sales, not profitability, will tend to strive for higher sales at the sacrifice of higher profits.
  • Luck. Leaders can lead through claimed expertise when in fact their success was due to luck or unique circumstances.