Strategic Thinking & Strategic Action

Fostering strategic thinking and strategic action by organizational leaders since 2007.

We are biased by the bell curve
Bell curve bias Lee Crumbaugh Bell curve bias Lee Crumbaugh

We are biased by the bell curve

We are biased by the bell curve in many domains of our decision making. For example: In investing, we discount the possibility of rare and unpredictable large deviations in stock prices. In marketing, we want to believe that “there is a meaningful ‘average consumer’ that can be used to scale products and operations around.” We are asked to rate Uber drivers, Airbnbs and Yelp establishments on a 1-5 bell curve scale, and yet the ratings cluster above 4. Any person or place rated lower, in essence, fails.  The implication of our tendency to assume that things are distributed normally is that we have a huge flaw in how we interpret what we see and how we make decisions. Better to step back and see what things look like without imposing the bell curve from the get-go.

Read More
Remember, history is written by the survivors
Decision biases cases Lee Crumbaugh Decision biases cases Lee Crumbaugh

Remember, history is written by the survivors

We are urged to learn from history. But what if the history is biased? Here’s a case showing how slanted history can lead to bad decisions. In the Cuban Missile Crisis, U.S. advisors were mislead by the fallacy of silent evidence, that is, not seeing the full story when looking at history, just seeing the rosier parts of the process reported by the “winners.” U.S. policy was tragically misguided because of survivorship bias, that is, concentrating on and giving undue credit to the people, things or interpretations that "survived" the process and inadvertently overlooking those that didn't because of their invisibility.

Read More
Beliefs about a group matter
Decision biases cases Lee Crumbaugh Decision biases cases Lee Crumbaugh

Beliefs about a group matter

Here’s a story about what can go wrong when we hold beliefs about a group and attribute these beliefs to the members of the group. The Battle of Little Bighorn, also called Custer's Last Stand, took place in Montana Territory on June 25-26, 1876, between the Lakota, Northern Cheyenne, and Arapaho tribes and the 7th Cavalry Regiment of the U.S. Army. The Battle of the Little Bighorn was a stunning victory for the Native Americans. The 7th Cavalry, casualties numbered 268 dead, including Custer, and 55 wounded. How Custer viewed the Indians opposing him led him astray.

Read More
Not knowing we don’t know
Decision biases cases Lee Crumbaugh Decision biases cases Lee Crumbaugh

Not knowing we don’t know

To lack relevant knowledge without realizing it can have disastrous consequences. Consider, for example, the underestimation of the risk of a nuclear accident when constructing the Fukushima Daiichi Nuclear Power Plant power plant in Japan. The Fukushima Daiichi Nuclear Power Plant disaster offers a stark example of what can go wrong when we rely on a small and biased sample of data.

Read More
The worst accident: “We’re going!”
Decision making Lee Crumbaugh Decision making Lee Crumbaugh

The worst accident: “We’re going!”

On March 27, 1977, two Boeing 747 passenger jets, KLM Flight 4805 and Pan Am Flight 1736, collided on the runway at Los Rodeos Airport on the Spanish island of Tenerife. Of the 644 people aboard the two 747s, 583 were killed and only 61 survived. This was the worst accident in aviation history. The massive investigation of and subsequent reports on the Tenerife airport disaster offer deep insight into what happened and what went wrong. As a result, aviation authorities and airlines worldwide changed procedures. But they are insufficient to explain why the KLM 747 collided with the Pan Am 747. Explaining the “why” of the disaster leads us to our great concern, bad decisions and what to do to avoid them when making a good decision is imperative for a mission-critical outcome.

Read More