Dan Lovallo, professor of business strategy and Olivier Sibony, director at McKinsey & Co.
are seeking to improve business decision-making by developing a language for common
biases that impact action. They make the case for implementing a behavioral strategy—a
style of strategic decision-making that incorporates the lessons of behavioral economics and
psychology.
Improving strategic decision-making requires limiting our own biases, limiting others’ biases,
and limiting group biases. Easier said than done, because biases are hard-wired in our
nature and we can’t overcome them by simply trying harder. Instead, according to Lovallo
and Sibony, we need a new approach to our daily leadership activities that impact decisions
(such as managing meetings, gathering and analyzing data, and stimulating debate) that will
minimize the impact of cognitive biases on critical decisions.
To clarify where the problem lies, let’s take a look at the decision-making process. Any basic
decision-making process pretty much looks like this:
Research/Analysis + Insight/Judgment = Decision