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decision-making with behavioral economics","McKinsey found executives are satisfied with strategic decisions only half the time","Debiasing should be embedded in daily activities, not just key decisions","Kahneman, Lovallo, and Sibony's checklist helps spot bias in strategic proposals",1,{"id":37,"data":38,"type":39,"maxContentLevel":19,"version":35},"edc4a327-ec0e-4be1-940b-a89c4608f129",{"type":39,"intro":40},10,[41,42],"What is 'behavioral strategy' according to Lovallo and Sibony?","Why is it important to embed debiasing practices into daily activities?",[44,62,67,93,110,115],{"id":45,"data":46,"type":35,"maxContentLevel":19,"version":19,"reviews":49},"d8968919-5697-4068-807a-7504f74c1adf",{"type":35,"contentRole":25,"markdownContent":47,"audioMediaId":48},"In a 2010 McKinsey Quarterly article, Dan Lovallo and Olivier Sibony used the term **‘behavioral strategy,’** referring to the intersection of corporate decision-making and behavioral economics. In a survey of over 1000 business executives, McKinsey found that the majority were satisfied with their organization’s strategic decisions only half the time. Even in the best companies, large projects rarely go to plan; they exceed their allotted budget and initial timelines; revenue forecasts prove overly optimistic.\n\n![Graph](image://c9c6d86b-b38e-4761-bfae-0ddc235c7b76 \"Behavioural strategist, Oliver Sibony. Image: \nOlivier Sibony, CC BY-SA 4.0 \u003Chttps://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons\")\n\nBetter strategic decision-making requires two components – an accurate estimation of the organization’s implementation and execution capabilities, and a realistic expectation of competitors’ reactions to planned changes. Both require judgment calls, which means they are susceptible to overoptimism and overconfidence as well as loss aversion.","335fb60b-faa6-433b-af3c-35b8ce01d01f",[50],{"id":51,"data":52,"type":53,"version":35,"maxContentLevel":19},"32b01d5d-87df-43b3-aa2a-3ea99892bd3c",{"type":53,"reviewType":19,"spacingBehaviour":35,"multiChoiceQuestion":54,"multiChoiceCorrect":56,"multiChoiceIncorrect":58,"multiChoiceMultiSelect":6,"multiChoiceRevealAnswerOption":6},11,[55],"What term is used for the intersection of corporate decision-making and behavioral economics?",[57],"Behavioral strategy",[59,60,61],"Bias mitigation","Nudging","Anti-bias policy",{"id":63,"data":64,"type":35,"maxContentLevel":19,"version":25},"b0f6239a-32a1-4e3a-8b7d-27de1dc652b6",{"type":35,"contentRole":25,"markdownContent":65,"audioMediaId":66},"Lovallo and Sibony draw on these observations to suggest that behavioral strategy is key for companies to make better strategic decisions. Instead of addressing bias individually, encourage debiasing through process and culture. Instead of relying on employees’ individual efforts, focus on tools and processes. At the end of the day, good process will weed out poor analysis. Debiasing practices should not be limited to key management decisions.\n\nInstead, they should be embedded into even seemingly mundane daily activities performed throughout all levels of the organization. After all, when a chief executive gives the final stamp of approval on a proposed project, their judgment is based on information gathered and presented by their team. They have to rely on the comprehensiveness, reliability, and accuracy of the information before them. But what makes it into the proposal is driven by small everyday decisions.","62c846d6-2368-4f9e-bd3a-ae7dccad64a0",{"id":68,"data":69,"type":35,"maxContentLevel":19,"version":19,"reviews":72},"35b1aeb6-2476-4000-9c1c-a1f70767ea08",{"type":35,"contentRole":25,"markdownContent":70,"audioMediaId":71},"Some decisions within the organization may not make it to management level but still impact a company’s overall direction. Functional, routinary activities can compound on one another and effectively shift a company’s course without undergoing any formal process.\n\nIn this regard, a culture that embraces debiasing practices at all levels – encouraging healthy discussion and dissenting opinions, using red teams, and celebrating diversity of background, skill, and personality – can help a company maintain its course without the distraction of noise.\n\n![Graph](image://77957aac-95f5-4263-9cfa-d3d4a8368b01 \"Employees engaged in an open, healthy discussion. Image: Luisalvaz, CC BY-SA 4.0 \u003Chttps://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons\")\n\nIn the article Before You Make That Big Decision…, Kahneman, Lovallo, and Sibony propose a checklist of 12 questions that decision-makers should answer to check for the undue influence of bias on projects presented before them.","6b5c1a08-aa83-434e-882c-934ca585ee9a",[73],{"id":74,"data":75,"type":53,"version":35,"maxContentLevel":19},"3776de99-10ec-439f-a650-a5129887c437",{"type":53,"reviewType":19,"spacingBehaviour":35,"collapsingSiblings":76,"multiChoiceQuestion":80,"multiChoiceCorrect":82,"multiChoiceIncorrect":84,"multiChoiceMultiSelect":6,"multiChoiceRevealAnswerOption":6,"matchPairsQuestion":88,"matchPairsPairs":90},[77,78,79],"43cd827e-34c7-43b3-963b-34e98828c342","682e2477-3bfe-4c40-a2fb-5f576fd014e5","77cc739a-2721-4730-9807-e3f50d7e56f9",[81],"Which of the following most closely applies to Kahneman's 12 questions?",[83],"Tool for decision-makers to check for undue influence of bias",[85,86,87],"Book about cognitive biases","Framework for mitigating cognitive biases, includes five categories of bias","Behavioral science tool, policy design guide",[89],"Match the pairs below:",[91],{"left":92,"right":83,"direction":19},"Checklist of 12 Questions",{"id":94,"data":95,"type":35,"maxContentLevel":19,"version":25,"reviews":98},"260bcd51-cbaf-4e55-ae73-f8898375b81e",{"type":35,"contentRole":25,"markdownContent":96,"audioMediaId":97},"The first part of the checklist requires the decision-maker to check for any red flags to do with the recommending group. Do they have any vested interest in the proposal, like reputation or career advancement? Have they become so attached to their idea to the point of losing objectivity? How about the group dynamics?\n\nGroupthink is particularly problematic, as it prevents members from voicing out dissenting views and exploring alternative paths. The decision-maker needs to answer these questions without asking them directly of the recommending team. If they must consult with others within the organization, they must do so discreetly. And if a dissenting member in the group has relevant inputs, the decision-maker should have a separate discussion with them.","ae69e0b0-3245-4144-9b16-a356d3f7bd56",[99],{"id":100,"data":101,"type":53,"version":35,"maxContentLevel":19},"050ee108-749b-4916-a6ec-3560677b343d",{"type":53,"reviewType":19,"spacingBehaviour":35,"multiChoiceQuestion":102,"multiChoiceCorrect":104,"multiChoiceIncorrect":106,"multiChoiceMultiSelect":6,"multiChoiceRevealAnswerOption":6},[103],"What is the first part of Kahneman's 12 step decision checklist?",[105],"Checking for red flags in the team",[107,108,109],"Focusing on the processes followed by the team","Evaluating the quality of the project","Re-aligning the debiased project",{"id":111,"data":112,"type":35,"maxContentLevel":19,"version":25},"4eea8ca5-f21e-4372-9ae8-e6994868babe",{"type":35,"contentRole":25,"markdownContent":113,"audioMediaId":114},"The majority of the decision checklist focuses on the process that the team undertook to craft their proposal. The decision-maker will want to follow the team’s line of thinking from start to finish. In doing so, they can check for gaps in logic or for instances where bias might have influenced the team. A few key questions form this part of the assessment. What assumptions did the team make in creating the proposal? What information was used – or overlooked? How thoroughly did the team assess other options? Does this proposal draw inspiration from other projects? How comparable are they?\n\nWhen referring to successful projects, we might assume that, by virtue of similarity, our proposal should likewise succeed. In our optimism, we may fail to see where key variables differ. Conversely, examining similar projects that failed can prove valuable in uncovering risks previously unforeseen. Ultimately, the decision-maker should ensure that the team is recommending this particular project because it is a solid plan, independent of extraneous details.","b58cfd7b-9fcb-4000-8e56-0d4c75de5eb0",{"id":116,"data":117,"type":35,"maxContentLevel":19,"version":19,"reviews":120},"1e749ab4-adbd-43fd-ba86-24dded107eeb",{"type":35,"contentRole":25,"markdownContent":118,"audioMediaId":119},"The final part of Kahneman, Lovallo, and Sibony’s decision checklist involves evaluating the quality of the proposal. Many business projects fail because of overconfidence. Managers draw up unrealistic timelines and make overoptimistic forecasts, or they fail to consider how competitors might respond to their plans. They might overestimate the firm’s capabilities, or rely on a star employee who may not stay long enough to see the project through. In crafting proposals, it's important that the team has examined the worst-case scenario so that contingencies and risk mitigation strategies are put in place.\n\nConversely, a company culture that is allergic to risk might have managers forgoing viable alternatives due to fear of failure. To this end, it is important that key members are aware of the company’s current risk appetite. Decision-makers are reminded to avoid showing partiality to any one option while the proposal is being drawn up. Doing so risks undue influence on the recommending team, potentially swaying their recommendation toward the decision-maker’s implied preference.","fbe219e8-63c6-42eb-8363-8e783d35a297",[121,129],{"id":122,"data":123,"type":53,"version":25,"maxContentLevel":19},"d31826b3-c3f8-4953-831b-3a6b54c14629",{"type":53,"reviewType":19,"spacingBehaviour":35,"multiChoiceQuestion":124,"multiChoiceCorrect":126,"multiChoiceIncorrect":127,"multiChoiceMultiSelect":6,"multiChoiceRevealAnswerOption":6},[125],"What forms the largest share of Kahneman's 12 step decision checklist?",[107],[105,128,109],"Communicating processes across teams",{"id":130,"data":131,"type":53,"version":25,"maxContentLevel":19},"12faa84f-349c-4121-bc67-a9500047645d",{"type":53,"reviewType":19,"spacingBehaviour":35,"multiChoiceQuestion":132,"multiChoiceCorrect":134,"multiChoiceIncorrect":135,"multiChoiceMultiSelect":6,"multiChoiceRevealAnswerOption":6},[133],"What does the final part of Kahneman's checklist involve?",[108],[105,136,109],"Communicating the project to stakeholders",{"id":138,"data":139,"type":25,"version":19,"maxContentLevel":19,"summaryPage":141,"introPage":149,"pages":155},"8f70a320-894a-4e8b-9dc7-66e8c26e6839",{"type":25,"title":140},"Advanced Decision-Making Techniques",{"id":142,"data":143,"type":19,"maxContentLevel":19,"version":35},"d94c7969-c4be-4e85-a61d-a0df5cfc3b59",{"type":19,"summary":144},[145,146,147,148],"Premortem planning helps teams identify potential project failures by imagining a fiasco","Investment decisions need a set risk appetite to avoid excessive risk-taking or being too cautious","Resource distribution should adapt to changing contexts, not just follow last year's budget","Red teams and scenario planning can reveal hidden flaws and unforeseen outcomes",{"id":150,"data":151,"type":39,"maxContentLevel":19,"version":35},"39665e77-2a1a-4259-93b9-6f79f15653dc",{"type":39,"intro":152},[153,154],"What is the main purpose of premortem planning?","How can a red team help in complex planning?",[156,171,195],{"id":157,"data":158,"type":35,"maxContentLevel":19,"version":25,"reviews":161},"facf03eb-af75-42cd-b9a9-3ede723218c6",{"type":35,"contentRole":25,"markdownContent":159,"audioMediaId":160},"Gary Klein introduced **‘premortem planning’** in 2007. Since then, its ease of use has endeared itself to business executives and behavioral scientists. The premortem starts with the idea that pessimism is taboo in project planning. We do not voice concerns when everyone else seems on board with an idea.\n\nThe internalized notion of being a team player prevents us from examining the potential pitfalls of a plan. In premortem planning, individuals are asked to imagine that the project has moved forward. Unfortunately, it was a fiasco. With this in mind, team members list down all possible ways the project could have gone wrong.\n\nThis practice shifts individuals’ mindsets. Whereas they would have initially felt uneasy entertaining the idea of failure, the exercise removes the burden of going against the grain. Failure has become a given, and the task is now to come up with all the possible threats lying in wait. The veil of confidence and optimism in the project is removed, allowing for a clear view of blind spots previously undetected.","71b9d0e4-1469-45f5-b57b-acde4c1b5342",[162],{"id":163,"data":164,"type":53,"version":35,"maxContentLevel":19},"fbadc0e4-a228-4d08-8ea3-869aa3ec5955",{"type":53,"reviewType":25,"spacingBehaviour":35,"binaryQuestion":165,"binaryCorrect":167,"binaryIncorrect":169},[166],"What does the term 'premortem planning' mean?",[168],"Planning for all potential pitfalls",[170],"Avoiding planning altogether",{"id":172,"data":173,"type":35,"maxContentLevel":19,"version":19,"reviews":176},"8d4d8067-238a-447f-9f64-500aa09983ce",{"type":35,"contentRole":25,"markdownContent":174,"audioMediaId":175},"Not all decisions require stringent process reviews and checklists. Applying equal rigor across all decisions is costly and time-consuming; therefore, organizations must identify which choices are worth time and effort and which ones are more likely to be impacted by bias. These are the decision processes that warrant redesign. Sibony, Lovallo, and Powell identify three high-stake strategic decisions with high susceptibility to bias.\n\nFirstly, investment decisions are prone to excessive risk-taking for high-stakes projects and too little for minor decisions. To address this, the company needs to set its general risk appetite. Risk levels should then be assigned for different investment sizes.\n\n![Graph](image://13600d34-ac18-4a0a-b046-6d62b5ab66f0 \"Investment risk dice. Image: freeGraphicToday, CC0, via Wikimedia Commons\")\n\nSecond, resource distribution suffers from inertia and status quo bias. Budgets are often set in proportion to previous years’ allocations regardless of changing contexts. But a business unit entering a high-growth phase requires extra funds to effectively capitalize on opportunities. Conversely, units in declining markets can make do with smaller budgets.\n\nLastly, where innovation is required, teams may be hampered by myopic lenses. Organizations must widen their angle of vision to approach opportunities with agility and innovation.","99225276-0bfe-46b4-a0f2-c5cffa066eb7",[177,186],{"id":178,"data":179,"type":53,"version":35,"maxContentLevel":19},"31e5c45b-93ff-4a79-86cd-b22ae1f92704",{"type":53,"reviewType":25,"spacingBehaviour":35,"binaryQuestion":180,"binaryCorrect":182,"binaryIncorrect":184},[181],"Do all business decisions require premortem plannning?",[183],"No",[185],"Yes",{"id":187,"data":188,"type":53,"version":35,"maxContentLevel":19},"7f2ce09e-691e-4ad7-970e-b526b09a3c9d",{"type":53,"reviewType":25,"spacingBehaviour":35,"binaryQuestion":189,"binaryCorrect":191,"binaryIncorrect":193},[190],"According to Sibony, Lovallo, and Powell, what is essential when making investment decisions?",[192],"Setting a general risk appetite",[194],"Identifying the size of the market for budget allocation",{"id":196,"data":197,"type":35,"maxContentLevel":19,"version":19,"reviews":200},"bb472a14-fbdd-4b15-a271-574dfc282652",{"type":35,"contentRole":25,"markdownContent":198,"audioMediaId":199},"The key to Lovallo and Sibony’s ideas on behavioral strategy is making sure that organizations design their decision-making processes with intent, in line with the company’s overall strategy. To this end, businesses can standardize decision-making processes and set clear evaluation criteria for key decisions.\n\nWhere complex planning is involved, a red team can prove valuable – an independent group that assesses and critiques plans without prior attachments or biases. Fleshing out key analyses in the presence of neutral third parties helps to identify any gaps in logic. Additionally, scenario planning can unveil eventualities previously unforeseen.\n\nIn terms of organizational culture, companies will want to nurture an environment that encourages debate – by depersonalizing discussions and cultivating a climate of trust. In this vein, leaders at the top will set the tone for the rest of the workforce.\n\n![Graph](image://0bff1b3e-eb2a-4cd4-8f30-c66df6193c6f \"Organisation encouraging open round table discussions. Image: Oregon Department of Transportation, CC BY 2.0 \u003Chttps://creativecommons.org/licenses/by/2.0>, via Wikimedia Commons\")\n\nIt is worth remembering that, besides cognitive biases, conscious biases also often impact organizations. Office politics can drive group dynamics and can influence decision-making. These, too, need to be addressed and will require their own toolkit.","8c118dac-fe4e-4283-b84a-f0a828460fd7",[201],{"id":202,"data":203,"type":53,"version":35,"maxContentLevel":19},"58e5ff6e-e0d3-4c7e-a6b9-1d5e8ff69f86",{"type":53,"reviewType":19,"spacingBehaviour":35,"multiChoiceQuestion":204,"multiChoiceCorrect":206,"multiChoiceIncorrect":208,"multiChoiceMultiSelect":6,"multiChoiceRevealAnswerOption":6},[205],"What is a red team, in the context of behavioral strategy?",[207],"An independent group that assesses and critiques plans",[209,210,211],"A group of senior executives with ultimate veto power","A committee of team members involved with the project","A group of junior members of the project team, who are given the chance to voice their views",[213,354],{"id":23,"data":24,"type":25,"version":20,"maxContentLevel":19,"summaryPage":27,"introPage":36,"pages":214},[215,256,273,303,320,337],{"id":45,"data":46,"type":35,"maxContentLevel":19,"version":19,"reviews":49,"parsed":216},{"data":217,"body":220,"toc":254},{"title":218,"description":219},"","In a 2010 McKinsey Quarterly article, Dan Lovallo and Olivier Sibony used the term ‘behavioral strategy,’ referring to the intersection of corporate decision-making and behavioral economics. In a survey of over 1000 business executives, McKinsey found that the majority were satisfied with their organization’s strategic decisions only half the time. Even in the best companies, large projects rarely go to plan; they exceed their allotted budget and initial timelines; revenue forecasts prove overly optimistic.",{"type":221,"children":222},"root",[223,239,249],{"type":224,"tag":225,"props":226,"children":227},"element","p",{},[228,231,237],{"type":229,"value":230},"text","In a 2010 McKinsey Quarterly article, Dan Lovallo and Olivier Sibony used the term ",{"type":224,"tag":232,"props":233,"children":234},"strong",{},[235],{"type":229,"value":236},"‘behavioral strategy,’",{"type":229,"value":238}," referring to the intersection of corporate decision-making and behavioral economics. In a survey of over 1000 business executives, McKinsey found that the majority were satisfied with their organization’s strategic decisions only half the time. Even in the best companies, large projects rarely go to plan; they exceed their allotted budget and initial timelines; revenue forecasts prove overly optimistic.",{"type":224,"tag":225,"props":240,"children":241},{},[242],{"type":224,"tag":243,"props":244,"children":248},"img",{"alt":245,"src":246,"title":247},"Graph","image://c9c6d86b-b38e-4761-bfae-0ddc235c7b76","Behavioural strategist, Oliver Sibony. Image: \nOlivier Sibony, CC BY-SA 4.0 \u003Chttps://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons",[],{"type":224,"tag":225,"props":250,"children":251},{},[252],{"type":229,"value":253},"Better strategic decision-making requires two components – an accurate estimation of the organization’s implementation and execution capabilities, and a realistic expectation of competitors’ reactions to planned changes. Both require judgment calls, which means they are susceptible to overoptimism and overconfidence as well as loss aversion.",{"title":218,"searchDepth":25,"depth":25,"links":255},[],{"id":63,"data":64,"type":35,"maxContentLevel":19,"version":25,"parsed":257},{"data":258,"body":260,"toc":271},{"title":218,"description":259},"Lovallo and Sibony draw on these observations to suggest that behavioral strategy is key for companies to make better strategic decisions. Instead of addressing bias individually, encourage debiasing through process and culture. Instead of relying on employees’ individual efforts, focus on tools and processes. At the end of the day, good process will weed out poor analysis. Debiasing practices should not be limited to key management decisions.",{"type":221,"children":261},[262,266],{"type":224,"tag":225,"props":263,"children":264},{},[265],{"type":229,"value":259},{"type":224,"tag":225,"props":267,"children":268},{},[269],{"type":229,"value":270},"Instead, they should be embedded into even seemingly mundane daily activities performed throughout all levels of the organization. After all, when a chief executive gives the final stamp of approval on a proposed project, their judgment is based on information gathered and presented by their team. They have to rely on the comprehensiveness, reliability, and accuracy of the information before them. But what makes it into the proposal is driven by small everyday decisions.",{"title":218,"searchDepth":25,"depth":25,"links":272},[],{"id":68,"data":69,"type":35,"maxContentLevel":19,"version":19,"reviews":72,"parsed":274},{"data":275,"body":277,"toc":301},{"title":218,"description":276},"Some decisions within the organization may not make it to management level but still impact a company’s overall direction. Functional, routinary activities can compound on one another and effectively shift a company’s course without undergoing any formal process.",{"type":221,"children":278},[279,283,288,296],{"type":224,"tag":225,"props":280,"children":281},{},[282],{"type":229,"value":276},{"type":224,"tag":225,"props":284,"children":285},{},[286],{"type":229,"value":287},"In this regard, a culture that embraces debiasing practices at all levels – encouraging healthy discussion and dissenting opinions, using red teams, and celebrating diversity of background, skill, and personality – can help a company maintain its course without the distraction of noise.",{"type":224,"tag":225,"props":289,"children":290},{},[291],{"type":224,"tag":243,"props":292,"children":295},{"alt":245,"src":293,"title":294},"image://77957aac-95f5-4263-9cfa-d3d4a8368b01","Employees engaged in an open, healthy discussion. Image: Luisalvaz, CC BY-SA 4.0 \u003Chttps://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons",[],{"type":224,"tag":225,"props":297,"children":298},{},[299],{"type":229,"value":300},"In the article Before You Make That Big Decision…, Kahneman, Lovallo, and Sibony propose a checklist of 12 questions that decision-makers should answer to check for the undue influence of bias on projects presented before them.",{"title":218,"searchDepth":25,"depth":25,"links":302},[],{"id":94,"data":95,"type":35,"maxContentLevel":19,"version":25,"reviews":98,"parsed":304},{"data":305,"body":307,"toc":318},{"title":218,"description":306},"The first part of the checklist requires the decision-maker to check for any red flags to do with the recommending group. Do they have any vested interest in the proposal, like reputation or career advancement? Have they become so attached to their idea to the point of losing objectivity? How about the group dynamics?",{"type":221,"children":308},[309,313],{"type":224,"tag":225,"props":310,"children":311},{},[312],{"type":229,"value":306},{"type":224,"tag":225,"props":314,"children":315},{},[316],{"type":229,"value":317},"Groupthink is particularly problematic, as it prevents members from voicing out dissenting views and exploring alternative paths. The decision-maker needs to answer these questions without asking them directly of the recommending team. If they must consult with others within the organization, they must do so discreetly. And if a dissenting member in the group has relevant inputs, the decision-maker should have a separate discussion with them.",{"title":218,"searchDepth":25,"depth":25,"links":319},[],{"id":111,"data":112,"type":35,"maxContentLevel":19,"version":25,"parsed":321},{"data":322,"body":324,"toc":335},{"title":218,"description":323},"The majority of the decision checklist focuses on the process that the team undertook to craft their proposal. The decision-maker will want to follow the team’s line of thinking from start to finish. In doing so, they can check for gaps in logic or for instances where bias might have influenced the team. A few key questions form this part of the assessment. What assumptions did the team make in creating the proposal? What information was used – or overlooked? How thoroughly did the team assess other options? Does this proposal draw inspiration from other projects? How comparable are they?",{"type":221,"children":325},[326,330],{"type":224,"tag":225,"props":327,"children":328},{},[329],{"type":229,"value":323},{"type":224,"tag":225,"props":331,"children":332},{},[333],{"type":229,"value":334},"When referring to successful projects, we might assume that, by virtue of similarity, our proposal should likewise succeed. In our optimism, we may fail to see where key variables differ. Conversely, examining similar projects that failed can prove valuable in uncovering risks previously unforeseen. Ultimately, the decision-maker should ensure that the team is recommending this particular project because it is a solid plan, independent of extraneous details.",{"title":218,"searchDepth":25,"depth":25,"links":336},[],{"id":116,"data":117,"type":35,"maxContentLevel":19,"version":19,"reviews":120,"parsed":338},{"data":339,"body":341,"toc":352},{"title":218,"description":340},"The final part of Kahneman, Lovallo, and Sibony’s decision checklist involves evaluating the quality of the proposal. Many business projects fail because of overconfidence. Managers draw up unrealistic timelines and make overoptimistic forecasts, or they fail to consider how competitors might respond to their plans. They might overestimate the firm’s capabilities, or rely on a star employee who may not stay long enough to see the project through. In crafting proposals, it's important that the team has examined the worst-case scenario so that contingencies and risk mitigation strategies are put in place.",{"type":221,"children":342},[343,347],{"type":224,"tag":225,"props":344,"children":345},{},[346],{"type":229,"value":340},{"type":224,"tag":225,"props":348,"children":349},{},[350],{"type":229,"value":351},"Conversely, a company culture that is allergic to risk might have managers forgoing viable alternatives due to fear of failure. To this end, it is important that key members are aware of the company’s current risk appetite. Decision-makers are reminded to avoid showing partiality to any one option while the proposal is being drawn up. Doing so risks undue influence on the recommending team, potentially swaying their recommendation toward the decision-maker’s implied preference.",{"title":218,"searchDepth":25,"depth":25,"links":353},[],{"id":138,"data":139,"type":25,"version":19,"maxContentLevel":19,"summaryPage":141,"introPage":149,"pages":355},[356,386,421],{"id":157,"data":158,"type":35,"maxContentLevel":19,"version":25,"reviews":161,"parsed":357},{"data":358,"body":360,"toc":384},{"title":218,"description":359},"Gary Klein introduced ‘premortem planning’ in 2007. Since then, its ease of use has endeared itself to business executives and behavioral scientists. The premortem starts with the idea that pessimism is taboo in project planning. We do not voice concerns when everyone else seems on board with an idea.",{"type":221,"children":361},[362,374,379],{"type":224,"tag":225,"props":363,"children":364},{},[365,367,372],{"type":229,"value":366},"Gary Klein introduced ",{"type":224,"tag":232,"props":368,"children":369},{},[370],{"type":229,"value":371},"‘premortem planning’",{"type":229,"value":373}," in 2007. Since then, its ease of use has endeared itself to business executives and behavioral scientists. The premortem starts with the idea that pessimism is taboo in project planning. We do not voice concerns when everyone else seems on board with an idea.",{"type":224,"tag":225,"props":375,"children":376},{},[377],{"type":229,"value":378},"The internalized notion of being a team player prevents us from examining the potential pitfalls of a plan. In premortem planning, individuals are asked to imagine that the project has moved forward. Unfortunately, it was a fiasco. With this in mind, team members list down all possible ways the project could have gone wrong.",{"type":224,"tag":225,"props":380,"children":381},{},[382],{"type":229,"value":383},"This practice shifts individuals’ mindsets. Whereas they would have initially felt uneasy entertaining the idea of failure, the exercise removes the burden of going against the grain. Failure has become a given, and the task is now to come up with all the possible threats lying in wait. The veil of confidence and optimism in the project is removed, allowing for a clear view of blind spots previously undetected.",{"title":218,"searchDepth":25,"depth":25,"links":385},[],{"id":172,"data":173,"type":35,"maxContentLevel":19,"version":19,"reviews":176,"parsed":387},{"data":388,"body":390,"toc":419},{"title":218,"description":389},"Not all decisions require stringent process reviews and checklists. Applying equal rigor across all decisions is costly and time-consuming; therefore, organizations must identify which choices are worth time and effort and which ones are more likely to be impacted by bias. These are the decision processes that warrant redesign. Sibony, Lovallo, and Powell identify three high-stake strategic decisions with high susceptibility to bias.",{"type":221,"children":391},[392,396,401,409,414],{"type":224,"tag":225,"props":393,"children":394},{},[395],{"type":229,"value":389},{"type":224,"tag":225,"props":397,"children":398},{},[399],{"type":229,"value":400},"Firstly, investment decisions are prone to excessive risk-taking for high-stakes projects and too little for minor decisions. To address this, the company needs to set its general risk appetite. Risk levels should then be assigned for different investment sizes.",{"type":224,"tag":225,"props":402,"children":403},{},[404],{"type":224,"tag":243,"props":405,"children":408},{"alt":245,"src":406,"title":407},"image://13600d34-ac18-4a0a-b046-6d62b5ab66f0","Investment risk dice. Image: freeGraphicToday, CC0, via Wikimedia Commons",[],{"type":224,"tag":225,"props":410,"children":411},{},[412],{"type":229,"value":413},"Second, resource distribution suffers from inertia and status quo bias. Budgets are often set in proportion to previous years’ allocations regardless of changing contexts. But a business unit entering a high-growth phase requires extra funds to effectively capitalize on opportunities. Conversely, units in declining markets can make do with smaller budgets.",{"type":224,"tag":225,"props":415,"children":416},{},[417],{"type":229,"value":418},"Lastly, where innovation is required, teams may be hampered by myopic lenses. Organizations must widen their angle of vision to approach opportunities with agility and innovation.",{"title":218,"searchDepth":25,"depth":25,"links":420},[],{"id":196,"data":197,"type":35,"maxContentLevel":19,"version":19,"reviews":200,"parsed":422},{"data":423,"body":425,"toc":454},{"title":218,"description":424},"The key to Lovallo and Sibony’s ideas on behavioral strategy is making sure that organizations design their decision-making processes with intent, in line with the company’s overall strategy. To this end, businesses can standardize decision-making processes and set clear evaluation criteria for key decisions.",{"type":221,"children":426},[427,431,436,441,449],{"type":224,"tag":225,"props":428,"children":429},{},[430],{"type":229,"value":424},{"type":224,"tag":225,"props":432,"children":433},{},[434],{"type":229,"value":435},"Where complex planning is involved, a red team can prove valuable – an independent group that assesses and critiques plans without prior attachments or biases. Fleshing out key analyses in the presence of neutral third parties helps to identify any gaps in logic. Additionally, scenario planning can unveil eventualities previously unforeseen.",{"type":224,"tag":225,"props":437,"children":438},{},[439],{"type":229,"value":440},"In terms of organizational culture, companies will want to nurture an environment that encourages debate – by depersonalizing discussions and cultivating a climate of trust. In this vein, leaders at the top will set the tone for the rest of the workforce.",{"type":224,"tag":225,"props":442,"children":443},{},[444],{"type":224,"tag":243,"props":445,"children":448},{"alt":245,"src":446,"title":447},"image://0bff1b3e-eb2a-4cd4-8f30-c66df6193c6f","Organisation encouraging open round table discussions. Image: Oregon Department of Transportation, CC BY 2.0 \u003Chttps://creativecommons.org/licenses/by/2.0>, via Wikimedia Commons",[],{"type":224,"tag":225,"props":450,"children":451},{},[452],{"type":229,"value":453},"It is worth remembering that, besides cognitive biases, conscious biases also often impact organizations. Office politics can drive group dynamics and can influence decision-making. These, too, need to be addressed and will require their own toolkit.",{"title":218,"searchDepth":25,"depth":25,"links":455},[],{"left":4,"top":4,"width":457,"height":457,"rotate":4,"vFlip":6,"hFlip":6,"body":458},24,"\u003Cpath fill=\"none\" stroke=\"currentColor\" stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"m9 18l6-6l-6-6\"/>",{"left":4,"top":4,"width":457,"height":457,"rotate":4,"vFlip":6,"hFlip":6,"body":460},"\u003Cpath fill=\"none\" stroke=\"currentColor\" stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M4 5h16M4 12h16M4 19h16\"/>",1778224858589]