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Why smart leaders make bad decisions

Good judgment will produce good decision making. Sounds fairly simple, right?

So, how come smart leaders make bad decisions?

All of us are required to make decisions every day – some decisions are just small and harmless, others are more important, and could change the direction of someone’s life.

Leaders, in particular, are called on to make intelligent decisions in spite of the complexity of some situations. Their direct reports look to them to make the decisions and if the leader makes a bad choice, the credibility of that leader could be jeopardized.

However, the reasoning behind how and why people make bad decisions can actually get a bit complex.

There’s even a specialty dedicated to this phenomenon called decision neuroscience, which investigates the principles of brain organization that underline executive control, reasoning, and decision making.

What research has told us is one reason leaders may make bad decisions is because they are struggling to achieve balance between the overall objectives and operational realities. They may be too abstract in their thinking that they ignore or miss the details of operations. Or they could be stuck in the present and not seeing the overall situation. In addition, they may over-analyze, or impulsively under-analyze, complex decisions because of a low tolerance for ambiguity.

According to an article in the Harvard Business Review, flawed decisions start with errors of judgment, which cycles back to the idea that sound judgment can produce good decisions.

There are two distinct skill sets that can help lead to better decisions – speed and decisiveness. While these are two distinct skill sets, to be effective you must have both. Sometimes a lack of speed and decisiveness can be interpreted as poor analytical and judgment skills.

As a leader you must learn to stay focused on the big picture and not get bogged down or distracted by irrelevant details. Here are some tips to keep in mind:

Determine the criteria 

A hallmark of sound decision making is clear criteria for making the decision. Before making a decision, determine the criteria for evaluating the options. The criteria should be drawn from the organization’s goals or objectives.

For example, the following criteria are common: minimal impact to current operations, helping to achieve important business priorities, consistent with corporate values, logically sound, can be implemented within the constraints, acceptable to those involved, considers all pros, cons, and risks.

Look at all angles

Consider alternative solutions instead of going with the first option that presents itself. There may be more alternatives available to you than you imagine. Try to imagine and fully analyze three alternative solutions before you make a final decision.

Mistakes happen

In ambiguous situations in which you are not sure of what to do and are afraid of making a mistake, realize that it’s very likely that no one else knows what to do either. Mistakes happen; they are a fact of life. The best tactic when confronted with a mistake is to say, “What can I learn from this?”

Remember the key is to communicate your reasoning processes clearly and link them operationally to what you are trying to achieve. In other words, try to zero in on what is important, and then take action.