Decisions Without Blinders

Your company’s success hinges on the quality of managers’ decision-making. Yet in making high-stakes decisions, many managers unwittingly don cognitive blinders: They don’t see or seek out vital information, they fail to use the information they do see, and they don’t share it with others.

Result? Blind spots that can spawn grave consequences. Consider pain reliever Vioxx, which drug maker Merck withdrew from the market in 2004 after realizing the drug caused heart attacks and strokes. Thanks to cognitive blinders, Merck’s executives may have discounted initial medical reports describing Vioxx’s dangers—and failed to fully understand how harmful the drug was.

How to remove cognitive blinders in your company? First, train yourself to see information that’s outside your awareness—by asking questions like, “What if our strategy is wrong? How would we know?” When individuals provide data justifying a proposal, insist that they also provide contradictory evidence—data acknowledging the proposal’s risks. And avoid the tendency for decision-making teams to over-rely on common knowledge by encouraging members to share information that only they possess.

Not every decision requires such extensive evidence gathering. But when an ill-informed choice would generate irrevocable damage, rigorously collect all the data you need to make a wise decision. You’ll ensure your company’s integrity—and its profitability.

The Idea in Practice

To remove cognitive blinders in your firm:

See Information

To stay alert to peripheral threats and opportunities, notice regulatory, political, and market-oriented changes in your environment—especially unexpected shifts. Use this information to adapt your strategies so your company can thrive in the face of change.

Encourage managers to ask, “What kind of information is out there that could directly affect our organization?” Gather multiple views—including those of outsiders who can tell you things you wouldn’t see from your vantage point.

Seek Information

By the time information reaches your desk, it’s often framed as recommendations supported by considerable data. If you don’t see any contradictory evidence in such data, send managers back to search for and articulate it. Failing to seek disconfirming data can lead to disaster. Example: 

When Pepsi gained ground on Coke by pitting the two beverages against each other taste tests, nervous Coca-Cola executives reformulated the 99-year-old Coke recipe. Taste tests of the old and new formulations seemed to confirm that old Coke’s taste was inferior. Executives didn’t collect contradictory evidence by asking if consumers would accept New Coke if old Coke was taken away. The outcome? New Coke’s legendary flop.

Use Information

Use all relevant data to inform your strategies. Ignore it, and you put your enterprise at risk. Example: 

The Financial Services Agency, which inspected international banking operations, sent signals that many formerly “gray-area” banking tactics—such as cross-selling financial products among corporate units—were now unacceptable and would be punished. For example, it revoked the license of Credit Suisse Financial Products’ Tokyo branch for using such tactics. Yet Citibank played aggressively in the Japanese marketplace’s gray areas—including hatching a shady deal to extend a loan to an unqualified Tokyo fashion school. The FSA revoked the licenses of Citibank’s four private-banking offices in Japan.

Share Information

Decision-making team members frequently discuss information they’re all aware of. That’s because it’s comfortable and rewarding when others chime in with their support. But this tendency undermines the very value of diverse teams.

During decision meetings, don’t assume that individuals who have unique information will speak up as needed. Ensure that each meeting agenda includes requests for individual reports.