The Idea in Brief

When executives make big strategic bets, they typically depend on the judgment of their teams to a significant extent.

The people recommending a course of action will have delved more deeply into the proposal than the executive has time to do.

Inevitably, lapses in judgment creep into the recommending team’s decision-making process (because its members fell in love with a deal, say, or are making a faulty comparison to an earlier business case).

This article poses 12 questions that will help executives vet the quality of decisions and think through not just the content of the proposals they review but the biases that may have distorted the reasoning of the people who created them.

Thanks to a slew of popular new books, many executives today realize how biases can distort reasoning in business. Confirmation bias, for instance, leads people to ignore evidence that contradicts their preconceived notions. Anchoring causes them to weigh one piece of information too heavily in making decisions; loss aversion makes them too cautious. In our experience, however, awareness of the effects of biases has done little to improve the quality of business decisions at either the individual or the organizational level.
A version of this article appeared in the June 2011 issue of Harvard Business Review.