Science of “Disaster Avoidance”
Excellent decision-making is one of the major pillars of personal and business development. The task of making such decisions is mostly designated with the leader. At enterprise or organizational level, the CEO or senior managers are charged with this task. Thus, to ensure growth, leaders strive to avoid terrible advice, cognitive biases, and bad judgment, while at the same time endeavoring to portray qualities that can be emulated.
Dr. Gleb Tsipursky, a cognitive neuroscientist and expert on behavioral economics and decision making, argue that while business failure can result from diverse minor and major factors, there is nothing that drives a business towards disaster faster than poor decision making. Some major firms, such as Enron, Tyco and WorldCom, have had a firsthand experience of the impact of poor decision making. Enron’s leaders chose to use illegal accounting practices with the intention of helping maintain the company’s high market value, which ultimately culminated into one of the major scandals of the 21st century. Such decisions were based on gut rather than logic and as result ended up costing the companies dearly.
Following one’s gut mostly leads to irrational behavior. In a business setting, for instance, bad accounting would mean that the actor will inevitably be caught, their reputations will be ruined and, in the worst case scenario, they go to jail. At the time of making a decision, however, these outcomes are often not considered.
To avoid such disasters, Dr. Gleb Tsipursky in his book “Never Go with Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters”, provides new and powerful strategies summarized as follows:
Always double check facts even when they seem obvious. Research indicates that we only detect 54% of lies on average, creating an almost 50% of being wrong about assumptions or gut.
Test the practicality of a decision. Many business gurus encourage people to “Trust your instincts” as far as business decisions are concerned. However, until the outcomes are statistically substantiated there is always a very high probability of the worst happening.
Never confuse luck and context particularly in matters business. Being at the right place at the right time with the right people plays a large role in success. However, while luck sometimes even proves facts wrong, relying on it can be the start of poor decision making.
Following these strategies in decision making helps leaders and organizations overcome cognitive biases, avert catastrophe, and adapt to any business contexts.
This article is based on the insights from Media Interview Questions and Answers for Never Go with Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters, by Dr. Gleb Tsipursky.
Written by Lingjun Zhou & Edited by Alexander Fleiss