Board Decision – A Case Study
Recently I spoke with a board chairman about a decision that board had made, and regretted. Several of the members now felt it had not been the best decision at the time, and should be reversed if the opportunity came.
I was curious (as usual) about the process that had led to this decision, taken unanimously, but now in doubt. How did that board of intelligent people, deliberating carefully, get itself into this position? What lesson could they, and others, learn about making better decisions?
We concluded that the board had allowed itself to be unwittingly caught up in what has been called the “illusion of confidence”. It’s one of those cognitive biases we come equipped with; they take a lot of self-awareness to detect and manage.
In this case, one of the directors had special charge of the matter in discussion, and had expressed a view with a very strong level of confidence and conviction. We have a bias towards giving undue weight to opinions that are expressed with great confidence, and that’s exactly what happened. The other directors allowed themselves to be swayed by the style, more than the logic.
Here’s a much-neglected tip for good decision-making: attend to the process just as carefully as you do to the subject of the decision.