You're About to Make a Terrible Mistake by Oliver Sibony

How Biases Distort Decision-Making and What You Can Do to Fight Them

Behavioural strategy : tackle biases in your strategic decisions 3 core ideas: Our biases lead us astray, but not in random directions, we are predictably irrational The way to deal with our biases is not to try to overcome them, collaborate with people to detect these biases and use good process to act on the insights While organizations can overcome individual biases, it does not happen by chance. Be the decision architect to design the decision making process

Instead of checking hard facts we corroborate the story told to us Confirmation Bias: we tend to uncritically accept accounts that confirm our opinions while immediately searching for reasons to ignore those that challenge them Champion Bias: reputation of the messenger outweighs the value of the info he bears Experience Bias: since we are the biggest champion to ourselves, if a story is relevant to our experience, we believe it even more Test the null hypothesis.

Attribution Error : our first impulse is to attribute success/failure to individuals, to their choices/personality but not to the circumstances. The Halo Effect : we generate an overall impression based on a few salient characteristics. Survivorship Bias : we focus on successful cases and forget the failed ones, it makes us think that risk-taking is the reason for success. We can find inspiration from the success story heroes but looking for practical lessons can be a serious reasoning error

Intuition is a poor guide to strategic decisions, intuition is based on rapid recognition of a situation that has already been experienced and memorized, even if the lesions from that experience haven’t been consciously formulated - recognition primed decision model. Dealmaking benefits from intuition, deciding which deal to make does not Decision makers intuition is relevant if : Prolonged practice with clear feedback in a high validity environment Strategic decisions are the exact opposite, they take place in a low validity environment, in which decision makers have had limited practice with delayed and unclear feedback.

In general we overestimate ourselves relative to others. Planning fallacy : when we make a plan, we don’t necessarily imagine all the reasons it could fail. We overlook the fact that success requires alignment of many favourable circumstances while a single glitch can derail everything. Consider the competition even when no one tells you to do it in advance. Where do our beliefs stop and our desires start? It’s healthy to be optimistic about what we can control, not what we can’t.