Early-Stage Research on Decision-Making Styles

People make decisions—often in very different ways. Learn more about five distinct styles and the preferences that shape them.

Taking the Bias Out of Meetings

Managing bias effectively can help lessen the impact it has on your company’s strategy.

Beating the Odds in Market Entry

How to avoid the cognitive biases that undermine market entry decisions.

Re-Anchor Your Next Budget Meeting

Anchoring is the psychological phenomenon that makes a number stick in your mind and influence you — even though you think you’re disregarding it. An anchor is such a powerful influence that only another anchor can overcome it. Re-anchoring combats the anchor of history and convention with another anchor, grounded in a different set of facts.

Overcoming a Bias Against Risk

Risk-averse midlevel managers making routine investment decisions can shift an entire company’s risk profile. An organization-wide stance toward risk can help.

Tim Koller, Dan Lovallo, and Zane Williams

Many of the managerial tactics used by companies in their capital-allocation and evaluation processes fail to take note of basic [behavioral biases]. By considering the success or failure of projects in isolation, for example, they fail to understand how each will add risk to the company’s overall portfolio and institutionalize a tendency toward risk aversion, essentially recreating the narrow framing that occurs at the individual … [ Read more ]

How to Put Your Money Where Your Strategy Is

Most companies allocate the same resources to the same business units year after year. That makes it difficult to realize strategic goals and undermines performance. Here’s how to overcome inertia.

The Case for Behavioral Strategy

Left unchecked, subconscious biases will undermine strategic decision making. Here’s how to counter them and improve corporate performance.

Distortions and Deceptions in Strategic Decisions

Companies are vulnerable to misconceptions, biases, and plain old lies. But not hopelessly vulnerable.

Dan P. Lovallo and Olivier Sibony

Loss aversion wouldn’t have such a large effect on decisions made in times of uncertainty if people viewed each gamble not in isolation but as one of many taken during their own lives or the life of an organization. But executives, like all of us, tend to evaluate every option as a change from a reference point – usually the status quo – not as … [ Read more ]

Dan P. Lovallo and Olivier Sibony

When companies evaluate strategic decisions, three conditions frequently create agency problems. One is the misalignment of time horizons between individuals and corporations. …Another problem that can generate harmful deceptions is the differing risk profiles of individuals and organizations. …The final agency issue arises from the likelihood that a subordinate knows much more than a superior does about a given issue. Higher-ranking executives must therefore make … [ Read more ]

Learning to Let Go: Making Better Exit Decisions

Although canceling a project or exiting a business may often be regarded as a sign of failure, such moves are really a perfectly normal part of the creative-destruction process. Companies need to realize that in this way they can free up their resources and improve their ability to embrace new market opportunities.

By neutralizing the psychological biases that make it harder for executives to evaluate struggling … [ Read more ]

Optimism: Don’t Let it Run Away with You

Many M&A decisions may be the result of hubris, say Dan Lovallo and Daniel Kahneman. Heres a technique to help executives avoid the bad kind of optimism.