Debiasing techniques […] aim to limit the effects of overconfidence by forcing the decision maker to consider downside risks that may have been overlooked or underestimated. And they can mitigate the dangers of confirmation bias by encouraging executives to consider different points of view.
Examples of such techniques include either the systematic use of a devil’s advocate or a “premortem” (individuals project themselves into a future where the decision has failed and imagine, in prospective “hindsight,” what failed and why). Another technique is to organize a formal scenario-planning exercise—expanding the range of assumptions underpinning a plan—or even a war game, in which executives put themselves in their competitors’ shoes. One study of investment decisions showed that when a company uses a range of debiasing techniques, its return on investment rises considerably. For high-impact, repetitive decisions, such as large investments, it is sensible to embed debiasing techniques in a company’s formal decision-making processes.
Authors: Olivier Sibony, Philip Meissner, Torsten Wulf
Source: McKinsey Quarterly
Subjects: Decision Making, Management, Organizational Behavior