According to experts, 85 to 95 percent of new products launched each year are failures. But since companies regularly consider industry data, market intelligence and relevant expertise as part of the decision-making process, these high failure rates are not likely due to a lack of information.
Rather, they are due to defects in our internal mental processes — flaws in the way we gather and process information that often go unnoticed and unaddressed. Here are three that can unknowingly create a virtual “mind field” of risk for business decisions such as new product launches.
1. Influence of the boss: Determining the level of sufficiency based on the source
In business, there are specific results that our boss or other stakeholders desire, and we attach strong feelings to achieving them. For example, if our boss has a significant attachment to launching a new product, we may spend disproportionately more time seeking information that validates the boss’s view than searching for information that conflicts with the boss’s desire.
As a result, we unconsciously go about gathering information under the boss’s influence and create an environment for faulty decisions. We end up living with the unrealistic but confident sense that we have figured out the way things are and that we have done that objectively. And if decisions do not go well, we find comfort that we can always blame our boss later.
2. Snap-judgment defense: The tendency to unreasonably defend decisions made solely on snap judgments
Due to the hard-wired threat response in our brain, we make rapid judgments about what is happening, which allows us to quickly determine what information is most relevant and then take speedy action. This is helpful when the threat is physical and we must act without delay.
But in business, we often find it easy to lose track of how quickly we are judging a situation or how much we’ve explained away.
Since we associate leadership with decisiveness, being decisive becomes a self-driven attribute causing us to focus solely on explaining and defending our snap judgment. Our logic circuits shut down and we are unable to objectively consider points of view that conflict with our own.
3. Shooting the critics: The tendency to marginalize people who disagree with us
Leaders know that any decision they make is subject to their judgment being questioned. And whether they’re fully aware of it or not, they’re really not in the market to have their decisions, beliefs and choices questioned.
Whether we are team leaders or CEOs, we subconsciously develop the tendency to marginalize people who disagree with us. When this happens, people stop telling the truth. They avoid rocking the boat and just quietly stay out of the line of fire.
The solution to this problem requires the courage to challenge our own thoughts. When these flaws in thinking are deeply entrenched, companies are at significant risk of being displaced by competitors, new technology and novel business models. By pausing to look for these cognitive defects, leaders can make better decisions, avoid problems, reduce risk, improve outcomes and never have to lament, “What was I thinking when I made that decision?”
Larry J. Bloom spent 30-plus years helping grow a small family business to more than $700 million in revenue. He is a consultant, the author of “The Cure for Corporate Stupidity: Avoid the Mind-Bugs that Cause Smart People to Make Bad Decisions,” and the owner of a start-up media and software company that promotes better thinking. For more information, visit www.curecorporatestupidity.com.