Assessing Bias in Strategic Decision-Making PPT

This PPT slide, part of the 23-slide 10 Sanity Tests for Strategy Development PowerPoint presentation, presents "Strategy Sanity Test 8," which focuses on the potential biases that can affect strategic decision-making. It emphasizes that strategy often relies on flawed logic, particularly when extrapolating future outcomes from current observations. This reliance can lead to 2 significant inference problems: attribution error and survivorship bias.

Attribution error occurs when decision-makers fall into the "halo effect," where they mistakenly believe that replicating the successful actions of another company will yield similar results. This is a retrospective view that overlooks the unique contexts and variables that contributed to those successes. Survivorship bias, on the other hand, highlights the dangers of analyzing only successful cases, which can distort understanding by ignoring failures that provide critical insights.

The slide advocates for a structured approach to mitigate these biases. It suggests developing multiple hypotheses and potential solutions to create a more robust decision-making framework. This involves building a solid fact base to validate hypotheses, which is essential for informed decision-making.

Additionally, the slide underscores the importance of incorporating diverse perspectives into the decision-making process. It encourages fostering a culture that values dissent and critical thinking, as this can help identify blind spots and challenge prevailing assumptions. The slide concludes with practical steps to de-bias the decision-making process, such as specifying objective criteria in advance and being open to the possibility of error. This comprehensive approach aims to enhance strategic robustness and ensure that decisions are grounded in reality rather than flawed assumptions.

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Strategy Development