Heath: Corporate Decision-Making ‘Seriously Flawed’

Four-step WRAP process helps people, organizations make better decisions.

September 23, 2013
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Decision-making processes in the business world are seriously flawed, according to bestselling author Chip Heath, who opened the joint conference of the CUNA Technology Council and the CUNA Operations, Sales, and Service Council Sunday in Hollywood, Calif.

Heath, co-author of “Switch: How to Change Things When Change Is Hard,” says we all live with flawed decision-making in our personal and professional lives due to biases and irrationalities.

As evidence of this, he cited these statistics:

  • In a survey of 2,000 CEOs, 60% said bad decisions were just as common as good decisions in their organizations;
  • Nearly 85% of mergers create no value for shareholders;
  • 40% of CEOs fail within their first 18 months on the job;
  • Seven publishers turned down the first book of the “Harry Potter” series; and
  • Medical diagnoses are wrong 40% of the time.

Heath outlined a four-step WRAP process to help people and organizations make better decisions:

1. Widen your options. “Many people let themselves be confronted with ‘whether-or-not’ decisions,” says Heath. “When people assume there are only two options, they’re engaging in ‘narrow framing.’

“Don’t assume there are only two options,” he continues. “Pretend those options have been taken off the table and look for other possible solutions.”

2. Reality-test your assumptions. Heath recommends testing your assumptions before making decisions.

“Job interviews are a classic example,” he says. “Instead of taking a job candidate out to lunch, give him or her a genuine problem to solve so you can see how well they’d solve problems on the job.”

3. Step back. Heath says decision-making is often influenced by short-term emotions.

“That's why you need to ‘sleep on it’ or imagine what your decision would look like in five years,” he says. “If you're wrestling with a problem, pretend the problem belongs to a friend. And then ask yourself how you’d advise your friend on this problem.”

4. Prepare to be wrong. Heath recommends setting “tripwires” for yourself—safeguards that prevent you from getting too far off course, such as limits on cost-overruns for key projects.

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