Debiasing Organizational Decisions-A Step Towards Organizational Excellence
Debiasing Organizational Decisions-A Step Towards Organizational Excellence
Resource Acquisition,
Structuring
Tactical Workflow, Divisional
Plan…
Semi-Programmed
• The term “Cognitive Bias” was introduced by behavioral economists Amos Tversky and Daniel Kahneman in
early 1970s
• Cognitive bias describes the inherent thinking errors that humans make in processing information.
Dual process theory – System 1 & System 2
System 1 System 2
Automatic Reflective
Fast
Slow
Doer
Never turned off Planner
Therefore, the intuitive reasoning will always interfere with your reflective processes
(replacing logical thinking with intuition). And that is how biases creep into
decisions.
Common biases that affect business
• Groupthink
• Excessive
• Overconfidence
Optimism
• Overconfidenc
e
Action Judgement
Oriented and
Bias perception
Stability Framing of
alternatives
• Research Area
• Psychology
• Economics
• Decision Theory
• Information Management
• Supply Chain Management
• Judiciary
• Medicine
• Accounting
• Finance
• Investments
Literature Survey/Specific work
• “Reducing biases in cross cultural top management team decision making
processes” - by David Strutton and William Carter, 2013
• “The Decision-Driven Organization”by Marcia W. Blenko, Michael C. Mankins,
and Paul Rogers,(Harvard Business Review,2010)
• “Why Good Leaders Make Bad Decisions” by Andrew Campbell, Jo Whitehead,
and Sydney Finkelstein (HBR,2009)
• “Flaws in strategic decision making”by Renee Dye, Olivier Sibony and Vincent
Truong,(McKinsey Global Survey,2009)
• “The case for behavioral strategy” by Lovallo & Sibony,(Mckinsey Quarterly,2010)
Debiasing
• Biases are hard wired to our brain
• It’s impossible to “remove” them completely.
• There are effective techniques/frameworks to reduce the effect of
biases by carefully changing the environment and processes where the
decisions are formed.
Debiasing frameworks.
A. Debiasing framework by Kaufmann, Carter, & Buhrmann (2010)
• Expanding an individual's bound of rationality,
• Reducing the dynamism of a decision-making environment, and
• Reducing complexity of a decision-making environment
It will also improve employee morale as decisions will be seen unbiased and goals and targets are more likely to be achieved.
Thank you!