Bad Decisions Don’t Just Happen

A few years back, my team and I prepared for the launch of our new leadership product. We were excited. We even skipped a few key steps in our rush to market. We just knew we had something special. We messaged hundreds of thousands of people about the product, and when the launch was over, we’d only made one sale. That’s right—ONE.

Looking back, our mistakes are clear. We let our intuition and excitement get too far ahead of our logic and reasoning. We skipped over the critical thinking that’s required for this type of business decision. It’s easy to do.

Bad decisions like this don’t just happen. They come from bad thinking.

To protect yourself from bad thinking that leads to business blunders, avoid the three decision-making traps below.

Trap 1: The Rosy Scenario

The name of this trap comes from an old government joke. In Washington D.C. any projection that sounded too optimistic was said to be written by “Rosy Scenario.” As you gather intel for your own decisions, you should be on the lookout for old Rosy.

Most leaders have a strong vision. We know what we want to see in the future, and we have a tendency to fit every new piece of information into that vision. We get so wedded to the outcome that everything, even if it’s contrary, somehow supports the decision we’ve made. This is classic confirmation bias.

That’s the thing we want to stay away from. Get nosy, not rosy. For instance, don’t neglect the low-revenue projections simply because you believe in a product. You have to understand the difference between what you think and what you can prove.

Trap 2: The Wrong Ingredient

When something goes right, we look for underlying principles or ingredients that make up the recipe for success. This practice can bring healthy predictability to business decisions. It can also wreak havoc when we misidentify which ingredient is responsible for the success.

When I was in the publishing world, there was a huge publishing success around a book called The Prayer of Jabez. The book was pretty short. It fell into the gift book category. Universally, publishers agreed the key to success was in the small format of the book. Many invested in the mass production of more small-format books. In the end, almost all of them tanked.

It turns out that The Prayer of Jabez’s popularity was an anomaly. Publishers misidentified the ingredient that caused its success.

It’s easy to mislabel ingredients. You have to do your research. You lose more from a bad decision than you gain from a good one.

Trap 3: Binary Thinking

Binary thinking is also called either/or thinking and the false dilemma. It’s the idea that every choice has only two extreme alternatives. It oversimplifies choices and shows through in statements like, “Either we invest in this new product or we go out of business.”

Leaders fall prey to this all the time. The key is to realize binary situations are rare. There’s usually a third option that reconciles the difference. Leaders tend to skip this critical thinking for the sake of efficiency. In other words, they want to get to a decision, even if it’s the wrong one. Effectiveness should not be sacrificed for efficiency.

When you pull back from a seemingly binary situation, you will likely see more alternatives. Consider asking yourself and your team, “If we couldn’t do either of these, then what would we do?” The third option is often the answer.

To become a better decision-maker, you must become more aware of the traps around you. When you remove rosy scenarios, wrong ingredients, and binary thinking from your playbook, you’ll make smarter decisions and lead to win.

Disclosure of Material Connection: Some of the links in the post above are “affiliate links.” This means if you click on the link and purchase the item, we will receive an affiliate commission. Regardless, we only recommend products or services we use and believe will add value to our readers. We are disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.

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