Nuala Walsh , The author and a non-executive director, behavioural scientist
Q. What makes decision-making particularly challenging in the current context?
Most executives spend about 30 percent of their time making decisions—some even longer. The primary determinant of effectiveness is context. But in today’s high-speed, noisy world of data overload and distraction, good judgement is at a premium.
Too often, even the best leaders tune out critical voices, ignore signals, and rush to misjudgement. How reliably do you hear the voices that really matter? When you don’t, stakeholders feel unheard. Beyond predictable reputation damage and underperformance, polarisation, exclusion and activism can result.
Q. What are some of the factors that shape our judgement?
While most people think of misinformation as AI (artificial intelligence)-driven, few think of misinformation as self-generated. Notwithstanding your personality, values, and beliefs, over 200 cognitive biases influence your reasoning.
In high-stakes situations, we are triggered by many things. These include power, ego, risk, identity, memory, ethics, time, emotion, relationships and stories. I summarise these misjudgement traps in the mnemonic PERIMETERS™, consistent with the theory of bounded rationality.
Influences are subtle. Nobel Prize-winner Richard Thaler identifies ‘supposedly irrelevant factors’ such as mood, timing, framing, friction or even the weather. These are an ‘invisible tax’ on decisions that lead to judgement variability over time.
Q. What’s the ‘trilogy of error’?
Human error alone accounts for 94 percent of road accidents, 88 percent of cyberattacks, and 80 percent of aviation accidents. Cognitive biases partly contribute to decision error, classified as blind, deaf and dumb spots.
Blind spots relate to our inability to accurately perceive reality. Under pressure, we overlook relevant decision inputs.
Deaf spots refer to our tendency to hear selectively. In motivated reasoning, we tune out inconvenient truths, defaulting to what we want to believe, not what’s most accurate.
Dumb spots involve the tendency to self-silence. They perpetuate falsehoods and deception.
These biases don’t operate independently but in what I call a ‘trilogy of error’. I think of them as judgement killers. They underpin missed signals, miscarriages of justice, and corporate misconduct.
Also read: Humans answer to intuition, not probability: Anand Damani
Q. What does ‘tuning in’ entail?
Tuning in is the solution to tuning out. When you are tuned in, you think beyond what you first hear and probe alternative explanations. You don’t take people, products or pitches at face value. You reinterpret not misinterpret information. You decode not encode data.
Tuning in is about hearing the voice of dissenters, mavericks and minorities. It’s about consciously prioritising the voice of common sense and curiosity over conscience and convenience. It’s why Gartner cited ‘decision intelligence’ as a top strategic trend.
Q. What do we need to unlearn to move away from flawed patterns of tuning out?
Behavioural understanding is not a soft skill. Decision error costs the average Fortune 500 company an estimated $250 million annually, according to a Harvard study. To avoid tuning out, we can unlearn flawed thinking patterns in several ways.
Tuning in starts with appreciating that better decisions require a better understanding of the human mind. You can mitigate binary thinking by not classifying people and events as either good/bad or right/wrong. While systems and structures embed such classifications, they narrow perspective and polarise attitudes. Think ‘and’ rather than ‘or’ to broaden your options.
Obsessive multitasking leads to shallow attention and reduced focus. Tempering the need for smartphone stimulation will gift you more reflection time. Don’t confuse the messenger with the message. Dial up discomfort with contrarian perspectives and seek data that disconfirms existing beliefs.
Q. How does bias play out in the decision-making context?
Biases influence how we process information, perceive others and react to situations. Psychologists have identified multiple biases such as wishful thinking, hindsight bias, social comparison, loss aversion, and naïve optimism.
For instance, when you suppress doubts, anomalies and inconsistencies, you might overlook red flags and deny reality. Think the global financial crisis, 9/11 or Catholic abuse scandals. You may over-trust colleagues in the default-to-truth bias. If you always assume honesty, susceptibility to deception increases. It explains why scammers, con artists and fraudsters succeed.
Within my ten PERIMETERS™ traps framework, I classify 75 interrelated biases. These can lead to misjudgement in every decision context from voting to hiring, negotiating, purchasing, designing, sentencing, adjudicating or refereeing.
Q. Could you touch upon the PERIMETERS?
Each PERIMETERS™ trap bounds our decisions. Each is influenced by power, ego, risk, identity, memory, ethics, time, emotion, relationships and stories. When uncertain, under pressure, or scrutiny by others, judgement is compromised by these traps—regardless of age, income or seniority.
Your misjudgement matters when you hold power, influence policy or strategy. For example, the SEC dismissed Harry Markopolos’s repeated warnings about Bernie Madoff’s $65 billion Ponzi scheme and thousands lost their livelihoods.
Equally, when overconfident CEOs merge, shareholders, customers, employees and investors typically lose. Once managed, leaders can side-step these traps. Because human behaviour is predictable and what’s predictable is preventable.
Q. Power and ego––how depleting can these be for leaders and organisations?
When executives pursue power, status and recognition, the probability of misjudgement rises exponentially. Consider cryptocurrency fraudster Sam Bankman-Fried. His inflated ego and illusion of invulnerability led to 28 years in prison.
Self-belief drives tremendous innovation, but it also closes minds. For instance, CEOs and presidents cling to power beyond their shelf life. Some go too far. Recall how Donald Trump declared a rigged 2020 election.
In organisations, employees feel pressured to follow directives and obey authority. Obedience suppresses rational thinking and amplifies unethical risk. Consider scandals at Enron, Theranos and Volkswagen.
Too often, leaders think they know best in the above-average effect. A study that appeared in the Journal of Financial Economics showed most CEOs and CFOs make capital allocation decisions in isolation. Such leaders decide solo and stifle innovation. This demoralises employees who don’t challenge ideas or propose new solutions. It’s a lose-lose scenario.
Q. How can leaders stay clear of these traps?
No one is immune from decision risk, not bankers nor builders, milliners nor millionaires. In TUNE IN, I propose 18 strategies to help leaders understand behavioural bear-traps and make better choices. The mnemonic SONIC captures this high-level approach:
- S: Slow down to challenge your thinking
- O: Organise your attention to decide
- N: Navigate novel perspectives
- I: Interrupt fixed mindsets to check for validity
- C: Calibrate information from situations, strangers and strategies
Introducing bespoke decision rules can help habitualise better practices. Similarly, selecting a decision buddy can increase accountability and stem the risk of ego, identity and time-based traps.
Q. Why is it crucial to apply a future lens?
Time is a lethal judgement trap. It’s easy to believe that today’s decisions are disconnected from the past. However, relying on historical successes prevents us from adapting to new situations. It keeps us stuck in old patterns. Past decisions become liabilities if you don’t recognise their lingering potency. Think Kodak or BlackBerry.
Some live in the present, prioritising instant decisions, results or rewards. However, a future lens allows you to anticipate change, innovate and stay relevant. A balance of each temporal perspective is best.
Q. What’s the strategic importance of ‘slowing down’?
Slowing down mitigates risk and fosters better long-term decision outcomes. Would SoftBank founder Masayoshi Son still have invested $4.4 billion in WeWork in 2016 if his tour was longer than 12 minutes? Would Will Smith have slapped Chris Rock at the Oscars?
In experiments, Mary Budd Rowe found that a three-second pause can lead to a 3x to 7x increase in reflection. University of Rotterdam’s Silvia Mamede demonstrated the power of a two-step technique—intuition followed by validation—improved medical diagnosis accuracy by 40 percent.
Q. Whom would you call a ‘decision ninja’?
Unlike the 90 percent of people who think they are less vulnerable to bias than the average person, a decision ninja is aware of how beliefs impact judgements—then moderates it.
Anyone can become intentional about interpretation, noticing what’s said and what’s not. The skills are akin to a probing a journalist, empathetic therapist, discerning analyst or savvy investigator. The common denominator is consciously probing assumptions, selectively second-guessing information, and spotting details that others miss.