"Finkelstein has identified four internal biases that often lead to bad decisions: inappropriate prejudgments; inappropriate experience; self-interest; and attachments.The first two are the most interesting. Prejudgment happens when we choose a course of action and ignore any advice or information that does not hew to that predetermined path. (The lead-up to the war in Iraq comes to mind.) Inappropriate experience, meanwhile, is basically a "What worked before will work again" attitude that's unfortunately quite common in executive boardrooms. It helps explain why financial firms got more and more enmeshed in subprime loans and collateralized debt obligations. "It's not just arrogance—they do these things because they were right before," says Finkelstein. "But it becomes dangerous when you do not heed the warning signs."
Monday, November 17, 2008
Why Managers Make Poor Decisions!
During my morning reading, I came across an article from Business Week called Bad Management: Why Managers Make Poor Decisions. What caught my eye was this quote: "Why do smart, powerful executives make really dumb decisions?"
The article goes on to review Sydney Finkelstein's new book Think Again which identifies four biases that lead otherwise savvy managers astray. I will certainly buy this book.
The article itself doesn't go into much detail but I did like this one quote as it is spot on regarding eBay's John Donahoe.
This is clearly what is going on with John Donahoe "Prejudgment happens when we choose a course of action and ignore any advice or information that does not hew to that predetermined path."
I'm past the point of believing that JD will turn this ship (eBay) around and now more interested in getting everything on-the-record for the next management team.
Just my 15%