Are You and Your Leadership Team Aware of the Top Cognitive Biases that Affect Strategic Planning?
We are all subject to cognitive bias. The term refers to the way that the framing of information and its context can influence our decision-making and judgment. Certainly, framing and context can help us to make decisions more efficiently, but cognitive bias also can lead us to errors in judgment because we are not being completely rational and objective.
Cognitive Bias and Strategy Planning
There is arguably no more important responsibility of business leaders than to develop a clear, believable, and implementable strategy for their enterprise that will lead to success. Leaders need to design a game plan that outlines clear and compelling choices about where to play and what actions to take. Done right, a successful strategic plan sets a company up to perform beyond just the sum of its parts.
As leaders hold strategy retreats, design strategies, and build plans, they need to be mindful of hidden biases which could affect their thinking and put the business at risk. Rather that succumbing to a one-sided view or to closing off their minds to new situations and ideas, business leaders must actively guard against cognitive biases that affect strategic planning.
The Top 10 Cognitive Biases that Affect Strategic Planning
The best way to avoid faulty strategic thinking is to recognize bias when it raises its ugly head. Here are the top cognitive biases that can lead you astray:
To combat action-oriented bias, design in the time to consider several strategic scenarios along with the consequences of both action and inaction.
One of our favorite ways to combat anchoring bias during strategic planning is to designate a red team to challenge ideas of the group.
New strategies often call for new behaviors and new ways of thinking. Make sure you understand and shape your culture to help, not hinder your strategic priorities.
To ensure that your strategic planning process does not overweight information favoring your existing beliefs, use third parties to create a neutral fact base during the information gathering stage.
To ensure that you have an accurate take on your capabilities, use benchmarks, 360 degree feedback, competitive research, and client focus groups to see where you truly stand.
To avoid the framing effect, actively involve the entire strategy design team in how information should be presented and insist on a strong rationale behind each strategic imperative.
To minimize groupthink, make sure that everyone has a chance to share their opinion, encourage alternative viewpoints, and purposefully test different scenarios.
Smart leadership teams build steps into the strategic planning process to compare timelines, costs, and risks to similar projects and to outside estimates in order to create more realistic plans.
To minimize its impact, invest the time to do the required research and consider all options equally.
If you suspect that there is too much sunflower bias, stay curious longer, ask more open-ended questions, run alternative scenarios, and move to action slower.
The Bottom Line
Cognitive biases represent flawed thinking that can lead to bad decisions and misaligned strategies. The more you are aware of these common but overly influential biases during your strategic planning process, the better prepared you and your team can be to design a winning strategy for success.
To learn more about how to create clear, believable, and implementable strategies, download Should You Facilitate Your Own Strategy Retreat – 3 Guidelines to Help You to Decide?
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