In his column, Forbes contributor and professor with the London Business School Freek Vermeulen explains how emotions often overpower objectivity when making important personal choices and strategic business decisions.
This can result in leaders “following their heart,” overestimating the odds of success and letting their commitments escalate or continue when they should really pull the plug. To avoid the clashes of heart and head, Mr. Vermeulen shared three tips for leaders to keep things objective.
1. Make decision rules beforehand. Mr. Vermeulen tells the story of a leader from Intel who had a hard time abandoning a product that was causing the company to lose money, largely because the leader felt this product had “made the company.” The product was ultimately scrapped because of Intel’s “production capacity allocation rule,” which helped decide which products would receive production priority. This formula was put together before the actual dilemma arose, so leaders were able to make a strategic choice detached from emotion of the moment.
2. Tap into the wisdom of your internal crowd. Leaving pivotal choices in the hands of the company’s broader internal crowd — not just the top managers — can also depersonalize difficult decisions. Mr. Vermeulen says one CEO with a television production company designed an internal system that identified the most promising ideas for shows by tapping into the collective opinion of his TV executives across the world. This approach helps ensure decisions do not rest in the hands of one individual leader, “no matter how senior.”
3. Exit and reenter through the revolving door. The third tip for leaders to reduce emotion in strategic planning is to adopt the perspective of an outsider. This might be a new CEO, a private equity firm or a turnaround manager. By putting on the lenses of an outsider, leaders can see things more clearly. Mr. Vermeulen says research shows people are bad at estimating the time it will take for them to complete a project, but are good at estimating it for someone else. By adopting a third-party perspective, leaders can more objectively assess processes.
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