Here are a few biases that directors can fail to recognize in a boardroom decision-making process. As your board moves forward on investment decisions, consider how each of these may be playing a silent but potent role.
Anchoring: Looking at past and present successes and not giving proper weight to adjustments in strategy when new information is presented.
Bandwagon Thinking: Other directors think this is a wise decision, so it must be worthwhile.
Confirmation Bias: The assumptions surrounding the decision are overwhelmingly positive without taking equal time to explore the possible negative outcomes.
Need for Closure: The need to draw a conclusion, or escape feelings of uncertainty, hurries the decision-making process, even when the environment is evolving.
Sunk Costs: The time and resources already invested are believed to be so great that a healthy debate on alternatives is dismissed.
Anchoring: Looking at past and present successes and not giving proper weight to adjustments in strategy when new information is presented.
Bandwagon Thinking: Other directors think this is a wise decision, so it must be worthwhile.
Confirmation Bias: The assumptions surrounding the decision are overwhelmingly positive without taking equal time to explore the possible negative outcomes.
Need for Closure: The need to draw a conclusion, or escape feelings of uncertainty, hurries the decision-making process, even when the environment is evolving.
Sunk Costs: The time and resources already invested are believed to be so great that a healthy debate on alternatives is dismissed.