It is no secret that leaders have blind spots. Like the blind men trying to understand the elephant, leadership teams frequently have a limited and biased view of what happens in an organization. Despite growing evidence and appreciation for the importance of good decision-making, all too often leadership base multimillion-dollar decisions on what they see, rather than a more complete and accurate picture.
This is particularly prevalent when talking about the traditional ‘soft stuff’ – decisions about culture, where leaders frequently overestimate their understanding of what is truly going on.
What is driving this bias? Leaders are often far from the work being done and do not see how things play out day to day. If they make decisions based on a leadership view alone, they may invest in things that deliver far weaker results.
To add to the conundrum, leaders are often aware of the poor decision-making that results from a biased view. A McKinsey survey of 2,207 executives found that only a third of executives believe the quality of decision-making was very good. On top of that, 60 percent thought bad decisions were about as frequent as good ones.
What should leaders do? Francis Galton, a father of modern statistics, provided a simple solution: Seek the wisdom of the crowd. Collecting opinions from a representative sample of the entire organization can deliver a view of the truth that reflects the real answer.
- Ask the organization what it thinks. Survey all employees on important questions.
- Debias your decisions. Challenge your incoming data and resulting decisions for potential bias.
- Fight bias with data. Make sure to use evidence-based approaches to ‘soft’ topics.
McKinsey’s Organizational Health Index directly measures and prioritizes cultural change. We have been able to quantify this bias using the OHI, an approach that has been applied in over 1,700 organizations. An organization’s health ranks among the most powerful levers leaders can employ to drive performance in the short term and prepare the organization for long-term success.
Leaders need to choose “how to manage the place,” and one key element is deciding what to prioritize for the organization to work on – not relying on their own observations, but using a robust fact base to make decisions.
Comparing top management results to those from representative samples, the most common bias is that leadership has a more positive view of their organization’s health versus other employees. The real challenge is that the effects of this bias are unpredictable – varying in size and direction.
The difference in perspective between leadership teams and the rest of the organization can, in nearly half of the situations we have observed, be equivalent to the impact of a year’s worth of working on health. So, a typical leadership team that sees the organization through its own (biased) view will have less urgency and commitment to change because they think they’re already a year ahead.
What should leaders do? Francis Galton, a father of modern statistics, provided a simple solution: Seek the wisdom of the crowd.
Clearly, making decisions based on the view of top leadership alone is likely to result in focusing on the wrong things. There is no longer any reason why leaders need to make decisions based solely on the part of the elephant that they see. By expanding their view, they can drive value creation and resource allocation much more effectively across their organization.
And there is one final benefit based on an insight from behavioral science – the individuals that you involve are more likely to be committed to the change, as they have helped to shape it.