Every day, senior managers are tasked with making very significant strategic decisions for their companies, which usually require support by teams of internal and external experts and a heavy dose of research. And every day, across the world, these managers screw up. Without fail. Why? Hard to say. Sometimes the experts are wrong. Sometimes the data is faulty, either due to collection, storage, or retrieval error (and, hence, the derived conclusions by the experts are faulty). And sometimes it’s the managers who are at fault. Sometimes they trust their gut when they should trust their brains, and vice versa. And sometimes, they are just biased and ignore the facts that suggest their bias is the worst decision they can make.

So what can they do? They can do whatever it takes to minimize their biases, especially if it impacts supply management, the lifeblood of a modern organization. How can they do this? They can take some tips from this recent post over on the HBR Blog Network on How to Minimize Your Biases When Making Decisions.

The first tip is to recognize the common biases that arise in corporate decision making. The common biases are:

• Anchoring
  This comes in two forms, number fixation and target information fixation. In the first case, we get fixated on numbers, even invalid ones, and don’t adjust away from, or ignore, them when we should. In the second, our questions can lead us down a path where we focus on a specific set of data to the point where we’ll ignore or omit contradictory data.
• Framing
  We are often persuaded to judge a situation by how it is presented. If it is presented as difficult to the point of painful, given our natural aversion to pain and preference to pleasure (as has been argued by philosophers throughout the ages), we’ll tend to shy away from it, even if the pain will be worth the gain in the end.
• Availability Heuristic
  We tend to weight recent events as more prominent than not-so-recent events and events we can easily imagine, such a those presented vividly to us, more than events we can’t easily imagine, even if the latter is much, much more common and likely to happen. (Remember, most companies FAIL!)
• Confirmation Bias
  We tend to seek out evidence that confirms our initial decisions, ignoring information against them.
• Commitment Escalation
  It’s our tendency not to accept sunk costs and throw good money after bad, even when no amount of money can save the situation. We act like captains with a bucket after a pirate has blown a hole in the side of the ship with a cannon ball.
• Hindsight Bias
  Once we know something, we find it difficult to remember when we did not know it and this limits our ability to learn from past failures.

Then, once we are able to recognize the biases, we must follow the following tips offered by the blog post to minimize them:

• relentlessly search for relevant or new disconfirming evidence
• seek diverse outside opinions that challenge our overconfidence
• flip the problem on its head to see if we are viewing the situation positively or negatively
• constantly redefine the problem to avoid escalation
• develop systemic review processes that contain well-defined committed “outs”

In addition, SI suggests that you also:

• have at least two parties run the numbers, and present them as they see them to minimize anchoring
• for every proposed course of action, ask a party who takes the opposing viewpoint to present the situation from her viewpoint to minimize framing
• take methodical notes at each step of the analysis and process that document knowns and unknowns so you can clearly identify not only when you learned something, but what process you used — if the process is repeatable, it may accelerate organizational learning in the future