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Daniel Kahneman, Dan Lovallo and Olivier Sibony: A Structured Approach to Strategic Decisions

Intuition as base for strategic decisions can lead to emotional rather than fact-based decision process. Nobel prize winner Daniel Kahneman and his partners Lovallo and Sibony publish an article in MIT Sloan Management Review about intuition based decision making in strategic decisions that can lead to errors in evaluative judgments. Errors can come from cognitive biases or simply random errors. They propose structured approach to decision making, naming it MAP – Mediating Assesment Protocol.

Article about structured approach

Core elements of MAP are:

  • Defining the assessments in advance
  • Use fact-based independently made assessments
  • Make the final evaluation when mediating assessments are complete.

Their approach suggest that CEO’s simple delay decision process with structured approach (that slice decision process into categories that are then estimated independently and brought together in final decision stage) and by doing so they reduce influence of gut feelings in decision process.

Majority of companies how very clear process in place for lot of everyday activities and small decision protocols, but lack of fact-based, structured approach in strategic decision making can lead to very costly mistakes.

Authors aren’t proposing to take intuition totally out of equation, they simply suggest that it should be informed. They believe that holistic judgment of experience executives is valuable, but it must be first prepared by a profile of mediating assessments.

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