Why do good leaders make wrong decisions? How can we reduce the occurrence of such mistakes? This article is selected from pku business review. Former U.S. President Kennedy is notorious for his decision-making mistakes in the Bay of Pigs landing in Cuba. Former British Prime Minister Margaret Thatcher actively advocated the "poll tax" policy, which eventually led to being ousted by her own political party. It seems that great leaders make wrong decisions. Not only these politicians, but also business leaders are prone to misjudgment. Jorgen Schlump, CEO of Daimler-Benz, urged and led the merger of Chrysler and Daimler-Benz. After the new company struggled for nearly 65,438+00 years, Daimler was finally forced to sell Chrysler's shares to private investment institutions. Yang Zhiyuan, CEO of Yahoo, insisted that the value of his company was much higher than the valuation given by Microsoft, so he refused to consider Microsoft's proposal to buy Yahoo. His stubbornness was costly: shareholders lost $30 billion and he lost his job. Why do good leaders make wrong decisions? How can we reduce the occurrence of such mistakes? We have identified four "red flag conditions" that are most likely to produce wrong ideas. When they exist, even experienced decision makers may make wrong decisions. Misleading experience. The past experience may look very similar to the present situation, but in fact it is completely different. We often make wrong decisions because we misjudge the current situation. Misleading prejudgment. Prejudice often misleads current decisions or judgments, and most likely leads us to make wrong plans. Fred Goodwin, former CEO of Royal Bank of Scotland, believes that acquisition is the only way for enterprises to grow, and cash is the best currency to complete the acquisition. His wrong prediction led to a serious cash shortage crisis in the bank. Improper self-interest behavior. Why did John Thain give many year-end bonuses to employees, and insisted on giving himself a year-end bonus of $40 million when Merrill Lynch lost billions of dollars? Obviously, influenced by subconscious egoism, he thinks these behaviors are reasonable. Inappropriate accessories. This attachment refers to our deep feelings for the organization and property. In the financial crisis, many enterprises are faced with the problems of layoffs and selling assets, but the loyalty to enterprises makes it difficult for enterprises to make a reasonable "slimming" decision. So how can we reduce the occurrence of wrong decisions? The following protective measures can prevent wrong decisions. Experience, data and analysis. Provide new experience, data or analysis for decision makers, and reduce the risk of wrong decision from the source. Group discussions and challenges. Even if the other person is not an expert, starting a discussion can help you find some ideas and opinions. In large organizations, the typical way to organize discussions and challenges is to establish decision-making groups. Governance team inspection. The governance group has the right to approve the suggestions submitted by the decision-making group, which plays a vital role. In major acquisitions, the decision-making team may be CEO or CFO, and the governance team is the board of directors. Key information monitoring. Additional monitoring of those factors that may affect the quality of decision-making will help to avoid wrong decisions. During the Cuban missile crisis, Kennedy established a special channel to communicate with Khrushchev to monitor his attitude and thoughts on the American blockade of Cuba, which in turn prompted him to decide to cancel the missiles with the United States in Turkey and "exchange" Cuban missiles with the Soviet Union. (This article Source: Netease Business Channel) 0 netizens have expressed their views, click to view. Netease statement: Netease reprinted the above content in order to convey more information, which does not mean confirming its description or agreeing with its views. The content of the article is for reference only and does not constitute investment advice. Investors operate accordingly at their own risk.