Decision-making pitfalls that can be avoided
The following poor decision-making practices were identified by the authors of Hard Facts, Dangerous Half-Truths, and Total Nonsense.
Casual Benchmarking
Often companies will benchmark against practices at their competitors, and will imitate the activities that seem successful at another corporation. However, before imitating other’s practices, or comparing one’s own company to another, management should ask if what is being compared to is actually driving the success of the competitor. Before benchmarking against, or attempting to imitate, a specific practice, management should ask itself whether it is logical that the practice in question has contributed to the desired results. Sometimes you can’t just imitate how your competitor works, but actually have to think they way they do to achieve the same results..
Doing What (Seems to Have) Worked Before
Even though a particular strategy may have worked in the past, or in another company, it does not mean the strategy is appropriate for the current situation in this company. Before implementing something that worked at a different company, management needs to consider whether that strategy will fit with the current situation and the corporate culture.
Following Deeply Held (Unexamined) Beliefs
There are many deeply held beliefs in corporations that have simply become standard practice, but may not actually be contributing to the company’s success. For example, it is often assumed that issuing stock options to employees engenders a sense of responsibility for the company in those employees. However, some research has shown that the issuance of stock options provides incentives for executives to focus on short-term earnings reports, and does not appreciably increase employee accountability. Management must always question why certain things are being done to ensure that there is no wasted effort on activities that make no positive contribution. In some cases, the company is doing well despite these activities, not because of them!
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Casual benchmarking is especially dangerous. Often times, you can see a successful company and think that by mimicking what they seemingly do, you can be just as successful. However a lot of what you see people do when they are already successful could be a result or symptom of their success, and not necessarily the cause.