Tuesday, July 29, 2008

Why Make Bad Business Decisions?

In business, making bad decisions is natural. If not a must. But to constantly make bad decisions is overkill. Big companies have made a lot of bad decisions but those companies managed to get up from that rut and become better than before. And in the end that's all that really matters. Apple has been known to make a lot of bad decisions in the past especially since Jobs had been a strong force both for the good and for the bad.

Why do we make bad business decisions?

We can't completely blame chance and fate. There must be some reason behind it. Now,I came across this article from Business Pundit.

The reason why we make bad decisions can actually be rooted scientifically. In an interesting experiment conducted by the researchers, participants were asked to choose between two women on two cards and to explain why they chose that particular card over the other. In some trials when the time of justification came, the researchers switched the cards they have chosen with the one that they didn't. Some participants didn't recognize the switch but the more interesting part here is the fact that they continued to justify their choice even if it wasn't really their choice in the first place.

What does this tell us?

It's the feeling of being invincible and being stubborn. This is the usual problem with making big reckless decisions. We always think that the worst can't happen to us. Oh no, not to us. To other people maybe but we never consider that we can be duped or taken advantage of. The participants justified a wrong decision or a wrong choice. That can also be reflected to how we justify our decisions no matter how bad it is. This kind of thinking brings about bad decisions and what's worse, we stick by them and justify it.

To tackle the problem we must first be aware that it exists. We have to revisit the decision and the consequences it brought. The proper way to go about making big business decisions is to have a projected outcome. So whatever the results that come out you can make a comparison between the projected outcome and what you really got. If you see the difference right in front of you it would be tougher to weasel out of the failure.

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