You’ve probably seen it. Joe or Josephine the supervisor is a decent, capable person — who makes dumb decisions that cause trouble for the company.

A new book, “Think Again: Why Good Leaders Make Bad Decisions and How to Keep it From Happening to You,” attempts to explain the whole thing — and the financial collapse — by using neuroscience and psychological analysis.

To try to boil a few hundred pages of a book into a few hundred words is perhaps another bad decision, but here goes:

• People tend to think if something worked once, it’s guaranteed to work again. This is the reverse of “Experience is the best teacher” — especially when the experience is misapplied. We saw it happen on Wall Street when experienced money managers thought they could ride to the rescue simply because they’d done it before. What they, and everyday supervisors, fail to recognize is that rules and circumstances change, so a solution that worked 10 years ago might be useless today.
• Self-interest can be a poor guide. Let’s go back to Wall Street and Alan Greenspan’s observation that he failed to realize that big banks wouldn’t operate in their best self-interests. Actually, companies don’t control self-interest; people do. And people tend to see only what’s best for themselves in the short term. Likewise, many good supervisors — maybe because of business pressures — can’t see past the next 30 days. So they take the quick fix for themselves and hope for the best — and often get the worst.
• Data gets filtered based on prejudgments. Here’s the way this works: Let’s say a  supervisor is convinced someone’s a star employee and gets four reports on that employee — three bad ones and one good one. The supervisor will tend to focus on the good report because of the prejudgment that the person is a good employee.
• Buy-in can be bad. You know the old technique of giving people responsibility for their own ideas by making them responsible for the sucess of the idea? What happens is that they become so married to the idea that they’ll ride it — and everyone else — into the ground in a vain attempt to prove the idea is brilliant.
• Everyone has a bias. And everyone needs someone else to point out when that bias is a road to ruin. “Yes men” need not apply for the job. The someone who points out the destructive bias has to be strong, honest and smart.  We hope the folks on Wall Street are reading this book.

Tags: Greenspan, Supervisors, Think Again: Why Good Leaders Make Bad Decision and How to Keep it From Happening to You