Since emotions influence decisions, mainly in helpful ways, we do not want to try to eliminate their effect. In fact, because emotions mostly work on our body and unconscious, we could not eliminate their effect even if we tried. Moreover, we need emotions to make decisions. But emotions can sometimes lead us to disaster, so we need some way of anticipating when our emotions might be a problem. If we are forewarned and if we can identify potentially misleading emotional tags in advance, we can strengthen the decision process in ways that will help combat the influence of the emotion we are worried about.
We have identified four types of emotional tags that, if inappropriate, can interfere with sound decision-making:
Intense emotional experiences: We may have powerful memories of successes, failures, fears or pleasures that we experienced. Most of the time, these emotions help us. But these memories can also mislead us. Why did John Thain sell Merrill Lynch while Richard Fuld could not do the same for Lehman Brothers? Perhaps because Fuld had been at the helm for many years, resurrecting Lehman earlier in his career, while Thain was new to Merrill and not influenced by history.
Previous judgments and decisions: We can tag previous judgments and decisions with strong emotions. Where these judgments are sound, our emotions help us focus. But, if the judgments are misleading, our emotions can cause us to cling to them long after others, less committed to these judgments, have seen the light. An Wang's statement that the PC is the stupidest thing I ever heard of reveals an emotional commitment to a judgment that would have contributed to his delay in launching a personal computer. General Browning's commitment to the attack on Arnhem appears to have clouded his judgment about the aerial photographs.
Personal interests: We often have personal interests at stake in the decisions we make. If these decisions only affect ourselves, our emotional tags will help us get to the right answer. But when our personal interests conflict with our responsibilities for other stakeholders, our judgment can be unbalanced. It is for this reason that members of a committee are often asked to leave the room or refrain from voting if they have a personal interest at stake. In the same way, politicians are expected to place their financial investments in the hands of an independent fund manager, so that their judgments are not influenced by their personal gains or losses. In fact, the attention we give to designing incentives and aligning managers interests with the interests of their organizations is recognition of the degree to which we think personal interests affect decisions.
Attachments: Since we are social animals, we are hard-wired to become attached to other people. Love is a powerful emotion. But we can also become attached to a group, to places and even to possessions. If the decision we are involved in is likely to affect one of our attachments, the emotions generated can unbalance our thinking. For example, An Wang's love of his word processor and hatred of IBM colored his thinking about the advantages of developing a personal computer.
The reality is that emotions are woven into the decision-making process in ways that make them a necessary and important part of decision-making. We are not conscious of how they influence us and we only become aware of them through our gut feelings. We can control the impact of these emotions to some extent, for example, by becoming more analytical and fact based or by being more aware of the source of the particular emotion. But we cannot eliminate their influence. Remember, without emotions we may well be unable to make a decision at all. The good news is that, most of the time our emotions help us get to the right answer effortlessly and efficiently. But, in the wrong situation, as happened to Wang and General Browning, they can lead us to disaster. Leaders who assume that they and others make decisions solely on the basis of rational thought are deceiving themselves. Such a deception can prove fatal, as these same leaders may end up believing that they are right when they are really wrong. And that would not be effective leadership at all.
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