Impact of cognitive issues in strategic decision making

The important responsibility of the business leader is to develop a strategy that will lead to
the success and the upliftment of the business. Leaders should have a game-plan and idea
about the actions that should be taken.
Cognition basically refers to anyone’s thinking skills or ability to think. It also refers to the
mental process of acquiring knowledge and understanding through experience and senses.
As a leader, while designing strategies and planning we need to be mindful about the
cognitive issues which could affect their thinking and put their business at risk. We need to
be aware of the cognitive biases which can knowingly or unknowingly hamper our thinking
process. Rather than having a one-sided view and shutting your minds to new situations and
ideas, as a business leader we must try to be away these cognitive biases.
We must recognize the biases which may lead to faulty business strategies, some of them are:
1. ACTION-ORIENTED: The action-oriented biases give birth to the tendency to act
too soon or push the leaders to jump into action-oriented discussions too soon or less
thoughtfully than they should.
2. ATTRIBUTION ERROR: Attribution bias often leads to the miscalculation of the
importance of the aligning corporate culture with their strategy. It leads to the
underestimation of the influence of the situation on people’s behaviour.
3. CONFIRMATION BAISES: It leads us to not only look for evidence that validates
our view and thinking but also to neglect information that supports our points of view.
4. SUNFLOWER BIAS: It is sometimes called the “follow the leader”, which greatly
diminishes the value and diversity of the strategic planning team.
5. AVAILABILITY CASCADE: It occurs when any idea is considered to be more
credible hence spread further just because it is increasingly known in public.
Cognitive bias is basically ‘flawed thinking’ that can lead to bad decisions and misaligned
strategies.