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A Structured Approach to Strategic Decisions

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A Structured Approach to Strategic Decisions

MIT Sloan Management Review,

5 min read
4 take-aways
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What's inside?

Learn a Nobel Prize winner’s system for making more logical, objective and reliable strategic decisions.

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Editorial Rating

9

Qualities

  • Innovative
  • Applicable
  • Eye Opening

Recommendation

Discipline and structure have improved the process of hiring at Google, Amazon and McKinsey. Now Nobel Prize–winning cognitive scientist Daniel Kahneman – the originator of the structured interviewing process these companies used – believes a similar method could enhance strategic decision making, too. Kahneman and his co-authors, business strategy experts Dan Lovallo and Olivier Sibony, make a convincing case for structured, strategic decision making in a cogent article for MIT Sloan Management Review.

Summary

The Mediating Assessments Protocol (MAP) approach to structured decision making draws from extensive research into hiring decisions.

A large body of research into hiring decision making has described how cognitive weaknesses – biases, the halo effect and more – affect the quality of evaluative judgments. The same pitfalls that affect the quality of hiring decisions apply for strategic decisions.

The Mediating Assessments Protocol (MAP) approach remedies these weaknesses by incorporating lessons from Daniel Kahneman’s work on structured interviewing in the 1950s. Kahneman’s most important finding then was that better hiring decisions result when global evaluations occur only at the end of a structured process. Structuring evaluations that way ...

About the Authors

Daniel Kahneman is the Eugene Higgins Professor of Psychology, Emeritus at Princeton University. He received the Nobel Prize in Economic Sciences in 2002 for his work (with Amos Tversky) on cognitive biases. Dan Lovallo is a professor of business strategy at the University of Sydney and a senior adviser to McKinsey & Co. Olivier Sibony is an affiliate professor of strategy and business policy at HEC Paris; an associate fellow at Saïd Business School, University of Oxford; and a consultant specializing in the quality of strategic thinking.

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