3. Listen to the objectors
Every company strategy – whether good or bad – has dissenters. But in some organisations, objectors are either suppressed or they understand that any constructive feedback isn’t welcome. A dissenter often chooses to stay quiet after weighing up the short and long-term consequences of speaking out (being dismissed from the group or seeing the business fail).
An environment where people feel safe to air their views is necessary to avoid an escalation of commitment. It’s up to the leaders to create that culture through various means such as expressing their own concerns about the strategy, anonymous feedback or building diverse teams with subgroups to spark more innovation, creativity and alternative thinking.
Deploying larger teams also helps. Objectors working in small groups may be just one voice with minimal influence, even if they have the courage to speak up, because other members discount them for having a different view. To avoid this, CEOs should enlist 10–14 people when discussing the company’s long-term strategy.
4. Throw alternatives into the mix
A study carried out by Shane Frederick, Professor of Marketing at Yale School of Management, reveals how different options can influence decision-making. For the study, published in 2009, two groups of people were told to imagine they had $14.99 (£11.50) to spend on a DVD featuring their favourite actor and genre.
The first group had two options: buy the film – which 75% chose – or don’t buy it. The second group had a slightly different decision to make: buy the film, or choose not to and then spend the $14.99 on something else. Only 55% people in group 2 said they would buy the DVD. Reframing the options so the second group had an alternative choice to make led to a shift in their decision-making.
Frederick’s research suggests that framing questions so they include possible alternatives can deter people from choosing a course of action driven by an escalation of commitment. Talking about different strategic approaches isn’t enough; leaders need to provide a few options to reach a decision that isn’t influenced by reinforcing biases.
5. Don’t let the decision-makers drive the strategy
In banking, a clerk who approves a client loan will often escalate that commitment by granting further loans – even if the borrower is expected to default. The same principle applies to a leader who initiates a course of action. That person will likely keep investing in a project even if it’s close to failing. To reduce the chances of escalation, responsibility for a change in strategy should go to someone who didn’t propose or initiate the plan.
Research shows that bosses look less favourably on underperforming employees than the managers that hired them. When buying a company, an entrepreneur tends to invest less in it than the person or people that established the venture. Make sure whoever comes up with your organisation’s latest strategy isn’t involved in executing it.