Reducing errors in judgement requires a disciplined process. All strategic decisions share a common feature: they are evaluative judgments. To make such tough calls, people must boil down a large amount of complex information. Strategic decisions tend to involve the distillation of complexity into a single path forward.
Given how unreliable human judgement is, all evaluations are susceptible to errors that may come from known cognitive biases or random errors, sometimes called noise. Unreliability in judgement has long been recognised and studied, particularly in the context of decision-making about hiring.
Researchers drew inspiration from that body of research and experience to suggest a practical, broadly applicable approach to reducing errors in strategic decision-making. Researchers call it the Mediating Assessments Protocol (MAP). MAP is a structured approach to grounding strategic decisions, like structured interviews, in mediating assessments. It has three core elements:
Define the assessments in advance
The decision maker must identify a handful of mediating assessments, that is, key attributes that are critical to the evaluation. In the decision to acquire a company, for example, the assessments could include anticipated revenue synergies or qualifications of the management team. This process is similar to one a hiring committee would follow when creating a job description that outlines the attributes required for success in the position.
Use fact-based, independently made assessments
People who weigh in on one aspect of a strategic option should not be influenced by one another or by other dimensions of the option. Their opinions should be grounded in the evidence available.
This approach is comparable to a well–organised structured interview process, in which job seekers are scored on each key attribute solely on the basis of their answers to relevant questions, calibrated using predefined scales.
Make the final evaluation when the mediating assessments are complete
Unless a dealbreaker fact is uncovered (for instance, evidence of accounting fraud at the acquisition target), the final decision should be discussed only when all key attributes have been scored and a complete profile of assessments is available.
This is similar to having a hiring committee review all the evaluations made by each interviewer on each key requirement of the job description before making a decision on a candidate. The use of mediating assessments reduces variability in decision-making because it seeks to address the limitations of mental model formation, even though it cannot eliminate them entirely.
By delineating the assessments clearly and in a fact based, independent manner, and delaying final judgement until all assessments are finished, MAP tempers the effects of bias and increases the transparency of the process, as all the assessments are presented at one time to all decision makers.
For example, because salient or recent pieces of information are not given undue weight, the process preempts the availability bias. MAP also reduces the risk that a solution will be judged by its similarity with known categories or stereotypes (an error arising from the representativeness bias). When differentiated, independent facts are clearly laid out, logical errors are less likely.
Some decision makers will have an initial dislike for MAP, just as many recruiters still resist structured interviewing. Structured decision making, based on mediating assessments, will be adopted only if it is viewed as offering a substantial improvement in decision-making quality. Accordingly, we next examine MAP’s application and benefits in two types of strategy decisions: large one-off decisions made by teams of executives or directors, and recurrent decisions made as part of formalised processes that, in aggregate, shape a company’s strategy.