By Bert De Reyck,
Associate Professor of Decision Sciences at London Business School.

Several decades ago, the behavioral decision-making experiments of Daniel Kahneman and the late Amos Tversky started a debate on how people and organizations make decisions. Kahneman was recently awarded the Nobel Prize in Economics for his pioneering work on decision-making. Why Decisions Fail is an addition to the growing series of books in this area that include the author’s earlier book Making Tough Decisions, as well as Winning Decisions by Russo and Schoemaker, which is based on the previous book by the latter, Decision Traps.

The book starts with the premise that decisions fail half of the time. The goal of the book is not to convince the reader that decisions often fail, but to investigate why they fail. The author identifies seven “decision traps” that typically plague decision-makers, namely “failure to identify concerns and reconcile claims,” “ignoring stakeholders,” “ambiguous directions,” “limited search for alternatives,” “misusing evaluations,” “ignoring ethical questions,” and “failure to learn from past decisions.” Each of the chapters in the book relates to one of these traps.

Although the book is similar in premise and focus to several other books investigating this topic, it is different in two ways. First, it is based on solid research involving 400 companies over a twenty-year period, whereas most other books rely on anecdotal evidence or the work of Kahneman and Tversky as their source of information. Second, the claims in the book are validated using a wide array of decisions in different environments. Although the seven traps seem rather self-evident, the author succeeds in explaining the failure of fifteen famous decisions-gone-wrong using these traps, from Disney’s decision to build a theme park in Europe to the collapse of Barings Bank, Firestone’s tire recall and Shell’s disposal of the Brent Spar oil rig. In each of these decisions, the author points out where the decision process went wrong, and how the ensuing debacle could have been avoided. And this is where the value of the book lies--it provides a concise checklist that you can go through every time you are faced with a tough decision. Have I considered other alternatives? Is the objective clear? Any ethical dilemmas? Have I considered all the stakeholders involved? And in case any of these issues is unclear, the book provides several examples of catastrophes caused by ignoring each question.

Any weakness, you ask? Well, while reading the book, you may get the feeling that the author himself is prone to fall in another trap – 20/20 hindsight vision. Although explaining past failures is one thing, it is harder to see how to avoid these traps when making future decisions. It would have been interesting to see the author go out on a limb and analyze recent decisions for which the outcome is perhaps not yet known, instead of criticizing infamous failures only. Also, some of the decision debacles seem to be featured in every chapter, indicating that the decision-makers have fallen in several traps simultaneously, whereas an identification of the root cause would have been more valuable. Finally, the focus on decision failures makes the book a rather depressing read. Perhaps a more positive outlook would have been useful as well?

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