Why Smart Leaders Sometimes Make Poor Decisions (And How to Fix It)

Smart leaders make poor decisions more often than we'd like to admit. Despite intelligence and experience, even the most capable executives can fall victim to flawed thinking processes. The culprit? Mental models that shape how we interpret information and make decisions.

The Hidden Power of Mental Models

Mental models are our internal representations of how the world works. First extensively studied by Chris Argyris and Donald Schön, these frameworks form the invisible lenses through which we view reality, filtering what we see and influencing how we respond. In leadership contexts, these models determine which business signals we notice, which we ignore, and how we interpret their meaning within the larger system.

When mental models become rigid or outdated, they create blind spots. A leader might excel at operational efficiency but miss emerging market disruptions because their mental model prioritizes internal processes over external scanning.

The Ladder of Inference: A Path to Better Decisions

The Ladder of Inference, developed by Argyris, illustrates how we move from observing data to making decisions:

1. We observe objective data and experiences.

2. We selectively choose which data to focus on.

3. We add personal and cultural meanings to this data.

4. We make assumptions based on these meanings.

5. We draw conclusions from our assumptions.

6. We develop beliefs based on these conclusions.

7. We take actions based on our beliefs.

   
   

Each rung represents a mental leap that can introduce error. The higher we climb, the further removed we become from objective reality. Leaders often jump rungs, rushing from selective data directly to conclusions without examining their thinking process.

Climbing Down the Ladder: Four Steps to Better Decisions

By consciously working with the Ladder of Inference, leaders can dramatically improve their decision-making:

1. Begin with awareness: Notice when you're making quick judgments. Ask yourself, "Am I reacting to observable facts or my interpretation of those facts?" This pause creates space for more deliberate thinking.

2. Test your selected data: Challenge yourself by asking, "What information am I focusing on and what am I ignoring?" Actively seek data that might contradict your initial view to ensure you're not cherry-picking evidence.

3. Surface and examine assumptions: Make your implicit assumptions explicit by articulating them: "I assume X because of Y." Invite trusted colleagues to challenge these assumptions from different system perspectives.

4. Run mental experiments: Before finalizing decisions, ask "If my assumptions were wrong, how would my conclusion change?" This systems-based approach helps identify potential unintended consequences before they occur.

   
   

Leaders who consistently apply these practices create a more robust thinking process. By making the Ladder of Inference a conscious tool rather than an unconscious trap, they prevent the cognitive errors that plague even the smartest executives.

The next time you face a challenging decision, remember to climb down the ladder before climbing back up. Your mental models will thank you—and so will your organization.