What Can New Leaders Learn from Past Decision-Making Mistakes?

New leaders can improve their decision-making skills by looking at mistakes made in the past. Learning from these past errors is important for good leadership. Here are some lessons we can take from history:

1. The Cost of Bad Decisions:

   • A study found that about 14% of projects fail because of poor choices. This can lead to huge financial losses—around $122 million for every$1 billion spent on projects.
   • Also, around half of the decisions in organizations are not effective, showing that we need a better way to make choices.

2. Using Data to Make Decisions:

   • Companies that use data when making decisions tend to do better than their competitors by about 5-6% in productivity and profit. This was reported by McKinsey.
   • Leaders who ignore data often make mistakes. About 70% of leaders say they usually trust their gut feelings more than data, which can cause poor choices.

3. Getting Different Opinions:

   • Research from Harvard Business Review shows that teams with diverse backgrounds make better decisions 87% of the time. Teams that include different viewpoints are also 70% more likely to win new markets.
   • New leaders should encourage discussions that include a mix of opinions to avoid 'groupthink,' which can lead to wrong decisions.

4. Learning from Real-Life Examples:

   • One famous example of a bad decision is Kodak, which went bankrupt in 2012. They failed to adapt to digital photography, which caused them to lose 90% of their market value since 1999.
   • On the other hand, Netflix changed its business model based on what customers wanted and market changes, growing its revenue from $1.2 billion in 2007 to over$25 billion in 2021.

5. Having a Clear Decision-Making Process:

   • Using a clear process can improve the quality of decisions. For example, the DECIDE model helps leaders:
     • Define the problem
     • Establish criteria
     • Consider alternatives
     • Identify the best solutions
     • Develop and implement a plan
     • Evaluate the decision

6. Getting Feedback:

   • Research shows that companies with feedback processes see a 24% increase in employee engagement and a 16% boost in job satisfaction.
   • Regularly looking back on past decisions helps create a culture of constant improvement, which is crucial for strong leadership.

By learning from past mistakes in decision-making, new leaders can improve their skills, avoid making the same errors, and guide their organizations to long-term success. Focusing on data, encouraging diverse opinions, and sticking to a clear process are key strategies for making better choices.