Article at a glance:

Hidden flaws in strategy

Why do top managers, steeped in theories of good business strategy, still make bad decisions? While ignorance and hubris sometimes play a role, the brain itself—how we think—is also a culprit. Insights from behavioral economics help explain why we don't always think rationally and how our logical flaws can lead to bad strategic decisions.

The take-away

Simply being aware of flaws such as overconfidence, following the herd, and false consensus can help the strategist steer around them. Awareness won’t put an end to bad strategy, but it may make good executives less likely to back bad strategies.