Bringing Decision-Making Science Into the Boardroom

When catastrophic outcomes occur at companies with intelligent, experienced board members, many wonder what happened. How did the smart people on those boards miss looming disasters? Why weren’t decades of proven judgment and broad experience enough to prevent catastrophe? Those of us serving on boards wonder if we would have...

Endnotes:

1    Sucher & Gupta, “What Corporate Boards Can Learn from Boeing’s Mistakes,” HBR (June 2021). The Verified Complaint presents an unusual level of detail because plaintiffs received from Boeing in advance of filing (pursuant to a shareholder request for records) more than 44,000 documents, including board materials, board minutes, and electronic communications. 
2    S. Danziger, et al., “Extraneous Factors in Judicial Decisions,” 108 Proceedings of the National Academy of Sciences, 6889-92 (2011).
3    Shih, et al., “Glucose Depletion and Decision Making: An Examination of Choice in Context,” In: Campbell, C.L. (eds) The Customer is NOT Always Right? Marketing Orientations in a Dynamic Business World. Developments in Marketing Science: Proceedings of the Academy of Marketing Science. Springer, Cham. https://doi.org/10.1007/978-3-319-50008-9_19
4    Linder, et al., “Time of Day and the Decision to Prescribe Antibiotics,” JAMA International Medicine 174 (2013).
5    Englich, et al., “Playing Dice with Criminal Sentences: The Influence of Irrelevant Anchors on Experts’ Judicial Decision Making,” Personality and Social Psychology Bulletin (March 2006).
6    Eren & Mocan, “Emotional Judges and Unlucky Juveniles,” National Bureau of Economic Research (September 2016).
7    This 2016 study echoes the Alabama Supreme Court’s 1869 commentary on ways a judge’s discretion can be affected in surprising ways: “it cannot safely be denied that mere judicial discretion is sometimes very much interfered with by prejudice, which may be swayed and controlled by the merest trifles—such as the toothache, the rheumatism, the gout, or a fit of indigestion, or even through the very means by which indigestion is frequently sought to be avoided.” Ex. P. Chase, 43 Ala. 303, 310-11, quoted in D. Priel, “Law is What the Judge Had for Breakfast: A Brief History of an Unpalatable Idea,” 68 Buff. L. Rev. 899, 912 (2020).
8    Bad Blood at 110.
9    Id. at 269.
10    Noise at 169.
11    Hot Seat 8 [e-edition].
12    Power Failure at 668 [e-edition]. Power Failure quotes multiple former GE executives’ complaints about Immelt seeing himself as the smartest person in the room and thus uninterested in opposing opinions. 
13    Lights Out 297 [e-edition].
14    Noise at 99.
15    Cameron Anderson & Gavin J. Kilduff, “Why Do Dominant Personalities Attain Influence in Face-to-Face Groups? The Competence-Signaling Effects of Trait Dominance,” 96 
J. Pers. & Soc’y Psych. 491 (2009).
16    Id. at 491, 500; Adam M. Chud & Michael L. Berman, “Six-Member Juries: Does Size Really Matter?” 67 Tenn. L. Rev. 743, 758 (2000).
17    Anderson & Kilduff, supra note 15, at 497.
18    Chud & Berman, supra note 16, at 757.
19    Id. at 759 (citing Elizabeth Noelle-Neuman, The Spiral of Silence: Public Opinion-Our Social Skin 5 (1984)).
20    Cass R. Sunstein & Reid Hastie, “Making Dumb Groups Smarter,” 92 Harv. Bus. Rev. (2014).  https://hbr.org/2014/12/making-dumb-groups-smarter
21    Power Failure at 342 [e-edition].
22    Id. at 344. Longtime board member Paolo Fresco reportedly was the only one who pushed back against Welch’s choice of Immelt. 
23    Noise at 318. 
24    Cass R. Sunstein & Reid Hastie, “Making Dumb Groups Smarter,” 92 Harv. Bus. Rev. (2014). https://hbr.org/2014/12/ making-dumb-groups-smarter
25    The Man Who Broke Capitalism, p. 6.
26    Id. p. 89.
27    Noise at 235. 

Photo Credit: stock.adobe.com/oleg 

Ralph Weber is a trustee of Northwestern Mutual, where he chairs the HR, Nominating, and Governance Committee. He also is a director for one of the nation’s largest beer and liquor distributors and serves on several nonprofit boards. His work as a trial lawyer prompted his study of decision-making science. Prior to forming Weber Advising in 2021, Weber cofounded a nationally recognized trial boutique. He is a graduate of Columbia University Law School and Marquette University.

This article is from the Winter 2023 issue of Directorship.