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Every CEO and business leader prides themselves on their decision-making ability. After all, isn’t that what leadership is all about—making the right calls at the right time? Yet, history is full of brilliant leaders who got it terribly wrong.

Take Kodak. The company invented the digital camera but failed to embrace it, fearing it would cannibalize their film business. Or Blockbuster, which had the opportunity to buy Netflix for a mere $50 million but dismissed it as a fad. These weren’t cases of incompetence—these were smart, experienced executives making decisions that, in hindsight, seem obviously flawed. So why did they fail?

The answer lies in decision traps—hidden cognitive biases that quietly sabotage even the best leaders. If you’ve ever wondered why some decisions don’t turn out as expected despite your experience and careful planning, decision traps may be the culprit.

The Decision Traps That Are Costing You Money

Decision traps are mental shortcuts our brains take to process information efficiently. While they help in day-to-day life, they can lead to massive errors in high-stakes business decisions. Here are three of the most common ones affecting business leaders today:

1. The Overconfidence Trap – Leaders often assume they know more than they do. This leads to underestimating risks, overestimating returns, and making aggressive bets that don’t pay off. A classic example? The disastrous AOL-Time Warner merger, fueled by executives convinced they were creating an unstoppable media empire.
2. The Anchoring Trap – Your first piece of information often becomes your reference point, even when better data becomes available. In negotiations, the first price mentioned often sets the tone—even if it’s completely arbitrary.
3. The Status Quo Trap – Sometimes, leadership teams resist change, even when the data says they should adapt. Companies that stick to “what’s always worked” often fail to recognize disruptive shifts in their industry until it’s too late.

Why This Matters to You (And Your Bottom Line)

Decision traps don’t just lead to bad choices—they cost real money.

Think about it: Every hiring mistake, every stalled initiative, every missed market opportunity likely stems from a decision trap that went unnoticed. The good news? Research shows that training on decision traps significantly improves decision quality. Studies indicate that leaders who receive structured training in recognizing biases make more accurate and effective decisions, reducing costly errors. Once you understand these traps, you can start making smarter, more profitable decisions.

Three Practical Steps to Improve Your Decision-Making Today

If you want to avoid the fate of Kodak or Blockbuster, here’s what you can do right now:

1. Slow Down Big Decisions – Your brain defaults to quick, intuitive thinking (what Nobel laureate Daniel Kahneman calls “System 1” thinking). For complex decisions, engage “System 2” thinking—pause, gather data, and challenge your initial assumptions. Applying a formal decision-making framework to high-risk decisions can further reinforce System 2 thinking, ensuring a structured approach that mitigates cognitive biases and leads to more deliberate, well-reasoned outcomes.
2. Seek Out Contrarian Perspectives – If everyone in your leadership team agrees too quickly, that’s a red flag. Assign someone to play “devil’s advocate” or actively seek outside viewpoints to test your assumptions. By specifically assigning one person this role, you give them explicit permission to challenge their teammates and even the “boss”—making it psychologically safe to question assumptions and bring up alternative viewpoints that might otherwise go unspoken.
3. Run a ‘Pre-Mortem’ – Before finalizing a major decision, ask: If this fails spectacularly in two years, what would have caused it? Identifying potential pitfalls in advance can help you address them before they happen.

The Bottom Line

Great leaders aren’t those who never make mistakes—they’re the ones who recognize their blind spots and work to overcome them. Decision-making is a skill that can be improved, and by learning to spot and sidestep decision traps, you can gain a real competitive edge.

If this topic resonates with you, I invite you to check out our other blog articles and subscribe to our newsletter.

If you’re interested in more practical strategies for overcoming decision traps, check out my book Enabling Empowerment, where I go deeper into these concepts.  It is also available in audiobook format on Audible.

Don’t have time to read the book?  Here is an awesome interview by Jon Franko of the Manufacturing Employer Podcast that you can listen to in your car!

If you’re serious about mitigating decision traps in your organization, we have two great resources for you:

📖 The Hidden Traps Sabotaging Your Decisions – A practical guide to recognizing and avoiding common decision biases.

📘 Enabling Empowerment: A Leadership Playbook for Ending Micromanagement and Empowering Decision-Makers – A deeper dive into our Decision-Making Framework and how leaders can build better decision-making habits.