Bias busters: How to make better decisions with the ‘outside view’

Despite their best intentions, executives fall prey to cognitive and organizational biases that get in the way of good decision making. In our new Bias Busters series, McKinsey partner Tim Koller and Dan Lovallo, an alumnus of McKinsey’s San Francisco office and professor of business strategy at the University of Sydney, will highlight some of the biases that hold sway in the strategy room. They will also offer effective ways to respond. Our topic for this episode? Taking the “outside view.” Tim, Dan, and host Sean Brown discuss how it’s easier than executives might think to make better forecasts by using a set of reference cases to build the “outside view”. They also discuss how the “outside view” can inform everyday decisions and Dan shares a story about his venture to predict the likelihood of a Hollywood movie succeeding at the domestic box office based on little more than the movie’s promotional poster.