The role of cognitive diversity in decision-making

The primary responsibility of a CEO is to make the best decisions possible for a company and its stakeholders. In today’s increasingly complex and fast-changing business environment, CEOs need access to unbiased, unfiltered information, advice and feedback to make good decisions.

Yet when it comes to making critical business decisions, many CEOs live inside a kind of bubble of isolation. That’s often due to several factors:

• They have blind spots, knowledge gaps or biases.
• They’re surrounded by people who have their own agenda (e.g., keeping the boss happy, job security, looking good, preserving some kind of consulting relationship).
• They have a homogeneous inner circle—meaning, they mostly interact with people within their company or industry who tend to see things from a similar perspective.

The importance of cognitive diversity

A recent article in Harvard Business Review explores the advantages of cognitive diversity when applied to problem solving in business. As the authors define it, cognitive diversity is differences in perspective, experience or information-processing styles. The authors contend that teams with greater cognitive diversity solve problems faster and more accurately.

Here’s why: Cognitive diversity leads to an expanded perspective and a wider range of options—which, in turn, enables a leader to make better decisions and solve problems more effectively.

Cognitive diversity at work

Vistage CEO groups are based on the principle of cognitive diversity. The group functions as a collective brain trust or think tank of trusted advisors. When you put 10-15 high-functioning, successful CEOs from different backgrounds and industries in a room together and have them focus their collective brainpower on each other’s issues and challenges, they can’t help but expand their thinking and options. As a result, they make better decisions.

As a Vistage group facilitator, I see the power of cognitive diversity on a regular basis. The members bring their biggest challenges and decisions to the group. Frequently, the best advice comes from someone in a different industry or background. I’ve seen seasoned CEOs in their 50s and 60s gain invaluable perspectives from entrepreneurs in their 20s, and vice versa.

For example, the twenty-somethings advise the older executives on technology issues and managing millennials in the workplace. The more seasoned CEOs help the younger members with long-term strategy, contingency planning and financial management.

Case study in cognitive diversity

Recently, a member brought a sensitive issue to the table: His 10-year old company had experienced tremendous growth and his CFO, who had been with the company since the very beginning, no longer fit the role. He simply didn’t have the knowledge or experience to take the company to the next level.

The matter was further complicated by the fact that the CFO had a 40% partially vested equity stake in the company and was a longtime personal friend of the CEO. The CEO was “tied up in knots” over this issue and couldn’t talk about it with anyone in his company. He didn’t know what to do and had procrastinated on taking action for over two years.

Several members of the group had experienced similar issues as CEOs. And from the outside, they saw how the issue was stifling the company’s growth. They helped the CEO see the exigency of tackling the issue and offered several practical suggestions he hadn’t considered before.

Based on their recommendations, the CEO made the difficult decision to replace his CFO, and he handled the equity and relationship issues that arose with fairness and dignity. The cognitive diversity of his peer group helped him develop a wider perspective, gain better options and make better decisions.

The key question

Who do you turn to for unbiased and unfiltered feedback and advice? Every CEO, no matter how smart or experienced, can benefit from the individual and collective intelligence of a group of peers—especially when that group has cognitive diversity.

Category: Leadership

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About the Author: Phil Glosserman

Since 1996, Phil Glosserman has coached executives, business owners, salespeople and other professionals to build and grow their organizations, become more profitable, and become more effective leaders. He has worked with hundreds of individ…

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  1. Rick Wolk

    June 11, 2017 at 5:12 pm

    Excellent piece, Phil. Thank you! – Rick

  2. Jackie Kibler

    June 13, 2017 at 7:23 am

    Fantastic article Phil! Very well written

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