Scholars of decision-making have long recommended that CEOs and managers gather and analyze comprehensive information before making choices. This advice is based on two assumptions: (1) More information leads to better understanding of the decision at hand and possible consequences, and (2) an emphasis on gathering information rather than relying primarily on one’s own knowledge may reduce harmful biases.
However, a growing body of research shows that CEOs may often be better off putting more trust in the simple rules of thumb known as heuristics. These usually spring from a leader’s direct experience, are applied deliberately, and frequently result in superior decision outcomes. Our recent study, published in the Journal of Management Studies, suggests that CEOs who use more heuristics in making decisions can accelerate the speed of new product development in their organizations and achieve greater overall business performance. Another study, by Christopher Bingham et al. in Strategic Entrepreneurship Journal, suggests that using heuristics for international expansion decisions can lead to higher sales and revenue growth from those initiatives.