Decisions Without Blinders

By the time Merck withdrew its pain relief drug Vioxx from the market in 2004, more than 100 million prescriptions had been filled in the United States alone. Yet researchers now estimate that Vioxx may have been associated with as many as 25,000 heart attacks and strokes. Evidence of the drug's risks was available as early as 2000, so why did so many doctors keep prescribing it? The answer, say the authors, involves the phenomenon of bounded awareness--when cognitive blinders prevent a person from seeing, seeking, using, or sharing highly relevant, easily accessible, and readily perceivable information during the decision-making process. Doctors prescribing Vioxx, for instance, more often than not received positive feedback from patients. So, despite having access to information about the risks, physicians may have been blinded to the actual extent of the risks. Bounded awareness can occur at three points in the decision-making process. First, executives may fail to see or seek out the important information needed to make a sound decision. Second, they may fail to use the information that they do see because they aren't aware of its relevance. Third, executives may fail to share information with others, thereby bounding the organization's awareness. Drawing on examples such as the Challenger disaster and Citibank's failures in Japan, this article examines what prevents executives from seeing what's right in front of them and offers advice on how to increase awareness. Of course, not every decision requires executives to consciously broaden their focus. Collecting too much information for every decision would waste time and other valuable resources. The key is being mindful. If executives think an error could generate almost irrecoverable damage, then they should insist on getting all the information they need to make a wise decision.

• Strategy formulation
• Decision making
• Psychology and neuroscience
• Risk management
• Information management