Some of the most expensive business decisions are not made by careless people.
They are made by capable leaders.
People who are experienced.
People who are intelligent.
People who have built successful teams.
People who have made difficult decisions before.
That is what makes poor decisions so interesting.
If bad decisions were simply the result of incompetence, they would be relatively easy to understand. Businesses could identify the weakest decision-makers and fix the problem.
But real business decisions are rarely that simple.
A capable leader can make an expensive decision because of overconfidence, incomplete information, pressure, incentives, past success, group dynamics or simply because the decision appears more obvious than it really is.
Capability helps.
It does not make anyone immune to poor thinking.
And sometimes the very qualities that make someone successful can make certain decisions harder to question.
Capability Is Not the Same as Good Decision Making
Being capable and making good decisions are related, but they are not the same thing.
A capable leader may have:
- strong technical knowledge
- extensive experience
- confidence under pressure
- a history of successful decisions
- strong communication skills
- a deep understanding of the business
None of those qualities guarantees that the information available at a particular moment is sufficient for a good decision.
Decision quality depends not only on who is making the decision, but also on how the decision is being made.
A highly experienced executive can still act on a weak assumption.
A successful founder can still become attached to an idea.
A respected manager can still ignore information that challenges an existing belief.
A talented leadership team can still collectively reinforce the wrong conclusion.
This is one reason business decision making deserves to be treated as a process rather than a personality trait.
Success Can Create Its Own Blind Spots
Past success is useful evidence.
But it can also become a source of confidence that exceeds the evidence available for the next decision.
Imagine a founder who has made several successful bets.
They launch a product that works.
They enter a new market and succeed.
They hire a small team that performs exceptionally well.
Over time, the founder develops a reasonable belief:
“My judgement is usually right.”
That belief may have been earned.
But the next decision is still a new decision.
The conditions may be different.
The customers may be different.
The competition may be different.
The available information may be incomplete.
Past success can therefore create a subtle problem.
The leader may stop asking:
“What does the evidence suggest?”
and start asking:
“What does my experience tell me?”
Experience matters.
But experience should inform judgement, not replace examination.
Confidence Can Hide Uncertainty
Confidence is useful in leadership.
Teams often need someone willing to make a decision when the information is incomplete.
The problem begins when confidence changes how uncertainty is treated.
Consider two leaders.
The first says:
“This is the decision I recommend, but here are the assumptions behind it and what could change my view.”
The second says:
“I’ve seen this before. We know how this works.”
Both may ultimately make the same decision.
But the first makes uncertainty visible.
The second may unintentionally make uncertainty disappear from the conversation.
That distinction matters.
A decision does not become more certain simply because the person making it sounds confident.
The Most Dangerous Decisions Often Feel Obvious
Expensive decisions do not always arrive with warning signs.
Sometimes they feel completely reasonable.
A competitor is expanding, so the business expands too.
Sales are growing, so the company hires ahead of demand.
A product is performing well, so more money is invested in it.
A senior employee has been successful, so they are given responsibility for an area they have never managed before.
A previous strategy worked, so it is repeated in a different environment.
None of these decisions is automatically wrong.
The problem is that an apparently obvious decision can discourage deeper questioning.
When something feels obvious, people may spend less time asking:
What are we assuming?
What evidence would change our mind?
What could make this decision fail?
What are we not seeing?
The absence of those questions can be more important than the confidence surrounding the decision.
Experience Can Create Pattern-Matching Errors
Experienced leaders often recognise patterns quickly.
That can be valuable.
But pattern recognition also creates a risk.
A new situation may look like something the leader has encountered before while being materially different.
A previous market expansion succeeded.
A new expansion looks similar.
The leader remembers what worked.
But perhaps the competitive environment has changed.
Perhaps customers have different expectations.
Perhaps the company’s resources are different.
Perhaps the original success depended on circumstances that no longer exist.
The mistake is not having experience.
The mistake is assuming that similarity means equivalence.
A useful question is:
“What is genuinely the same, and what only looks the same?”
That question forces experience to be examined rather than automatically trusted.
Smart People Can Rationalise Their Decisions
A capable leader can often produce a convincing explanation for a decision.
That is a strength.
It can also become a weakness.
The more articulate someone is, the easier it can be to construct a coherent story around a preferred conclusion.
Instead of asking:
“What evidence supports this decision?”
the conversation can quietly become:
“How can we explain why this decision makes sense?”
Those are different questions.
The first searches for evidence.
The second can search for justification.
That distinction becomes particularly important when a leader has already become emotionally or professionally attached to an outcome.
The Decision May Be Influenced Before the Meeting Starts
Poor decisions are not always created during the final discussion.
The thinking may have been shaped long before the meeting.
A proposal arrives with a strong narrative.
The expected benefits are clearly described.
The risks receive less attention.
The numbers are presented in a way that supports the proposal.
The team has already invested time in developing the idea.
By the time the leadership team discusses the decision, the conclusion may feel almost inevitable.
This is why good decision-making requires examining not only the final recommendation but also the process that produced it.
Ask:
How did we arrive at this conclusion?
That question can reveal assumptions that the final presentation hides.
When Everyone Agrees, Ask Why
Agreement can feel like evidence.
But agreement and accuracy are not the same thing.
A leadership team may agree because everyone independently sees the same evidence.
Or they may agree because:
- the most senior person expressed an opinion first
- nobody wants to slow the decision down
- the proposal has already gained momentum
- disagreement feels personally uncomfortable
- the team has become attached to the expected outcome
- people assume someone else has challenged the underlying assumptions
The answer is not to create artificial disagreement.
It is to make disagreement safe enough to surface when it matters.
One useful question is:
“If we believed this decision was wrong, what would we expect to see?”
That changes the conversation.
Instead of asking everyone to defend the proposal, the team is asked to examine how it could fail.
Expensive Decisions Often Have a Hidden Second Decision
A decision can contain another decision inside it.
For example:
“Should we launch this product?”
may actually contain several questions:
- Do customers want it?
- Will they pay the expected price?
- Can we acquire customers efficiently?
- Can we deliver the product reliably?
- Can the team support the growth?
- What happens if demand is lower than expected?
The headline decision may look simple.
The underlying decisions are not.
This is why breaking a large decision into its assumptions can improve the quality of the discussion.
Instead of debating:
“Should we do it?”
ask:
“What would have to be true for this to work?”
That question is often more useful.
Why Capable Leaders Can Double Down
One of the most difficult moments comes after the decision has already been made.
The first signs of trouble appear.
Revenue is below expectations.
Costs are higher.
Customers are slower to adopt.
The project takes longer.
The original forecast is becoming harder to defend.
At this point, the leader has a choice.
They can revisit the original assumptions.
Or they can search for explanations that allow the existing plan to continue.
The second option can be psychologically easier.
Changing direction can feel like admitting that the original judgement was wrong.
But a previous decision should not determine the next decision simply because resources have already been committed.
The relevant question is:
“Knowing what we know now, would we make this decision again?”
That is a very different question from:
“How do we make our original decision work?”
A Better Way to Examine Major Decisions
Before making an expensive business decision, a leader can create a simple decision check.
Start with the decision
State exactly what is being decided.
Avoid vague language.
Instead of:
“We should probably expand.”
write:
“We will open a second location within the next six months.”
The more precise the decision, the easier it becomes to examine.
Identify the assumptions
Ask:
What has to be true for this decision to work?
List the important assumptions.
Do not hide uncertainty behind a polished forecast.
Separate facts from beliefs
For every important assumption, ask:
Do we know this, or do we believe this?
The difference matters.
Look for disconfirming evidence
Do not only search for information that supports the decision.
Ask what evidence would make the decision less attractive.
This is especially important when the team is enthusiastic about the proposal.
Identify the consequences of being wrong
Not every uncertain assumption deserves the same attention.
Ask:
If this assumption is wrong, what happens?
An assumption with small consequences may require limited attention.
An assumption that could materially affect revenue, costs, people or cash deserves greater scrutiny.
Define the review point
A major decision should not always be treated as permanent.
Define when the assumptions will be reviewed.
This creates a mechanism for learning rather than forcing the organisation to defend the original decision indefinitely.
Good Leaders Do Not Need to Be Certain
Leadership is sometimes described as having the confidence to know what to do.
In reality, leadership often involves deciding while knowing that you do not have complete information.
That requires a different kind of confidence.
Not:
“I know this will work.”
But:
“This is the decision I believe is justified by the evidence we have, and we know what could change our view.”
That approach does not eliminate risk.
It makes the risk visible.
And visible risk is easier to manage than hidden uncertainty.
The Real Advantage Is Not Never Being Wrong
No leader will make every decision correctly.
That is not a realistic standard.
A stronger standard is to create a decision-making process that makes important errors easier to detect.
A capable leader should be able to say:
“This was our assumption. This is the evidence we had. This is what changed. This is what we now believe.”
That is not weakness.
It is disciplined thinking.
The goal is not to protect the reputation of the decision-maker.
The goal is to improve the quality of the next decision.
The Bigger Lesson
Capability does not remove cognitive bias, uncertainty or incomplete information.
Experience does not guarantee that a new situation will behave like an old one.
Confidence does not turn an assumption into a fact.
And intelligence does not prevent someone from becoming attached to a conclusion.
That is why some expensive business decisions are made by people who are otherwise highly capable.
The problem is not necessarily a lack of intelligence.
Sometimes it is that the thinking process was never challenged.
Before a major decision, ask:
What are we assuming?
What evidence supports it?
What evidence challenges it?
What would make us change our minds?
And perhaps the most important question:
If we were wrong, what would we expect to see?
Good decisions do not come from always being right.
They come from creating enough intellectual discipline to notice when you might be wrong.
Takeaway
Capable leaders can make expensive decisions because capability does not eliminate uncertainty, bias, overconfidence or flawed assumptions.
Past success can create confidence. Experience can encourage pattern matching. Strong communication can make a weak argument sound convincing. And a leadership team can unintentionally reinforce a conclusion simply because everyone wants the decision to work.
The answer is not to distrust experience or confidence.
It is to make the thinking underneath important decisions visible.
The quality of a decision is not determined only by who makes it. It is also determined by how willing the organisation is to challenge the thinking behind it.
Frequently Asked Questions
Why do capable leaders make bad decisions?
Capable leaders can make poor decisions because they still operate with incomplete information and can be affected by factors such as overconfidence, confirmation bias, past experience, group dynamics and pressure.
Does experience improve business decision making?
Experience can provide useful knowledge and pattern recognition, but previous situations may not perfectly match new circumstances. Experience is most useful when combined with examination of the current evidence.
How can leaders avoid expensive decisions?
Leaders can improve decision quality by identifying important assumptions, separating facts from beliefs, considering evidence that challenges the preferred conclusion and defining what would cause them to reconsider the decision.
Why is disagreement important in leadership teams?
Constructive disagreement can expose assumptions and alternative interpretations that a group might otherwise overlook. The goal is not disagreement for its own sake but making important challenges safe to raise.
What is one question leaders should ask before a major decision?
A useful question is:
“What would have to be true for this decision to work?”
It forces the team to identify the assumptions underneath the decision rather than discussing only the final proposal.
