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| McKinsey Classics | February 2022 |  |
| McKinsey has been fascinated for years by the cognitive biases that explain how people make economic decisions, such as investments. One useful approach for controlling these biases is to develop scenarios that reflect a wide range of possibilities: for instance, how an acquisition would fare under a variety of macroeconomic, competitive, and geopolitical conditions, not just under the most optimistic ones. | | Yet the flaws that scenario planning aims to counteract can also undermine it—by shaping these very scenarios. Some sources of information are easily accessible or top of mind (the availability bias). The importance of low-probability events may be under- or overestimated (probability neglect), and risks and uncertainties may be discounted (overconfidence and excessive optimism). Many people assume that the future will resemble the past (the stability bias). Groupthink may inhibit free and open discussion (social biases), and subordinates may defer to ideas from the boss (sunflower management). As a classic McKinsey article put it in 2015, “Scenario planning can broaden the mind but can fall prey to the mind’s inner workings.” Learn how to control them: read “Overcoming obstacles to effective scenario planning.” | | — Roger Draper, editor, New York | |  | | | | Did You Miss Our Previous McKinsey Classics? | | | | | Do people in your company explode at meetings? Make jokes about employees? Interrupt them when they’re presenting? If so, you have a workplace jerk problem. Find out how to address this in our 2007 classic article “Building the civilized workplace.” | | | | | | McKinsey Insights - Get our latest
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