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Many theories and tools abound to aid leaders in decision-making. This is because we often find ourselves caught between two perceived poles: following gut instincts or adopting a data-driven approach. While instinct has its merits, it can lead to costly blind spots if not balanced with deliberate reflection.
The Ladder of Inference, a powerful tool developed by Chris Argyris and Donald Schön, is designed to help leaders understand and recalibrate the mental models that influence our decisions. It traces the steps of how we interpret data, make assumptions and form beliefs that drive our actions. It can help show unconscious bias and reflexive loops that reinforce flawed thinking.
How Mental Models are Formed
To use the Ladder of Inference effectively, start by recognizing that you naturally select certain data from all available information. Be aware that your interpretation is shaped by personal and cultural perspectives, which can lead to assumptions. These assumptions then influence the conclusions you draw, which in turn solidify into beliefs that guide your future decisions and actions. To make better choices, pause at each step, question your reasoning and seek alternative viewpoints before committing to a conclusion.
Applying the Ladder of Inference for Better Decision-Making
Let’s explore how leaders can harness this tool to adopt a more reflective approach to decision-making by examining a recent client situation of mine, where a company’s strategy director found engaging the finance controller tedious when it came to how to grow the company.
During a strategic leadership meeting, the two senior executives, whom I’ll call Alice and Mark, found themselves at odds over the company’s five-year expansion strategy. Alice, the strategy director, advocated for an aggressive push into new markets, emphasizing the importance of capitalizing on emerging opportunities. Mark, the finance controller, was more conservative, warning against overextending resources without stronger financial projections. The discussion grew tense as each executive became entrenched in their viewpoint.
Over a series of coaching conversations in which I applied the Ladder of Inference, we were able to deconstruct their assumptions and move toward more reflective collaboration, resulting in a balanced outcome to move their organization forward.
1. Observe the Available Data
First, Alice and Mark identified the key data points each had selected to support their argument. Alice focused on market trends, while Mark prioritized financial forecasts. Next, they broadened their perspective by reviewing additional data, such as competitor strategies and historical expansion outcomes.
2. Add Meaning to the Data
Alice viewed rapid expansion as a competitive necessity and interpreted market trends as signals of urgency. Mark saw financial caution as essential and interpreted past corporate failures as a warning against hasty growth.
3. Recognize Assumptions And Biases
Alice assumed that inaction would lead to lost market share, while Mark assumed that aggressive expansion would overstretch the company’s financial health. In our conversations, they were able to pause to question whether these assumptions were fully valid or whether alternative perspectives were being overlooked.
4. Test Conclusions and Invite Alternative Views
Instead of reinforcing their original positions, Alice and Mark invited department heads to provide insights on operational readiness and customer demand. By incorporating these diverse viewpoints, they identified a hybrid approach: targeted expansion with phased financial safeguards.
5. Refine Beliefs and Take Informed Action
The leadership team aligned on a strategy that balanced Alice’s market-driven approach with Mark’s financial prudence. They established a pilot phase to enter select markets while continuously reviewing financial performance before full-scale expansion.
Guidelines For More Reflective Decision-Making
To encourage a more thoughtful decision-making culture in the organization, leaders should work to cultivate a mindset that recognizes that their conclusions are not self-evident facts. In keeping with this, leaders should express their perspectives as viewpoints rather than definitive truths, encouraging discussion and alternative interpretations. For instance, instead of asserting that a strategy is too risky, a leader might say, “I think this strategy carries risks, but that’s based on my perspective. What do others think?”
Encouraging questioning of reasoning and assumptions is another crucial element. Leaders should actively seek validation or challenge existing assumptions, asking questions like, “We assume that delaying expansion is safer, but is there evidence suggesting otherwise?” This approach fosters a culture of critical thinking and avoids reliance on unfounded beliefs. Using examples to illustrate selected data and its meaning further strengthens decision-making. Instead of making general statements, leaders should refer to concrete cases, such as stating, “Our competitor successfully entered this market last year. What factors made that possible?”
Effective communication also involves paraphrasing others’ viewpoints to confirm understanding. Leaders can ensure alignment by stating, “If I understand correctly, you believe our cash flow limitations make expansion too risky right now—is that correct?” This practice prevents misinterpretation and promotes clarity in discussions. Finally, inviting alternative interpretations enhances inclusivity and generates innovative solutions. A leader might ask, “Who sees this differently? What might we be missing?” By incorporating diverse perspectives, organizations create an environment where decisions are well-rounded and robust.
Building a Culture of Thoughtful Leadership
Organizations thrive when leaders balance intuition with reflection. The Ladder of Inference provides a structured way to challenge assumptions, test conclusions and align decisions with broader strategic goals. By embedding this approach into daily discussions, companies can cultivate a more adaptive and forward-thinking leadership culture—one where disagreements lead to innovation rather than deadlock.
Reflective collaboration is not about slowing down progress but rather ensuring that when actions are taken, they are based on the best possible reasoning. Given the complexity of the business operating environment, leaders who master this approach will be better equipped to navigate issues, foster collaboration and drive sustainable success.
The SIM Centre for Systems Leadership (CSL) aims to develop and build systems leadership capacity to drive transformational, systemic change for the benefit of current and future generations.
We achieve this by offering professional learning and development programmes, partnering with professionals and enterprises to enhance and apply their systems leadership capabilities for greater individual and organisational success. To learn more, email us at simacademy@sim.edu.sg to arrange a discussion.
