When it comes to decision-making, our choices aren't always rational. But is there a good recipe to make better decisions?

It’s a rainy day in the ’90s. You just got home after a long day, and all you want to do is unwind by watching a movie in the comfort of your apartment. The answer to your need is simple: Blockbuster — the most popular video rental store, founded by David Cook in 1985. Flash-forward to 2023, and you’re still on your couch, rain pattering just outside. Your eyeballs are glued to the screen, but the grainy frames of sub-HDTV have given way to Netflix, in all its real-time-streaming glory.

A lot of things have happened in the intervening years, and some of them have led to Blockbuster’s demise. Although debts and changes in the industry contributed to its bankruptcy, bad (or irrational, some would argue) decisions were made. The most famous: when Netflix founder Reed Hastings decided to sell Netflix to Blockbuster for $50 million in 2000, the latter failed to conduct a comprehensive analysis of the deal, which fell through. The consequences of this decision were disastrous. 

Maybe you remember Balenciaga’s unfortunate November 2022 campaign, “Gift Shop” — a more recent example of a decision-making short circuit. The campaign featured, according to many, sexualized children, and the rage on social media was followed by an official message on Balenciaga’s Instagram profile, in which president and CEO Cédric Charbit explicitly claimed that the Gift Shop campaign “was a wrong choice by Balenciaga”. 

These are two of the endless cases where better management decisions could have been made. The questions we want to address here are, first, whether the best decisions are rational decisions, and, second, whether there is a recipe for making optimal decisions, especially when organizations are involved.