When trying to understand why some companies succeed while others fail, we look to their leaders.

The scrutiny is even more intense when a soaring company falls back to earth, often mind-bogglingly fast. We want to know who made what decision, when they made it, and why. How could great managers with plenty of experience get it so wrong?

Surprisingly, sometimes all that experience is what led them down the wrong path. “Most people overestimate the quality of their experience,” says Sydney Finkelstein, Professor of Management at the Tuck School of Business at Dartmouth and Faculty Director of the Tuck Executive Program.

Finkelstein has examined managers and decision-making for years, and recently offered some insights into leadership in the context of making good decisions. While there are many capabilities important to being a good leader, Finkelstein noted three he considers crucial:

• Adaptability. Being open-minded is necessary to avoid falling into the trap of believing that what happened yesterday will happen tomorrow.
• Intellectual Honesty. Seeing the world as it is, rather than how you want it to be.
• Self-awareness. Being alert to all the different ways you think, and understanding why you think the way you do.

To make better decisions, Finkelstein suggested that managers take the time to evaluate the quality of their process by asking themselves four important questions. “We are under time pressure 24/7,” says Finkelstein. “You can’t always wait for all the data to come in, but you have to ask the questions.”

4 Questions to Ask When Making Important Decisions

Does my past experience make it tougher, not easier, to change direction?

Once you have achieved success in one way, you assume that what worked in the past will also work in the current situation. But experience “cuts both ways,” says Finkelstein. Relying on their past successes is one reason managers miss market trends and the disruptive ideas and technology that can take down a business.

What other experience should I have in the room when making a decision?

People tend to rely on the data that confirms their own experience and ideas, which can lead them to miss important information. It’s essential to add other perspectives to the process. “Bring in more debate and discussion,” says Finkelstein. “We know from research the power of diversity.”

Are you making any prejudgments that are limiting your options for change?

Our brains have evolved to make quick decisions, and we naturally look for shortcuts when making decisions. Managers must review the assumptions they’re making to test if they are valid. Because people usually rely on data that is consistent with their own biases, managers need to ask themselves and others why they looked at a particular set of data and what data they are ignoring. “Fact-based decisions require that you to ask what the right facts are,” says Finkelstein. “The risk is that I am going to say the right facts are those that are consistent with my intuition and experience, but others will have different ones.”

Whose opinion do you trust?

When making a tough decision and balancing conflicting ideas, identify the people and sources whose opinion and information you trust the most.