WHEN EXPERTISE BECOMES A LIABILITY
THE MOST CRITICAL FUNCTION of every board of directors — and more broadly, of every executive team — is to make decisions that benefit an organization in the long term. Therefore, one would imagine that the more domain experts involved, the better: their extensive collective knowledge of risks and opportunities in a particular industry will surely lead to more effective long-term decision making, the thinking goes. However, recent evidence suggests that this reasoning is flawed.
The fact is, in certain circumstances, decision-making groups that are dominated by domain experts may exhibit several harmful tendencies that actually detract from effective decision making. In this article we will explain why and summarize our recent research, which suggests that the proportion of domain experts in a decision-making group can be a key determinant of organizational success or failure.
Domain Expertise vs. Diversity
To date, research on the composition of decision-making groups has focused on diversity in group members’ professional backgrounds. The degree of diversity, however, is conceptually distinct from that of domain expertise.
To illustrate, consider two simple examples. First, a manufacturer of solar panels has a board of directors that includes five solar energy experts, two lawyers, and two bankers. Second, the board of another firm in
