6/20/2018 | 3 MINUTE READ

Overcoming Cognitive Biases

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How we see the world is how we manage our company and employees.


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As good leaders and managers within our businesses, we make hundreds of decisions each day. Those decisions typically revolve around strategy, execution, cash and people. Whether we are willing to admit it or not, often we make the wrong decisions, yet we consider ourselves to be smart leaders. But smart leaders make dumb decisions because they rely on cognitive bias.

A cognitive bias is a systematic error in thinking that affects how decisions and judgments are made. It is usually a result of our brain trying to simplify information processing or, simply put, the brain’s rule of thumb that helps us quickly make decisions.

Social pressures, individual motivations, emotions and limits on one’s ability to process information can all contribute to biases. Memory and attention span can also have a major impact on cognitive bias.

There are several types of cognitive biases:
Confirmation bias: When a person listens only to information that confirms what he/she already believes, instead of being open to another viewpoint.

Self-serving bias: The tendency to blame others when bad things happen and give themselves credit when positive things happen. 

Availability heuristic: People often ignore research or access to information that is readily available to them. For instance, one might argue about the effects of driving without a seat belt by saying he or she knows someone who survived two car accidents because they did not buckle up.

Choice-supportive bias: When someone makes a choice, they often defend it, even if it is ultimately flawed or the wrong choice. For instance, someone might believe their dog is the best in the world, even though it has a history of biting people.

While it is normal to rely on biases to make decisions, psychologist Daniel Kahneman has shown that reliance on cognitive bias decision making often results in poor decisions. Our intuitions lead us astray, or deliberate reasoning is absent from the decision-making process, when we are stressed or tired.

To get away from relying too heavily on biases, we need to broaden our scope of decision-making thoughts. Here are some ideas to shake up your cognitive bias thinking:

Think about the future and make three scenarios as to what might happen. To improve accuracy, make at least three scenarios that are low, medium and high possibilities instead of only making a range. People give wider ranges when they think about their low and high possibilities separately. Low and high guesses should be unlikely, but still within the realm of possibility. With this approach, people are less likely to get blindsided by events at either extreme—and they can plan for them. Chances are, the middle scenario will bring you closer to reality than a two-number range would.

Seek advice. People should outline objectives on their own before seeking advice, so they don’t get “anchored” by what others say. And advisers shouldn’t be anchored by leading with what they already believe (“I think our new CEO needs to have experience with acquisitions—what do you think?”). When making a decision with others, have people list their goals independently and then combine the lists.

Use joint evaluation. In separate evaluation mode, people pay attention to what they can easily evaluate and ignore what they can’t. They make a decision without considering all the relevant facts. A proven way to snap into joint evaluation mode is to consider what will be missing if they make a certain choice. 

Vanishing options test. In their book, “Decisive: How to Make Better Choices in Life and Work,” authors Chip and Dan Heath suggest people assume they can’t choose any of the options they are weighing and ask, “What else could I do?” This question will trigger an exploration of alternatives. When people imagine they cannot have an option, they are forced to move their mental spotlight elsewhere—really move it—often for the first time in a long while. If more than one idea looked promising, they might split the difference.

If we want to have different results within our company, we must continue to learn beyond our biases. Different information and thinking can create better results.