Knowing & Confronting your Biases: Avoiding Pitfalls at Work - Part I

We make decisions every day of our lives, ranging from the trivial ones, like what to wear, to one with a far-reaching impact, like career transitions. Running a business, building a product, managing a project or developing software, all comes down to essentially making decisions, the only difference being that these decisions affect not just the decision-maker, but the entire organization, including its owners, employees, vendors, partners and even competitors. Hence, making the 'right' decisions, with the available information and within the required time, are of paramount importance for businesses.

But what can go wrong in this decision-making process? After all, business leaders have access to time and resources to arrive at the best possible outcomes. Turns out, there are many decision-making traps called 'cognitive biases' that affect an individual’s judgment, perceptions and ability to make decisions.

Some History About Biases

Amos Tversky and Daniel Kahneman introduced the term ‘cognitive bias’ in the early 1970s, after decades of research on people's approach to decision making. They concluded that the decision making ability of any individual is affected by their ingrained biases.

In this article, I’m going to delve into the two most common biases that affect the decision making of business leaders and individuals making decisions on a day to day basis. The first step to confront our biases is knowing about them.

Overconfidence Bias

Overconfidence bias is the tendency to overestimate one’s intelligence, skills or talent, thereby creating a false sense of belief in their ability to take the right decision. 

The ‘unsinkable' Titanic or now the defunct Blockbuster company are examples where this bias led to their eventual downfall. 

Leaders affected by this bias may think on the lines of being the best product or service provider in the market. Believing that they do not need to learn or look at the changing circumstances/market, they soon become irrelevant due to the ever-changing technologies in the industry.

What should be done

We can avoid Overconfidence Bias while taking decisions by reflecting on past mistakes made by us or others, paying attention to others’ suggestions and actively seeking opinion from others. Continuous Feedback culture plays a very important role in avoiding this type of bias, as it helps to keep regular checks on the situation and keeps your foot on the ground.

An informed leader will always make bias-free decisions, eventually leading to the overall success of the organization.

Confirmation Bias

Confirmation Bias is the tendency to look favourably on the facts that support one’s preconceived notions, leading to overvaluing such information while making decisions. The failure of Nokia and Blackberry to look at the facts supporting the prevalence of Android and iOS in the market, and believing that their devices and Operating Systems will continue to rule the masses caused them to lose the market of which they were once undisputed leaders.

What should be done

We can avoid Confirmation Bias by searching for information that negates our supported beliefs and helps us to look at all the available facts, asking for a second opinion before concluding, being open to criticism and acting as devil's advocate to one's own decisions. This kind of open environment and thought process helps to make an informed decision and avoid the pitfalls of confirmation bias.

Business leaders are, after all, humans, and so, they can be influenced by biases during decision making. The important thing, however, is to be aware of such biases and take actions towards avoiding them. Some of the steps that can help them in this regard are to carry out a periodic evaluation of their decisions and take strict measures to recover from bad decisions. Above all, business leaders should strive to create an organizational environment where it is okay to own up to one’s mistakes.

I will discuss other organizational biases such as Gender Bias, Anchoring and Hindsight Bias in my next articles :)