Two programmes I’ve watched recently mentioned ‘sunk cost fallacy’, a tendency to continue to do something because we’ve already invested a certain amount of time or money into it, despite it being more logical to stop. It led me to think about cognitive biases in general and their impact on our ability to objectively observe and diagnose during consultancy assignments.
Our brains struggle to make sense of the complex world in which we live and so they simplify the information received. Cognitive biases are unconscious errors that occur during this simplification process. Whilst biases are designed to make decision-making quicker and more efficient, they also lead to a potential misinterpretation of the information from the world around us and, as a result, affect our ability to make logical and appropriate judgments and decisions.
Cognitive biases can be caused by a number of different things, such as heuristics (mental shortcuts), social pressures and emotions. When we have a ‘gut feeling’ or use a ‘rule of thumb’, we are relying on our biases to shortcut or predict an outcome. We can make a decision because it confirms what we know is held to be true by others around us. We make the wrong decision because we are emotionally invested in that outcome. The list of biases is extensive and below are just a few examples. How many have we exhibited today?
We are influenced by the order in which we receive information, relying too heavily on the first piece of information as an anchor for the following data. One group were asked to guess in 5 seconds the value of multiplying all the integers 8,7,6 down to one. The second group were asked to multiply all the integers from 1,2,3.. up to 8. The average guess of the first group was ten times higher and more accurate than that of the second group. Anchoring bias is important to understand how we are observing as well as how we communicate.
The belief that we knew the answer all along, because we have amended our memories to confirm what we now know to be true. Hindsight bias can lead to overconfidence in our ability to predict future outcomes.
This is also known as the availability heuristic, a great mental shortcut where we tend to use information we can quickly recall whilst evaluating a topic or idea, even if the information is not the best representation of it. We tend to deem the information we can most easily recall as valid, without questioning alternative solutions or opinions.
Optimism and Pessimism Bias
Very simple biases based solely on our perception of events and outcomes, depending on whether we are in a good or bad mood. We can be aware of our own mood and we can try to enable a positive environment when we need to gain buy-in from our clients.
Inattentional blindness occurs when we fail to notice something extraordinary in plain sight because our brain is concentrating on something else. Elective attention tests, including the infamous “Invisible gorilla test”, ask the observer to focus their attention on a task and then question whether they had observed any unusual events occurring during the task. Few people notice what is happening in the background even when they are alerted that this might be part of the test. See if you can spot what is going on here.
We’re getting back to sunk cost fallacy, an example of commitment bias, which describes our tendency to remain committed to the things we’ve done in the past, particularly if exhibited publicly, even if logically we know they won’t have desirable outcomes. The inability to learn, grow and admit we were wrong in the past can severely limit our ability to make the right decisions in the future.
The first step in overcoming bias is to recognise it. Individually we can train our unconscious mind to think in different ways by minimising distractions, strengthening memory, seeking different perspectives before decision making and improving reasoning skills.
Cognitive forcing strategies are mental tools used to force unbiased decision-making. The consultancy world has many tools such as: evaluation criteria, scoring matrices and checklists which can enforce the discipline needed to ensure objective and reasoned decisions as well as avoid cognitive traps.
When there is a lot of information to take in, such as during key interviews, or when facilitating workshops, we can work in pairs or we can use a mentor, coach or supervisor with whom we can bounce ideas and ensure that our biases are being challenged.
The greatest strength is in creating environments in which diversity of thought is nurtured. McKinsey have found a “startlingly consistent” correlation between board diversity and Return on Equity. Building boards comprising people with different life experiences increases immunity from cognitive bias and decreases confirmation bias, the tendency to select information which confirms our existing beliefs. And that confirms one of my beliefs too!
Denise Fellows is a Past Master of WCoMC and is an unbiased judge on the panel for the CMCE Research Awards