Your Brain is Bias. Better Leadership Decisions with Data!
If I were to call you bias or prejudice how would you respond? Perhaps with a tad of defensiveness or anger? When someone holds a weighted point of view, we often accuse them of being prejudiced, or having a bias. As humans we are predisposed to treat situations in biased ways. This bias is based on the individual’s cultural beliefs and norms. Yet there is another kind of bias, called cognitive bias. Cognitive bias is our affinity to make decisions based on cognitive factors rather than tangible proof. Cognitive scientists have identified over 100 cognitive bias and believe our cognitive biases assistance in processing information more proficiently, particularly in unsafe conditions.
However, just as genes can trigger diseases that accelerate the decline of our biological structures, leadership decision making that is not grounded in data, can trigger cognitive biases that will accelerate our organizational decline. With respect for the modern human attention span, I am only covering a few of the many cognitive biases that can affect our business decision making process. Contemporary revenue leaders need to understand our cognitive biases and utilize a data driven approach to decision making to ensure logical, profit driven decisions are made. *If unfamiliar with the concept of data driven decision making this is great overview from Harvard Business Review An Íntroduction-to-Data Driven Decisions for Managers Who Don’t Like Math
In business one of the most troublesome cognitive bias is what psychologists call the “In group bias (IGB). IGB is when we over value the capabilities and importance of our immediate group at the expense of people we don’t know well. IGB can be very dangerous for corporate culture and company performance. Jim Collins in his book Why the Mighty Fail” identified 5 stages of corporate decline. The very first stage is what Collins calls HUBRIS BORN OF SUCCESS. Collins describes Hubris as “Stage 1 kicks in when people become arrogant, regarding success virtually as an entitlement, and they lose sight of the true underlying factors that created success in the first place.” I would argue that If left untreated IGB can be the first sign of 1st stage one decline.. Revenue leaders, should implement performance metrics and rooted in tangible and trackable data points. If there are negative indictors, we should embrace them and work diligently to correct them.
In order to achieve future goals we need to start implementing behavioral changes immediately that will effect that the realization of this goal. However there is a human tendency to not imagine ourselves in a future state. Cognitive scientists call this Current State Bias (CSB). CSB is of particular concern to economists when reviewing dwindling consumer savings habits. In general humans would rather take pleasure today then pain tomorrow. To provide a business example, let’s focus on Polaroid. If we had asked an executive at Polaroid in the late 90’s to look 25 years in the future, do you think they would have imagined a world without a Polaroid camera? Of course not, it seemed like an American hallmark. Once you understand CSB, as a revenue leader you can implement change to encourage progressive thinking. One example is to conduct a short exercise in goal setting and then hold your team accountable to their goals.
As humans we process negative data faster and more thoroughly than positive data, and they affect us longer. Cogitative scientists’ call this concept the negativity bias and it causes us gravitate to negative experiences than positive ones. A national study of business teams found that the highest performing teams had a ratio of positive to negative comments of 5.6 to 1, whereas in average performing teams the ratio was 1.9 to 1 and in low performing ones, 0.36 to 1. In organizations, the negativity bias can be manifested in “negative leadership”. This is when a negative member of a team converts positive or neutral members of the team to negative. Have you ever observed a group of people complaining about work? Next time see if you can identify the negative leader. Negative leadership can be terminal to organization growth. Leaders should always be positive even in the most volatile situations. Additionally, one should facilitate a collaborative and contributive environment. It is impossible to have positive outcomes from negative thoughts.
If we can agree that all humans are bias then we can truly appreciate the value of data. As we expand our knowledge through the modern data connected world. We are discovering the value of data driven decision making in almost every area aspects of our lives. From the Netflix recommendation to the heart rate monitor on a new smart phone. As medical innovations have cured many biological illnesses, if used properly, data can cure irrational business practices rooted in cognitive bias.