HR & Staffing Productivity

How Leaders Can Overcome Confirmation Bias

Evan Goodman
Written by Evan Goodman

You will doubtless feel rejected if a friend ignores you when you reach out. But every day small business owners make multiple decisions. Some may influence the survival, growth, and success of their companies.Decision-making can easily go wrong.

Decision-making is impacted when leaders have pre-existing ideas or views on a topic and seek out information that confirms these beliefs. We embrace information that confirms our view and reject, ignore or avoid any contrary information. Confirmation bias is what stops people from viewing circumstances objectively. People with confirmation bias are self-righteous and cherry-pick their data. In short, confirmation bias makes people prisoners of their own assumptions.

Confirmation bias is not inherently bad but it becomes problematic when leaders connect prejudice with stereotypes and act on it.  This impacts decision making and hampers business success. Be on guard when it comes to confirmation bias and takes conscious steps to overcome it before you make crucial decisions.

 What is confirmation bias?

Confirmation bias is one of the cognitive biases that relates to favouring information that backs previous biases or beliefs. Confirmation bias prevents you from seeking out diverse perspectives.

For example, when an individual believes left-handed people are more creative, they look for evidence that supports this belief when they meet a creative left-handed person. They may seek out more information that furthers the idea and discount or ignore examples that show otherwise.

Confirmation biases impact the way people gather information and influence how they recall and interpret information. Employees in opposition to a particular idea will usually seek information that supports it and interpret news stories or events in a manner that upholds their ideas. They will also remember details in such a way as to reinforce these attitudes.

Another hypothetical business scenario is when a CEO has a preconceived belief regarding a new product and directs the team to carry out market research to evaluate its feasibility. The team conducts surveys and competitive analysis. The CEO’s confirmation bias can mean that he wants the data from the market research to confirm his existing ideas on the new product. The team also launches into market research, knowing that the boss wants a particular set of data to confirm his belief. This research is designed to give the answers that the CEO wants.

Cognitive scientists theorise that humans think in two modes, intuitively and reflectively.  When feelings, associations and impressions are used to understand events or the world around us, we are in reflective mode. In the reflective mode, we take a deliberate look at data and decisions.Failing to seek and interpret information objectively leads to misjudgements that can have serious consequences. By being aware of confirmation bias, leaders can not only learn to identify it in themselves but can recognise it in their team members.

 Overcoming confirmation bias

The following steps can help leaders avoid confirmation biases and make informed decisions that are aligned with the company’s vision and goals. Shortlist choices by defining your needs, gather information and evaluate alternative resolutions. Strategic decision-making includes the processing of information and alternatives that help leaders make thorough, sound decisions. These steps help mitigate the risks caused by confirmation bias whilst improving decision making.

Collect information from all sources: A bias blind spot when a leader doesn’t recognise their cognitive biases.  It is critical to seek and review information from all possible sources when making an informed decision. This involves internal and external research. Some information is obtained from your company’s internal databases, policies, protocols and procedures. Other information can be gathered from industry experts, surveys, polls, books and online sources.

Work in groups: It’s easier to identify intuitive bias in other people. If one group member overlooks something, another group member is likely to point it out. Make a small team to gather information and summarise findings and results.

Weigh the evidence: Carefully review the data gathered while exploring the alternative paths or decisions that can be made from the data. Consider the impact that each of these alternatives will have on the project or your company as a whole. Evaluate which one of these options would meet the identified needs and goals of the project. List the choices and rank them based on their potential to achieve your company’s goals. Reflect on whether all credible alternatives have been considered. Critical decisions necessitate looking at all possible alternatives. Asking members to submit second and third options is a good way to ensure you evaluate all possible alternatives.

Evaluate recommendations: You may not settle for someone else’s recommendation but you should still hear it out. Reflect on whether it would disproportionately benefit the person putting it forward. Determine if they have fallen in love with the outcome. People exaggerate benefits when they love an idea but exaggerate costs when they hate something. Leaders need to watch out for recommendations that come from an emotional place.

Choose the best path:  Choose your options carefully. You can also select a combination of options to maximise your chances of a good outcome. Discussing the options with relevant stakeholders that include your team members and leaders can help arrive at a consensus as to the best approach.

Draw up an action plan: Form a cross-company project team for your action plan and assign people different roles.

In conclusion

A McKinsey study that involved more than a thousand business investments indicated that when companies focused on mitigating the effects of cognitive bias, the return on investment (ROI) went up by as much as seven percentage points. A disciplined and open-minded approach to decision-making is the most effective strategy to overcome confirmation bias and maximise your business’s chance of success.

 

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About the author

Evan Goodman

Evan Goodman

Over the past 30 years, Evan Goodman | Business Coach has founded numerous ‘start-ups’, built them into successful businesses and gone on to sell them. He has experienced and overcome most of the common challenges faced by business owners and leaders and understands the pressure and stresses that running a business can cause.

He also recognises the value and importance of getting sound advice and support when faced by these common challenges and of being prepared to openly discuss issues with a coach or mentor.

Since building up his last business into a national company, and selling it in 2009, Evan focusses on coaching SME business owners on how to become business leaders. He has a Masters of Business Coaching degree UOW; creating a unique blend of experience, expertise and coaching best practice for his clients.

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