Cognitive Biases Sabotage Improvement Efforts
Wednesday, March 26th, 2008
Cognitive biases are strong (some say hardwired) tendencies to process information, think or interact in ways that can (but don’t always) create systematic errors. Well known cognitive biases include the confirmation bias (I seek out new information and ideas that support my current beliefs) and the halo effect (I tend to judge all aspects of something based up one or two dominate characteristics that overshadow the rest). There are dozens of interrelated biases that have been documented and many studies that illuminate them at work in how doctors think, investors make decisions, people chose mates, teams function (or not), managers hire employees, consumers make choices and many other domains.
Effective decision-making requires managing cognitive biases especially in high stakes situations. This point was made vividly by Phil Rosenzweig in his recent book the Halo Effect and the eight other business delusions that deceive managers. The book highlights the role that cognitive biases and other systematic errors in thinking have played in our attempt to understand and improve the performance of organizations. He outlines nine such “delusions” about high performance organization, including the halo effect:
“The tendency to look at a company’s overall performance and make attributions about its culture, leadership, values and more. In fact, many things we commonly claim drive a company performance are simply attributions based on prior performance.”
Just as we have a bias to think that good looking people must be smart, have an interesting life, or be successful, we think high performing organizations must have strong cultures, good leaders or the right values. He quickly dashes our hope that research could settle the question (Good to Great, In Search of Excellence, etc.) by arguing the professors and consultants that do the research fall prey to other types or errors in reasoning including for example, confusing cause and effect (or correlation and cause). So does employee satisfaction generate organizational performance or does organizational success generate employee satisfaction? We are often told the former when it fact some research shows the latter. This would mean our attempts to improve organizational performance by focusing on employee satisfaction (a popular thing to do) could be wrongheaded. This does not mean we don’t want to focus on employee satisfaction but doing so under the theory that it will drive organizational performance may be more of the halo effect, or confusing cause-and-effect than anything else.
If Rosenzweig is right (I have seen all the delusions he quotes in action in many different circumstances) then our inability to manage cognitive bias has wrecked (or at least limited) our ability to improve our organizations through research and managerial will.
We need a more detailed understanding of the role that cognitive biases play in organizational improvement and then we can use that understanding to “design against” them in our research and implementation work.
