How Leaders Make Good Decisions?

The Challenger space shuttle accident on January 28, 1986, that killed 7 Astronauts was caused by the failure of one O-ring joint to seal properly during the take-off phase. The Presidential Commission that investigated the accident soon discovered though that the problem with the O-ring had been known for a long time at NASA and Morton-Thiokol, the manufacturer of the joints. In fact, managers and engineers at both organizations had all the data they needed to see that the launch of Challenger would very likely lead to a disaster. However, nobody took the decision that was the most reasonable: cancel the launch. How come did NASA and Morton-Thiokol let the space shuttle take off on that fateful day then?

The answer is, simply put, management cognitive biases. The investigation found that one of the major causes of the Challenger space shuttle disaster was groupthink, or the illusion of unanimity. That means that although engineers at Morton-Thiokol recognized a major risk for the launch of January 86, they however agreed to the launch because they thought everybody agreed to it. Another bias that played is engineers’ interpretation that past space shuttle launch successes – especially in cold weather conditions and despite having clear undisputable information to the fact that the O-ring joints were severely damaged each single time there was a launch in cold weather – was evidence for future launch success. The thinking went by “if there is no accident this time, this means the probability of a success next time is higher”. This cognitive bias is called the disjunctive bias.

Biases are very dangerous when you are a manager and a leader. At its extremes, it can kill. Fortunately, most biases don’t result in people being killed. However, all biases will end up in serious business mistakes or failures at one point or another. Leaders therefore must be able to recognize these biases in them or their teams before they impact performance.

There are dozens of cognitive biases and I won’t describe them all here. In my career, I have mostly encountered 3 and I want to share how I have learned to counter their impact.

Similarity Bias
The similarity bias often occurs in recruiting situations. As a leader of a team, when you interview someone, you may have a tendency to search for common interests and talents in applicants. In doing so, you will be unable to separate friend from employee. This results in hiring the same type of profile again and again on your team.

Personally, I see myself falling for that bias when I interview someone and I start thinking “yes, he is right, I would have done the same thing” or “I love that guy, he works like me”. This is where your bias detector should go to red and warn you that you are about to make a bad decision. Instead, you should focus on what value the new hire will bring to you and your team.

For instance, I am a very analytical person and I believe I have little creative mind. For that reason, I like being surrounded by people like me. If I allow that to happen on my team though, results can be disastrous, because I will have a team of analytical people, unable to be creative when we need an innovative solution or process to be implemented. During the interview process, I therefore make sure that the person I interview (1) can fit into the company’s culture and values, and (2) most importantly adds value to the team by bringing a new competency.

How to counter similarity bias: Make sure you prepare before starting the recruiting process, by identifying what key skill you need in your team and that the new hire must have. Be aware that you will have the tendency to prefer people who look like you. The pre-screening of resumes and applicants can be the best time in the process to activate your bias detector and start not selecting only candidates who look like you. Finally, use a consistent interview process, one where you evaluate each candidate on exactly the same criteria, and do not compromise on this. Then you have the best chances to avoid the similarity bias in your next recruitment.

Confirmation Bias
The confirmation bias is in my experience one of the most encountered in a leadership role. Confirmation bias occurs when as a leader, you want to prove your point or assumption and in doing so, you have the tendency to only look into data that confirms that your point is the correct one and you discard any information that would disprove your point.

One example where I fell for that bias early in my career was a discussion about a client contract. While working on the financial structure of the deal, I had made up my mind on what the correct path for the discussion with the client was. But the division GM had a completely different opinion. I however stuck to my initial thinking, only focusing on the information that proved me right, and discarding every alternative offered by the GM. As a result, we got stuck in the process. When I later talked to my manager about this challenge, he asked me to change my perspective and think like if I were the GM and what I would do then (excellent coaching question by the way!) I then saw how I could also benefit from thinking about the situation while wearing a GM hat.

How to counter confirmation bias: Look for ways to challenge what you think is the only truth. Seek out information from a range of sources and discuss your thoughts with a diverse group of people. Remove your function hat (e.g., forget you’re Finance) and put on another function hat (e.g., pretend you’re Sales). For major decisions, consider assigning someone on your team to play devil’s advocate. Use your mentors in the company to test assumptions. Don’t shy away from asking help, people will feel valued when you ask them “I need to decide on this, if you were me, how would you approach that?”

Conservatism Bias
Raise your hand if you have heard “We have always done it this way!” or “This is the process” in the past 2 weeks! I have; no later than this week.

The conservatism bias occurs when we favor existing information and conditions over new information that could threaten the status quo and force us to change. This is a very powerful roadblock in a team or organization when you are trying to drive change. Even when you have compelling reasons for the change (implementing a better tool, improving a process, modifying the way the team works), people will tend to cling to old patterns, stick to current state. It’s not that people are stubborn. It is more that they don’t recognize the importance of the new information, of the change.

For instance, in one of the organizations I have worked with, people preferred sticking to Excel files and fixing bad processes continuously by finding workarounds, rather than starting from scratch and rethinking all processes, although there was ample information that this was the best way forward.

How to counter conservatism bias: Build a burning platform – people have to believe there is a fire that will engulf everything if there is no change. Engage people in discussions and in brainstorming ideas: Let people vent about what is wrong with the current state, let them express their ideas. Once they have done that, they will feel much more inclined to follow the change. Be aware that this is a slow and hard-won battle.

By now, you may have remembered several situations you were in where these biases were at play. As leaders, it is critical to be aware of them. Acknowledging biases and countering them can significantly improve the productivity of your team or organization. It can drastically improve the performance of your team through making better hiring decisions.

I am offering you a few more tips on how you can enhance your leadership and decrease the impact biases may have on you and your team:

1. Stay humble, don’t believe you know it all, ask for help.
2. Define early on what you won’t compromise on and stick to this. It could help in making better hiring decisions, addressing challenges or requests in a consistent way that will not favor one team, manager or employee more than another
3. Be aware that the way you see things is but one perspective only. There are plenty of others. Put yourself in the shoes of others before making decisions. I found this to be particularly important when I work in a multi-cultural environment. I am always eager to understand how someone from a different culture than me would react to my decision, or to an information
4. Overcommunicate with your team and coach or mentor people on situations where biases may be present

I am curious to know what your experience has been with biases in the past. How did you learn to cope with them? What has worked for you and your team? What are other biases you regularly encounter at work? Please let me know in a comment.

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