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Management & Leadership

Six cognitive biases to avoid in strategic management

eye 2144 Published on 29 Nov. 2018
cognitive
tag #Cognitive bias #Emotional intelligence #Managerial skills

We have well seen how many start-ups have experienced a slowdown or even been eliminated from the market due to poor decisions by their charismatic leaders. And yet most of them were recognized to be brilliant. So how to explain these failures? One of the reasons lies in the fact that we are subject to cognitive biases and beliefs that constantly distort our judgement when making decisions. This can have unfortunate consequences when it comes to strategic decisions. We are our own worst enemy! One of the keys to success of a strategist manager is to overcome these cognitive biases. This involves a healthy dose of introspection and critical thinking, important qualities to be considered by Human Resources.

Here are the six biases linked to strategic decision making.

1- The certainty bias: Some managers are convinced that they hold the truth. Sure of themselves, they never question their own intuition. They rely on set paradigms to justify their decisions: 'You need to participate in exhibitions to be visible, 'It's always worked well like that, there's no need to change it', 'The Americans are not fussy about the prices', etc. In order to counter this bias, the strategist manager is always able to question himself, even if it means changing his mind if he realise is on the wrong track. His motto is 'I know I do not know'.

2- The guru bias: Just like in ancient times when people went to see a guru to consult the gods, some managers blindly trust an expert who supposedly knows all the answers. However, the expert is not infallible and at the same time, they are also trying to defend their own interests, which are not necessarily in line with those of the company. The strategist manager will certainly consult experts but also demonstrate critical thinking by incorporating their recommendations as part of a global vision.

3- The meetings bias: When facing a new issue, some managers tend to immediately suggest a meeting in order to make a decision, such as the Knights of the Round Table. The problem is that it can be risky to make a strategic decision based on a single meeting, especially if it is not unprepared. The strategist manager knows that individual thinking is essential. Studies have demonstrated the benefit of solitary thinking over generating ideas in a group. Steve Wozniak, co-founder of Apple, said: 'I do not believe that anything revolutionary has ever been invented by a committee'.

4- The readiness bias: Some overeager managers feel obliged to make a decision quickly, sometimes under employee’s pressure. While this form of impulsiveness can be justified for an operational decision, such as choosing the colour for a chair, it is however likely to lead to poor strategic decisions. The strategist manager will advocate their 'right to indecision'. They need to have an incubation time for an idea. They prefer to delay the decision if they have not found the best solution because it helps to sleep on it.

5- The partial vision bias: Strategic errors can also be made by not taking the full picture into account. For example, some managers can get carried away with some new information which seems exciting (identifying a new fast-growing market). The strategist manager learns to approach a subject from every angle and demonstrates critical thinking (are we really qualified to develop this market, who is the competition, the investment required, etc.?).
 
6- The confirmation bias: Similarly, this bias affects our perception and reasoning. Our brain pushes us to make decisions and to justify them so as to remain consistent with the choices that we have made or with our convictions. For example, if we launch a product, we will absolutely tend to want to continue our investment even when the signs are not good. The strategist manager, on the contrary, is always prepared to question himself and demonstrate objective thinking, even if it means going back on previous choices.
 
One of the secrets of a strategist manager is therefore to step back and analyse the situations where he or his peers have fallen victim to cognitive biases. This enables him to counter them in time. On the other hand, while excessive self-confidence, a tendency to be too trusting, or making decisions on the spot may seem comforting to some, these will prove to be counterproductive to the approach needed in strategic decision making! No need to panic though, strategist talent can be developed if we demonstrate all the necessary humility.
 

Patrick Leguide

Founder and CEO

Patrick Leguide is the founder and CEO of Central Test. With degrees in both Psychology and Management, he is also the head of the Research and Innovation department at the company.

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