BackOpinion | The heady cocktail of creativity and cognitive bias in today’s workplace
Groupthink can lead to defective decision-making, and dampen innovation and transformation
PremiumThe holy grail of 21st century enterprise is to endure change and thrive amid chaos. With empires falling and startups securing astronomical valuations, the times have never been more exciting. The pace of change in technology and information liberalization is only going to intensify with time, and permeate organizations and geographies. Where does this kind of change leave the management of innovation?
For many, managing innovation is an oxymoron, and it isn’t all that misplaced, unless managers learn to behave differently, leaving behind their routine activities and ways of working, when it comes to fostering change. They are more likely to suffer from cognitive biases, often fuelled by a misplaced sense of importance, and this can hurt innovation.
There are five cognitive biases that hurt organizational innovation the most: fundamental attribution error, sunk-cost fallacy, confirmation bias, groupthink and the bandwagon effect.
Let’s discuss each with real-world cases from the corporate realm.
The cost of narrow vision
Have you ever encountered a review presentation where the presenting team places the blame for its failures on almost everything except their mistakes? This is common in review meetings and appraisal cycles, and that’s the fundamental attribution error at play.
You attribute success to your talent or disposition, while failure to situations or other individuals. How does it hurt innovation? By not owning up to the mistake, you have no chance of solving it. Failure will happen, but if the fundamental attitude is of passing the buck, there’s no way you can create anything worthwhile.
Next, we have the sunk-cost fallacy, which creeps into decision-making when it comes to investments. Imagine you had a great idea and then you kept investing in it despite experiencing a lacklustre response from the market. If you continue to escalate the commitment in the face of not-so-promising results, you are falling for the sunk-cost fallacy. The key is to devoid decision-making from the historical investments; instead, it should purely be on the basis the prospects of the project. Take the case of Tata Nano. Despite strong signals from the marketplace that the product isn’t going anywhere, the leaders lacked the courage to shut the project. It was the sunk-cost fallacy at play, with a touch of fundamental attribution error (that the market isn’t ready yet).
The fallen manager still has a chance to overcome the above biases, provided she looks somewhere different for inspiration, but the confirmation bias traps her again. The confirmation bias creeps in when you tend to seek, receive, filter, interpret and adjudge incoming information that suits your preconceived notions or hypothesis. It only exacerbates the already acute blind spots, for now you are seeking data that offers fuel to your hunch. If you attend the same conferences, meet the same folks, read the same literature and be surrounded by similar minds, you are only worsening the situation.
One of the favourite approaches to ideation is brainstorming, where a bunch of employees get together and think of solutions for a problem. It’s a go-to approach for most corporates, except that the approach isn’t nearly as effective as its adoption.
A big critique of the brainstorming is groupthink, where a group starts to think like one brain, and where you are obliged to comply to the dominant voice in the room, regardless of how flawed you think the idea it. This results in the group regressing towards the mean and all divergent ideas get filtered out to maintain tranquillity and agreement in the team.
Groupthink is more pronounced in a collectivist, high power-distance culture like that of India, where bosses, though might be called on their first-name basis, still wield disproportionate power. What’s the panacea? Allow individuals to think independently and try writing down your ideas before airing them.
Finally, it comes down to the talk of the town, the bandwagon effect. Imagine how many innovation presentations start with some good-looking charts from a known consultancy firm. Managers somehow assume that by basing their innovation agenda on some autocratically compiled and democratically available information things would start to happen. It does, for as long as appraisals are concerned. But when it comes to the novelty of ideas or impact, the charts are an eyewash. They substitute the first-hand insights that managers are supposed to glean from real-life experiences. To on-board a bandwagon seems to be the imperative, instead of discovering what’s good for the company and important for the customers.
As a panacea, let me borrow this quote from Elon Musk, an influential innovator of present times: “Really pay attention to negative feedback and solicit it, particularly from friends."
Pavan Soni is the founder of Inflexion Point, an innovation and strategy consultancy.
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