Part 5 in our “Cognitive Bias and Leadership”
On our January 16, 2013 blog, I gave an overview of cognitive bias (our tendency to filter information through our own past experiences, likes, and dislikes) and surmised that it can lead to judgments that are faulty. We have been exploring how these biases affect the ability to lead and make good decisions.
In the fifth in our series, I am expanding on the Illusion of Control Bias – the tendency to overestimate your degree of influence over external events. The classic example is gambling…think someone who is convinced they have a system for choosing the right random Keno or lottery numbers.
This cognitive bias is a particularly interesting bias to me because unlike other biases, this one has an interesting upside. It can encourage people to take responsibility or to act on something they otherwise wouldn’t. Consider entrepreneurship, which requires real risk taking – the chances of success are stacked against you. In this case, overestimating potential control over the successful outcome causes the entrepreneur to act in the first place. And let’s face it, without trying; you would never get there.
But like all biases, there is a definite darker side. For decision making to lead to optimal results, the leader must be able to accurately assess the situation. Bad assumptions can lead to not only negative results, but also less inclination to learn from mistakes and decreased sensitivity to feedback.
Wondering if you suffer from this bias? Think harder in situations where you are particularly familiar. Familiarity can increase the likelihood of this bias. Also, if you are very clear on the desired outcome, you may be especially susceptible.
Power can also contribute. According, to Niro Sivanathan, Assistant Professor of Organizational Behavior at London Business School, ”Power can over inflate self-esteem to the extent that people believe they have more control over outcomes than they actually do.” Niro’s work explored how individuals cope with the sudden acquisition or loss of power. What he found is that rapid increases in power can prompt people to overreact to their newly enjoyed power with very negative outcomes as a result of the illusion of control. Niro found that people in power believed themselves to have control over uncontrollable situations, such as predicting the outcome of a die roll. It doesn’t take much imagination to see how this could lead to leadership and decision making snafus. Niro’s studies include concrete examples of companies that have collapsed after the overambitious decisions of those ‘drunk on power’, as well as political leaders whose overestimation of their strength has led them into conflict.
What does this mean for your organization? Try to be aware, especially in situations where you are familiar or are especially clear on the desired outcome. Also, think about areas where you are estimating effort, time, money and other resources. Be sure to listen to the facts and measure results as you proceed. When appropriate, use analytical and process management tools that can help expose blind spots and weaknesses. And finally, if you have a culture that encourages open communication, use one of the best overall tools of all – listen (one of my favorite positive business skills). Because as we have all experienced, often, upon looking back, we will see the information was there all along.