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.

On our January 16, 2013 blog, we 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 faulty judgments. So much of positive leadership hinges on good decision making, which, of course, affects company culture and workplace happiness. So, let’s expand the discussion.

In the fourth of our series, I am going to talk about the Anchoring Bias. This bias is the tendency to favor a piece of information and “anchor on” or favor that information when making decisions, even though it may have no logical relevance to the decision at hand. With the Anchoring Bias, the information becomes our reference point to evaluate and make decisions. And, as you might guess, this can lead us astray.

One illustrative example is a series of studies that were done in the Real Estate industry. In these studies, before touring a home, appraisal agents were broken into four groups. Each group of agents were given information about the home including a standard MLS listing sheet and comparable prices of houses in the area. The twist is that each of the four groups saw a completely different listing price. After touring the home, they were asked to write the appraisal and then list the factors that went into their pricing. As you might have guessed, the listing price they saw prior to the tour significantly affected the appraisal price…the higher the listing price, the higher the average appraisal price. And these agents weren’t even generally aware of this effect. When asked to list the factors that were important to them in pricing the property, only 8% said that listing price was a top-three consideration.

So what is a leader to do to minimize the Anchoring Bias?

1. Remember experience is important.  But don’t overestimate historical information as a predictor to a successful outcome. Stop to ask yourself if history is relevant from time to time.
2. Watch out for the classic “business-as-usual attitude” during changing conditions.
3. Stop every once in a while, employ a blank slate, and really look at a problem.
4. Check for anchoring in your budgetary processes. For instance, in new markets, clean slate thinking could help.
5. Expand the team to people who can bring fresh eyes to assess and share their opinions to gain better perspective. This is good for teambuilding as well.

We hope that was helpful.  What did we miss?  We’d love to hear some of your tips to avoid anchoring.

But it will be worth it.  I’ve been to the first two and each time I’m learned as much as going to a graduate level course and made good connections (and gotten jobs) from/with the people I’ve met.

The IPPA website as such press worthy quotes as:  ”Presentations, workshops, and poster sessions will feature leading-edge research, as well as applications of positive psychology in a variety of fields – from business to education to medicine. Attendees will have the opportunity to discuss the latest research, insights, and ideas, and interact with other people who focus on studying what is best in life and how to create more of it. The internationally diverse audience will consist of researchers, clinicians, educators, students, business owners, coaches, consultants – anyone committed to the science and practice of positive psychology.”  Which is all true, actually.  There are a few crazies there, but most are students and consultants and wanna be consultants and some researchers.

Martin Seligman and Shannon Polly

What am I looking forward to?

While talks and discussions will cover a wide range of topics, the Congress will feature a particular emphasis on these five themes:

1. Positive Development across the Lifespan
2. Positive Environments, Sustainability, and Conservation
3. The Healthy Body and the Healthy Mind
4. Work and Well-Being
5. Creativity and Evolution

Featured speakers include Mihaly Csikszentmihalyi, Richard Davidson, Barbara Fredrickson, Martin Seligman (whom I’m excited to see), and anyone whose written a book you’ve seen on your way through Barnes and Noble.  (Does anyone go to bookstores anymore?)

The workshops (for which they charge a fee) fall under three categories:

• •Master Lecture Series, featuring leading scholars discussing their research
• •Research Methods Workshops, offering the opportunity to learn advanced research techniques relevant to positive psychological science
• •Applied Practice Workshops, featuring best practices for applying positive psychology in a range of disciplines

Mostly I’m looking forward to connecting with the 50+ graduates of the Master of Applied Positive Psychology program at UPenn (there is one in London who is a wee bit jealous of the attention we get).

I want to know what they are doing, how they are doing and what exciting things are happening in their lives.  It’s going to be one big reunion.  But I also want to branch out and meet new people.  I tell my participants that when I do my Networking courses.  And I want to learn.  I want to learn new things and ask questions because I’m curious, not because I want to look good or get noticed.  I’m going to be growth mindset this time.  And I’m going to be present.  And I’ll write some more posts about what I learn (and tweeting when I can).

How about you?  What is a situation where you can just BE this week?

Disengagement

•  80% of students ‘don’t see how school contributes to their learning and growth’
•  60% of students ‘don’t rank learning as a reason they go to school’

Lack of Fulfillment

•  80% of dropouts would stay in school if learning were project-based rather than drill and kill

Motivation

•  50% of dropouts leave school because they’re bored
•  50% of students spend ‘an hour or less on their schoolwork each week’

More than 1 million American kids drop out of high school every year… that’s a run rate of 25%. How can that be possible? And more importantly, what can we do about it?

The folks at The Future Project conducted an experiment to improve high school students’ levels of engagement last year, and the results are pretty interesting. The program experienced a retention rate of 86%, which exceeded principals’ expectations by 5x. If you’re interested in the program, check out their site to learn more. If you want to try something at home to pique your kids’ curiosity and raise their levels of engagement, you might want to download The Future Project Playbook. It has some interesting exercises that I’m thinking would be good for most everyone to try… regardless of age. The framework provides a step-by-step guide for tapping into your potential.