Believing is Seeing

Here’s a familiar scenario for most board directors. You’re reviewing management reports in preparation for an upcoming board meeting. There’s a report on a just-completed project, or maybe a proposal for a new one. You take a quick look. Ho-hum. Nothing new there. It’s just as you thought – the project was a success and the proposal makes sense.

Maybe you’re right. Or maybe it’s confirmation bias at work.

Confirmation bias has a profound impact on all of us, in terms of how we think and – most importantly – how we make decisions. It causes us to seek out and overvalue evidence that confirms our beliefs, while undervaluing, or even ignoring, facts that don’t conform to those beliefs.

“What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact.” – Warren Buffet

Every board of directors is made up of people with the same tendency toward confirmation bias, so its easy for the whole board to fall into the trap. That poses a challenge for sound decision-making.

Let’s explore.

Confirmation Bias and How It Affects Us

Cognitive biases are mental shortcuts that we use to assess information and make decisions efficiently. Quite simply, confirmation bias is a type of cognitive bias that causes us to look for information that supports our preconceived beliefs and to reject conflicting ideas or evidence.

Under the influence of confirmation bias, we search for, favor, interpret, and recall information in a way that confirms what we already know or think we know. Not only do we select information that supports our views, but we ignore contrary information and interpret ambiguous evidence as supporting our existing attitudes.

It’s essentially a form of self-deception that leads to narrow-minded, short-sighted thinking. The more we’re affected by it, the less likely we are to listen to critical or opposing views. Unfortunately, we’re all susceptible to it. It’s not hard to recognize it in others, even though we’re often quite oblivious when it comes to our own thinking.

We draw on evidence to solve problems, but confirmation bias distorts the reality that we rely on for that evidence. We ignore evidence that entertains new ideas, and instead we keep assigning greater value to information that confirms our existing beliefs. Not only does this impact our ability to find a solution to a problem, it may even prevent us from identifying the problem in the first place.

Confirmation bias also impacts our memory - we’re more likely to remember information that’s consistent with what we already know, while conveniently forgetting facts that run counter to our beliefs.

It can even impact interpersonal relationships. For instance, once we’ve formed our first impression about someone, we reinforce this belief through subsequent interactions and ignore any actions that contradict our first impressions. And when we look for favorable traits in our own social group – surprise, surprise - we find them. Yet we interpret the behavior of other social groups through the lens of what we already assume about them.

In a rational world, if we encountered evidence that challenges our beliefs, we’d evaluate the new evidence, and adjust our beliefs accordingly. In the real world, that’s not what happens. Instead, we’re subject to the backfire effect, and as a result we tend to reject the new evidence and strengthen our support for our original stance.

Minimizing Your Confirmation Bias

Just knowing that confirmation bias exists can help you avoid it in your own thinking. Look at a belief you hold, and deliberately search out ways in which you’re wrong, rather than the ways in which you’re right.

Try to look at the alternative to a belief you hold and see the viewpoint of the other side. You don’t need to compromise your values and beliefs to open your mind. Entertaining another idea doesn’t mean accepting it.

Listen to and carefully consider all sides before coming to a conclusion. And even when you’ve reached a conclusion, continue reassessing it as new information becomes available.

Try out the following tips. You should be able to find one or two that work well for you.:

• Try to identify when you’re likely to experience confirmation bias,
• Focus on trying to find the right answer rather than on proving your belief is right.
• If you find out you’re wrong, focus on what you’ve learned from it.
• Don’t let emotion dictate how you process information.
• Dedicate enough time and effort to processing information.
• Diversify where you get your information.
• Consider the source of information and ask yourself if bias might have occurred.
• Engage in debate that challenges your views and exposes you to information you might otherwise avoid.
• Avoid coming to a conclusion before you’ve had a chance to analyze information.
• Go through the discipline of articulating your stance and the evidence that you base it on.
• Force yourself to think of reasons why your stance might be wrong.
• Come up with alternative stances, and the reasons they might be right.

Confirmation Bias in the Boardroom

Confirmation bias is an individual phenomenon, but it also takes place within groups. In the boardroom, it can lead to behaviors such as dismissing others’ opinions, interrupting discussions, holding side conversations, and holding back from sharing ideas. Since people tend to overvalue the opinion of those who agree with them, directors may have a hard time pushing against the tide.

It can also produce and sustain Groupthink, where decision-making is hindered by the belief that harmony and group coherence are crucial to success. Groupthink inhibits diversity of thought and limits the expression of opposing viewpoints. It can lead to decisions based on incomplete or biased information – decisions that result in poor outcomes.

Confirmation bias can lead to overconfidence in the outcome that directors are hoping for by causing them to overvalue evidence that supports success. Directors who were strongly in favor of a new strategy can find glimmers of positivity in almost any report from management. On the other hand, confirmation bias can also confirm a negative view - the director who was against the strategy from the start may see only the bad news.

The more the board becomes entrenched in its beliefs, the greater influence confirmation bias has on directors’ behavior. It even impacts director recruitment. The result is that directors become trapped in an echo chamber where biased thoughts prevail without being challenged.

Here are some symptoms to look for:

• The board seems to arrive at a conclusion before a topic is even discussed.
• Directors are bounding toward the launch of a project, initiative, or strategy without a concerted effort to focus on the uncertainties and potential problems.
• Directors use analogies to their past experiences to support their decisions, as opposed to insights, evidence, and facts.
• Many board members share similar pasts, worldviews, and thought processes.
• Concerns aren’t shared out loud. Instead, they’re set aside for In Camera sessions.

What Can the Savvy Director Do?

Fortunately, there are a few ways to reduce the influence of confirmation bias. These methods generally involve trying to help people overcome their tendency to focus on confirmatory information and reject challenging information, while encouraging them to conduct a valid reasoning process.

Following are a few techniques to consider:

• Explain what confirmation bias is, how it affects us, and why it can be a problem.
• Make it so that the goal is to find the right answer rather than defend an existing belief.
• Try to minimize the unpleasantness people experience when they find out they’re wrong.
• Encourage people to spend enough focused time on considering information.
• Encourage them to avoid coming to a conclusion too quickly.
• Ask them to explain their reasoning.

When it comes to the board, the importance of group dynamics — the human element – can’t be overestimated. Each director brings their own habits, preferences, beliefs, and biases to the boardroom. Taken together, all of these individual factors have a huge impact on the board’s culture. When directors are willing to take a hard look at the biases on their own boards, it bodes well for overall board effectiveness.

To combat confirmation bias, here are some practices you might suggest to your own board:

• Ask management specifically about the strategies that they considered and dismissed, and why.
• Recruit a director from a completely different industry to challenge preconceived notions.
• Have one advisor present arguments in favor, and another present arguments against.
• Have directors present dissenting views, even if they don’t hold that view.
• Ask internal audit to provide data-based challenges to the prevailing view.
• Highlight diversity of industries, backgrounds, and roles in the boardroom.
• Designate a devil’s advocate to contest preconceived beliefs.
• ?Reconsider strategies that were previously dismissed.
• At the beginning of a discussion, have each director propose their ideas.
• At the end of the discussion, ask directors to share key points that weren’t previously touched upon.

Your takeaways:

• We’re all prone to confirmation bias. It causes us to look for information that supports our beliefs and reject conflicting evidence.
• Even in the face of new evidence that challenges our beliefs, we tend to reject it and strengthen our support for our original stance.
• In the boardroom, confirmation bias leads to dismissing others’ opinions, interrupting discussions, holding side conversations, and holding back from sharing ideas.
• To counter the confirmation bias, look for diverse sources of information and try to avoid reaching a conclusion too early.
• Boards can mitigate the effects of confirmation bias with practices such as appointing a devil’s advocate, having management present strategies that they considered and rejected, and encouraging diversity of thought among directors.

Resources:

• Unpacking board culture: How behavioral psychology might explain what’s holding boards back. PwC Governance Insights Center. February 2022. ? 2022 PwC.
• The Confirmation Bias: Why People See What They Want to See. Itamar Shatz, Ph.D. ? 2024 Effectiviology.
• Why do we favor our existing beliefs? ? 2024 The Decision Lab.
• Bias in boardroom decision-making. Richard Sheath. ? 2023 Independent Audit Limited.
• How to Avoid Confirmation Bias in the C-Suite. Tasnim Ahmed. Escalon. April 2021.
• What is Confirmation Bias and How to Reduce it? ? 2019 Economist Impact.
• Overcoming Confirmation Bias. Bryce Hoffman. Forbes. April 2023.

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Thank you.

Scott

Scott Baldwin is a certified corporate director (ICD.D) and co-founder of DirectorPrep.com – an online membership with practical tools for board directors who choose a growth mindset.