What You Need To Know About Cognitive Biases…

…that Could Make or Break Your Business Success,

Your Personal Happiness, or Your Entire Life

Every thought you have, every decision you make, every conclusion you draw – as well as your personal values, your moral positions, and your senses of love-and-hate, right-and-wrong, good-and-bad that essentially define you – are all partly the result of one or more cognitive biases. And these biases are ones that you’re probably not even aware of.

Most people have a good understanding of social biases – those related to race, gender, age, or lifestyle. But very few have more than a superficial understanding of the broader variety of purely cognitive biases that affect all of our basic thought processes. There are well over 100 unique versions of these biases listed in Wikipedia, for example. And these are biases that affect your logic, reasoning, judgment, and decision-making in all facets of business and of life. Don't worry...you don't have to memorize them all; but it would be of great value to you to get familiar with a dozen or so of the most common ones.

Every human being is affected by cognitive bias. There are no exceptions. The smartest, highest-IQ people in the world are affected by bias. The richest and most successful people are. Every world leader is. Every Nobel Prize-winner is. Every doctor is. Every Supreme Court justice is. And so are you (and so am I). Every single moment of every single day of your life. Sounds a bit scary, doesn’t it?

The difference between relative success and utter peril is that some people are better than others at dealing with their vulnerability to cognitive bias. This doesn’t mean that they can completely eliminate them. But it does mean that they can significantly reduce the problematic impact of biases by consciously acknowledging them and minimizing their effects upon any given thought, conclusion, or decision that they make. The good news is, there are some excellent strategies for overcoming the negative potential of cognitive bias. More on this below.

One of the most destructive aspects of cognitive biases is that they are generally implicit. In other words, you are typically not consciously aware that they exist…let alone that they are having an effect on you. You make decisions, for example, by taking into consideration the information that you have right in front of you, but ignoring other – possibly much more valuable and relevant – information that is not that obvious or easy to access (a form of Availability Bias). In the extraordinary NY Times Best-Seller, Thinking, Fast and Slow, Daniel Kahneman coins the phrase, “What you see is all there is” (WYSIATI), which speaks to our tendency to subconsciously believe that if it’s not visible to us, it doesn’t exist – and, therefore, there’s no need to go exploring for something we don’t think can be found.

A real life example of this might be that you develop your business strategy that includes a competitive analysis. You regard your competition as all those firms in the marketplace who currently sell products or services that might displace yours. But you fail to consider that future new entrants into the marketplace are also a threat. Some are “non-competing” firms that do exist, but are in the process of developing new, competitive products. Or others that are acquiring such offerings through some sort of M&A or strategic partnership. Or others still that don’t even yet exist, but will very soon. 

Your constant vulnerability to cognitive bias does not mean you’re wrong about all of your decisions in life. But it does mean that you could be wrong. And of course you could be very wrong. Even by your own standards. And this “wrongness” could be anywhere from slightly, to radically, off of your true north principles. The point is, you simply don’t know if, or how, hopelessly na?ve or wrong you are, at any given time. As a society, we tend to over-value confidence; ironically, it is this very confidence that suppresses our ability to even consider alternative ideas, resources, or points-of-view…or that we just might be wrong. Indeed, a healthy dose of humility is precisely what we need to regularly embrace.

So, what’s one to do? As mentioned before, there are strategies for countering the effects of cognitive bias. The concept of debiasing is getting a lot of attention lately. There are three basic approaches to debiasing: incentives, nudging, and training. Incentives provide an individual’s motivation for changing their (cognitive) behavior. Nudging – or providing some sort of external stimulus to either remind or guide an individual’s behavior – is also being used a great deal in organizational psychology (see McKinsey interview with Nobel Prize-winner Richard Thaler on Nudging and Debiasing). And training, of course, can include expanding an individual’s knowledge of not just what various types of cognitive biases are, but also various skills to apply for avoiding or countering them.

Interestingly, attempts have been made at leveraging each one of these approaches in the past, but the majority of these attempts have largely failed – especially at sustained change in the cognitive behavior that would effectively counter biases. However, new evidence points to the success in applying all three of these simultaneously. And that is the fundamental principle behind Stanford University researcher, BJ Fogg’s Behavior Design model. This model can be expressed in the following relational function:

B = m · a · p

…where B is the desired behavior, m is the sufficient level of motivation, a is an individual’s ability to do the behavior, and p is a prompt, or trigger to remind the individual to “do the behavior now.” Fogg notes that the only way a behavior happens is when – and only when – all three of these conditions are met simultaneously. Remove any one of them, and the behavior is significantly less likely to happen. Include all three together appropriately, and the desired behavior will happen. And, yes, this applies to cognitive behaviors as well as to physical actions or other more salient forms of behavior (such as speaking, writing, “body language,” etc.).

The fact that such biases can be countered reliably is a game-changer for many important walks of life. In an earlier article, I mention that cognitive biases play a major role in leading to diagnostic errors in medicine, which result in tens-of-thousands of deaths per year. It stands to reason, then, that effective debiasing of physicians and other relevant allied health professionals could result in fewer deaths and patient harm, as well as millions of dollars saved via reduced medical malpractice claims. But think about challenges in business where cognitive biases may be affecting the investment decisions being made by corporate executives in M&A deals, as well as choosing which projects to fund or not. Here, billions of dollars in loss or gain may be riding on such crucial choices. On the smaller side of business, the entrepreneur who needs to make extremely important decisions on strategy, product development, hiring, timing, pricing, sales and marketing, and so forth are facing biases that could cloud their judgment and mean the difference between financial success and a slow, painful degradation of their livelihood.

Within a social context, think now about how extraordinarily divisive much of our country – indeed the entire world – has become, politically. The levels of polarization are so extreme that we are witnessing behaviors today that would have been unheard of years ago. The good and the bad news is, that whether you’re a liberal or a conservative, a Democrat or a Republican, a socialist or a capitalist, chances are you’re deeply impacted by multiple cognitive (and likely social) biases right now. I realize this may be a universally unpopular thing to say. Yet it seems everyone thinks “the other guy” is wrong, evil, or (at best) mentally deficient. But what if none of the above is true? What if we are all being impeded in our judgment because of cognitive biases that lead us to believe that this “either-or” mindset is the only existing construct? What if there is the possibility that an entirely new framework for social and political civility might exist – but we just don’t know that it does, and thus have never had the inclination to explore, or apply, it. What if both sides could be right? “How could that be possible,” you may ask. Well, it could be that each side could be “right”…but just not be complete. In other words, their “rightness” is overly contextualized (via one or more cognitive biases), and as such might not fit in with the other side’s worldview…at least not in all circumstances. I will not dive into this topic in too much depth here, but I invite anyone who’d like to learn more about this to explore the concept of Polarity Thinking, as well as the concept of “Both/And” Leadership (as illustrated in this HBR article).

Okay, I’m convinced that cognitive biases are something I really do need to worry about; but how do I go about getting de-biased? 

The good news here is that BJ Fogg himself has created a methodology for mobilizing the behavior design model described above. This methodology is called Tiny Habits? and he has just written a book about it: Tiny Habits?: The Small Changes that Change Everything. It is set to be published by the end of 2019 (yes, you can pre-order it; no, I don’t get any royalties if you do). 

Tiny Habits is not exclusively about affecting your behaviors related to cognitive bias; however, it most certainly has been successfully applied to them. You simply need to add the context of cognitive bias structures, conditions, and the real-life scenarios in which to apply this methodology. Because I have been working with BJ Fogg and his team for well over a year now, I have taken this same methodology to a new level in creating a coaching service called The Innovation Habit – a 12-week curriculum that addresses the very same principles used in the innovation process that are relevant to combatting cognitive biases (in another prior article, I explain exactly how cognitive biases are among the 7 Errors that Destroy Innovation). 

About the Author:

Charlie Garland is an expert in creating tools, models, and methods that help develop an individual’s innovation capacity. He is also a Tiny Habits? Certified Coach, and in the process of becoming a Tiny Habits? Master Coach. Charlie collaborated with both BJ Fogg’s Behavior Design Model and his Tiny Habits Methodology to create TheInnovationHabit.com, a coaching service and 12-week curriculum designed to make innovation second nature?. He also co-developed a special innovation tool and method to help physicians overcome cognitive biases and make fewer diagnostic errors: CubieDx? was created and provided to all 500 attendees of the Diagnostic Errors in Medicine conference held in Washington DC, in early November, 2019.

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