Business leaders urged to tackle biases in organisational change
Business leaders are being encouraged to examine the cognitive biases that can influence decision-making, particularly in the area of transformation and organisational change. Dan French, Chief Executive Officer of Consider Solutions, warns that biases often play a pivotal role in committing companies to strategies that may prove difficult to execute or deliver limited returns.
Cognitive bias impact
Cognitive biases or mental shortcuts are common in both personal and professional contexts. French highlights the issue of focusing too narrowly on the end value of business projects, without full consideration of how the time required to achieve results affects return on investment (ROI). Financial leaders can often overlook the added value generated by faster returns.
French points to elapsed time as a critical but underestimated factor. "The time taken to deliver future value is a function of that value itself and, for example, $10 million in achieved, crystallised P&L benefit in 3 months is worth a great deal more than $50 million in 18 months' time," said French.
Common organisational pitfalls
French identifies a set of ten common cognitive biases: confirmation bias, in-group bias, self-serving bias, availability bias, fundamental attribution bias, hindsight bias, anchoring bias, optimism bias (including its flipside, pessimism bias), the halo effect, and status quo effect. These instincts can create unintended consequences, particularly under stress or time pressure.
"We all suffer from cognitive bias - especially in our attitude to business change, technology, processes and people - and it gets worse through stress and pressure and leads to decisions with unintended consequences. A great example is our current obsession with key performance indicators and expectations and the notion that you can't manage what you can't measure," said French.
Challenging assumptions
To address these biases, French advises a more deliberate approach that prioritises understanding the underlying reasons and challenges before defining the methods or processes for change.
"We should be concentrating on the Why and the What, before the How; winning the hearts and minds of stakeholders and process communities involved first, plus engaging all our operational leaders in understanding the real challenges and root causes, as well as potential opportunities, approaches and solutions. We should also be asking if we are measuring the right things," said French.
Inviting multiple viewpoints and interpretations is also key, he notes, since collective input helps dismantle ingrained biases and encourages more robust problem-solving.
Changing habits
French acknowledges that overcoming entrenched cognitive biases requires deliberate effort and self-discipline. He stresses that meaningful change comes not from quick fixes but from forming better business habits over time.
"In effect it's all about forming new and better business habits, but remember it typically takes between 21-90 days disciplined effort to create a new habit. We also need a clear plan - what exactly am I going to do and what am I going to stop doing, from a behavioural perspective?" said French.
He further emphasises the importance of daily routines and personal accountability in driving sustained improvements in decision making. "The hardest part is that we need self-discipline - that bridge between goal and accomplishment - because we need a daily cadence and we have to commit to removing shortcuts that tempt us, as well as making ourselves more accountable."
"There are no quick fixes or easy hacks, but this more measured approach does result in better decisions, more success and better team working - and having more of a focus on doing things that are thought out, rather than just natural, knee jerk reactions."
