Bias

Bias is a disproportionate weight in favour of or against an idea or thing and can be innate or learned. Biases can be cognitive, statistical or contextual. Biases should not be confused with logical fallacies, which are errors in reasoning which weaken or invalidate arguments.

Senior leaders are the core factor affecting organisational transformation, and their cognitive bias can have a strong effect on strategic choices.

Overconfidence and overoptimism are thought to be some of the most common forms of managerial cognitive bias affecting organisational transformation. Leaders with a cognitive bias for overconfidence are prone to overemphasize their own abilities, while leaders with a cognitive bias for overoptimism are prone to overemphasize their expectations of positive conditions or results in regard to the external environment.

From the perspective of organisational transformation, the cognitive biases of senior leaders should also be considered when selecting and employing the strategy, as these can directly impact the efficiency of decisions. 

Pros

  • Identifying cognitive biases enables leaders to challenge assumptions and beliefs, and can lead to better decision-making.
  • Being aware of cognitive biases helps to filter any new information through a more objective lens to improve decision-making.

Cons

  • It can be challenging to differentiate between conclusions and decisions being made on the basis of heuristics (a thinking short-cut based on an accurate representation of reality), or a bias (a thinking short-cut based on beliefs or influences).
  • While challenging assumptions and beliefs has many pros, it can also lead to endless discussions and little progress.

Recommended resources:

Think Again, Grant Adam, 2021, ISBN 978-0-593-29874-9

The Art of Thinking Clearly, Dobeli Rolf, 2014, ISBN 978-0-06-221969-5

Sage Journals, Managerial Cognitive Bias, Business Transformation, and Firm Performance: Evidence From China

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