Founders Beware: Confirmation bias

Confirmation bias has proven to be extremely harmful: decisions are made without balancing the ‘going for’ with the ‘going against’ views. The proverbial “pros and cons”.

The financial costs are twofold: the cost of the bad decision plus the cost to undo it.

Confirmation bias is the search for information that backs one’s point of view while disregarding all the information that opposes that point of view. The colloquial ‘cherry picking’ can describe it well: the act of taking the most beneficial items from all the available options.

It can also demotivate teams. Because confirmation bias from a founder drives decisions with incomplete information, they are low-quality decisions. And the teams know it.

Responsible teams raise a flag.

Then, they are considered “pessimists”.

They are disloyal and are met with hostility.

It happens all the time.

We’ve all been there.

What also happens consistently is that this unilateral decision-making process brings a systematic erosion to organizations. Unfortunately, there are no immediate effects of confirmation bias beyond the effect on teams. This can lead founders to believe and -paradoxically- confirm that they are making the right decisions.

By the time the fog clears, and bad results come in, people and events can be used as scapegoats.

Until founders find themselves living and re-living the past. A deja-vu loop. Something is not flowing.

It’s time to act.

How to minimize confirmation bias?

1.      The first step, as in most learning experiences, is to be aware.

2.      Gain perspective from your team to increase the quality of the decision.

3.      Only decide after the two prior steps have taken place.

To be pragmatic, set a minimum financial threshold for this framework: if the decision has an X dollar impact, it’s pros-and-cons time.

Better decisions = better bottom line.

Enjoy the profits.