No matter how rational we think we are, humans aren’t perfect. We’re born with innate biases that cloud our judgment. Thankfully, it is possible to fight these biases, provided you know they’re there, and you take actions against them. No project manager should move forward without awareness of the following five cognitive biases.
1. Loss Aversion
You know the stock picker who frantically holds onto losing stock? The gambler who keeps playing in order to “break even?”
This is loss aversion, an effect that was first demonstrated experimentally by Daniel Kahneman and Amos Tversky. This effect has been tested experimentally many times. Put simply: losses affect us twice as much, psychologically, as gains.
Why does management insist on “sticking to the game plan” when projects spiral out of control? Why do we keep dumping more resources into strategies that keep failing to show quantitative results? It’s because human beings are biologically programmed to take bigger risks to avoid a loss than we would ever be willing to take for a win.
“We’ve done it this way for too long. We can’t turn back now.”
This also works both ways. Loss aversion causes us to reject innovative ideas with potentially big payoffs because the risks seem too big.
We need quantitative risk analysis. Without it, all projects eventually fall victim to loss aversion.
2. Status Quo Bias
We humans fear change.
Nobody likes to admit it. There may even be a few of us who deliberately challenge ourselves to confront this fear. But nearly everybody has this fear, and the vast majority of us let it rule us.
Status quo bias has repeatedly reared its ugly head under the lens of “the reversal test.” In this simple test, you ask half the people what they would think if a certain parameter were increased, and half of them what they would think if it were decreased. If both groups report that the change is bad, you’re staring status quo bias in the face.
Status quo bias is what keeps consumers from even considering the possibility that your product could improve their lives. It’s at the root of the stubbornness that prevents management from adopting new and innovative techniques like Agile.
Without acknowledging status quo bias, the gears of project management ultimately grind to a halt. You fail to adapt to changing expectations, environments, and resources. You can only fight this bias by looking at the state of affairs with fresh eyes. This is one reason why it’s often helpful to bring in outsiders.
3. The Optimism Bias, Naive Cynicism, and the Negativity Bias
These three innate biases affect the way people see themselves and the world around them.
The optimism bias might sound like a good problem to have, and one that most people probably don’t have, but quite the opposite is true. Most people suffer from it, and it impairs rational thinking. It biases us toward believing that risks don’t affect us the way that they affect others. It’s why smokers think that cancer is only a risk for other smokers, and why project managers think that going over budget is something for other, lesser managers to worry about.
On the flip side, we have naïve cynicism. It has showed itself in studies analyzing everything from married couples to gamers. On average, partners fairly attribute about half of the good events and half of the bad events to themselves. Unfortunately, most people expected their partner to blame them for most of the bad events, and take credit for most of the good ones. In short, we expect others to be more egotistical than they really are. This breaks partnerships, disrupts synergy, and lies at the root of a culture of blame.
The negativity bias clouds the way we see the world. The brain is designed to pay attention to, remember, and articulate negative events more easily than positive events. Positive experiences need to be held in the brain for about twelve seconds before they can be transferred over to long term memory. Negative experiences make the jump almost immediately. A professor of communication at Stanford, Cliff Nass, advises managers to always praise after criticism, never before, because negative emotions actually activate our brain’s memory center.
In short, most people think they are at less risk than those around them, they assume others are out to blame them and take credit from them, and they have a natural tendency to remember negative events more easily than positive ones. If we don’t take action to fight these biases, they can do serious damage to morale.
4. In-Group Bias
In plain and simple terms, this us “us versus them.” It’s why we make excuses for the negative actions of politicians in our own political party, and become outraged at negative actions of the other party. It’s why the sales and marketing teams will take sole credit for revenue, and it’s why engineers and accountants are at each other’s throats.
While very little can be done about the bias itself, management can be somewhat successful at expanding the size of the in-group. Furthermore, it’s been shown that this bias is strongest when people perceive a threat. By minimizing the perception of threats, changing incentives, and fostering a “brand culture,” management can fight the problem of in-group bias.
5. The Bandwagon Effect
In the 1950s, Solomon Asch conducted an experiment. He showed participants a series of lines labeled A, B, and C, and he showed them a fourth line with no label. Then he asked them whether that line was the same length as A, B, or C. But there was a catch. They were asked to do this after everybody else in the room gave an incorrect answer.
Only 1 in 4 of the people could get the answer right.
This was staggering, because without the influence from everybody else in the room, people only got the answer wrong 1 percent of the time.
This has come to be known as the bandwagon effect, and it kills corporate meetings. The common advice not to criticize has been shown in many experiments to be counterproductive. Brainstorming groups that are advised to debate and even criticize routinely come up with more, higher quality ideas. Ironically, permission to criticize allows people to feel more comfortable in the minority, and can help combat the problem of the bandwagon effect.
Keep these biases in mind, and you’ll already be ahead of most of your competitors. Ignore them at your own peril.
Think about it!
About the Author: Mary Prescott is working as a community manager at WorkZone – A web-based project management software company. She is @MaryP_WZ on Twitter. When she’s not working, you’ll find her reading fiction or hiking with her dog.