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On choice-supportive bias and the need for paranoid optimism

· Agile Zone

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In cognitive science, choice-supportive bias is the tendency to view decisions you have made in the most favorable light. Essentially, we are all hardwired to subconsciously reinforce decisions we have made. We tend to retroactively ascribe positive characteristics to our selections, allowing us to actually strengthen our conviction after the point of decision. This is why we become more resolute in our positions after the initial choice is made.

In corporate culture, this is a powerful driver behind corporate conviction. But in rapidly-shifting landscapes, it can be a dangerous mindset. Consistently finding reasons to reinforce a decision can insulate companies from other feedback that might otherwise initiate a different response. A more productive mindset, especially for companies experiencing rapid evolution, is paranoid optimism.

The need for choice-supportive bias

Choice-supportive bias can actually be a powerful unifier in companies for whom the right path is not immediately obvious. Throughout most of the high-tech space, strategic direction is murky at best. Direction tends to be argued internally before some rough consensus is reached. But even then, the constantly changing technology that surrounds solutions in high-tech means that it can be difficult to stage a lasting rally around a particular direction.

Failing some rough consensus, companies run the risk of fracturing into various constituencies, each believing in their own solution to whatever strategic imperative exists. Without a cognitive device with which to naturally unite, the dynamic can turn toxic quickly, which makes it impossible for a strategic foundation to ever truly form.

But having a solid foundation is obviously important. So companies (and individuals) will tend to find reasons to support their decision. They see themselves in analyst reports. They hear their words in customer commentary. They envision their strategy with every turn of the numbers. Every data point suddenly lines up to support their point of view, which allows companies to talk with conviction about their strategy. Internally, people can align around the supporting data, and the company can move forward as a unified entity.

Indeed, choice-supportive bias is perhaps more than powerful—it is absolutely necessary for high tech companies to make progress.

Where things go wrong

The challenge with constantly finding reasons to agree with yourself is that you miss all the reasons not to. It becomes easy for companies to become dismissive of their competition. They are idiots over there. I can’t believe they are following that strategy! Or maybe you think disparagingly of customers who pursue other avenues. They just don’t understand what is really going on.

However it manifests itself, choice-supportive bias causes individuals and companies to write off data that otherwise would be compelling. In fact, psychologically, if the very same data was seen just moments before the decision was made, it might be compelling enough to act on. But once the decision is taken, our collective cognitive selves don’t allow us to see the information in the same way.

If a decision is certainly the right one, this is actually ok. But rarely in business are decisions correct or incorrect in absolution. There is nuance. And things change as competitors make moves and technology evolves. What was a good decision a few quarters ago might no longer be the best path forward.

Choice-supportive bias and sunk cost

The situation gets even more challenging to handle when you consider sunk cost. Sure, once a cost is sunk, it ought to be gone. In theory, most leaders understand this. But it can be terribly difficult to walk away from a sizable investment. Most companies lack the collective discipline to do so even when the individuals know it has to be done.

So imagine that you have made a decision. Your company has spent a few quarters and hundreds of man-hours in pursuit. And on top of all of that, you are all cognitively looking for ways to reinforce the decision. Is it that hard to understand why companies continue to pursue ideas that are clearly not going to pan out? It isn’t that the individuals are incapable. Rather the individuals are fighting against their collective hardwiring.

Paranoid optimism

It is useful for companies to be optimistic. Seeing the world lining up in support of your ideas gives people the boost they need to continue pushing forward. In the absence of progress, people can quickly become discouraged, which saps all energy out of the system. There is absolutely a need for optimism in the work place. But balancing that optimism with realism is critical for companies who must navigate shifting sands to deliver sophisticated outcomes to their customers.

It could be that the right disposition for companies is a mix of the optimism that comes naturally with any decision and the paranoia that drives skeptics. You want to be able to rush headlong in pursuit of some outcome while staying connected enough to the outside world to adjust course if you need to.

This means that you need to find data that supports your hypothesis and then question it aggressively. Are the customers only telling you what you want to hear? Are the technologies actually being adopted by the market? Do the market trends really support your grand vision?

Bulls and bears

For every bull, you need to manufacture a bear. Because we are cognitively predisposed to being bullish, this means you have to explicitly create the bear conversation in your company. The easy way to do this is to target the skeptical people in your organization and allow them to be themselves. But in doing so, you run the risk of discounting their feedback because they are known naturally as skeptics.

A more powerful approach is to force the bulls to play the role of bears. Explicitly playing each side allows individuals (and ultimately the company) to experience the data from more than one perspective. And of course, use external sounding boards to the extent it is practical. Having not been complicit in the decision, they are free from cognitive bias.

The bottom line

For any of us to throw ourselves into pursuing a strategic direction, we have to believe that direction is correct. It is absolutely critical that we see confirmation in the world around us. But allowing that natural tendency to keep us from questioning everything keeps companies from re-evaluating decisions. Companies are not blind because the individuals are not talented; they are blind because there are powerful psychological dynamics at play that keep us all from seeing that which we must see the most. By deliberately cultivating a culture of paranoid optimism, companies can force themselves to constantly be aware of their surroundings without succumbing to the inaction that comes with highly skeptical environments.

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Published at DZone with permission of Mike Bushong, DZone MVB. See the original article here.

Opinions expressed by DZone contributors are their own.

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