In an ever changing business environment where leaders are confronted with every sort of barrier to success – competition, limited resources, fire drills, regulation, and so forth – there is one huge barrier to our success which we are only in the earliest stages of understanding: our minds.
The explosion of social psychology insights has been a recent phenomenon. It was less than a hundred years ago when many psychology “experts” adhered to the concept a phrenology, where a person’s personality and character could be determined by evaluating the shape of the skull. To say that humanity has come a long way since then is an understatement.
Phrenology chart. Use with caution.
Much of our insights over the past few decades have demonstrated what we humans are up against. Our brains have evolved a number of biases over the millennia and frankly, many of them were more useful for our distant relatives who had to fend off frequent attacks from wild animals, bad weather and local enemies.
The evolutionary distance between those relatives and ourselves is small. The fact that we spend more time answering email messages than our caveman forefathers shouldn’t kid us about how similarly we confront threats.
One of the differences however is the explosion of incoming information and associated uncertainty.
To help ourselves assert control in such the face of chaotic information overload, we humans consistently exhibit Confirmation Bias – the inclination to seek out and attach emphasis to information which confirm our previously held beliefs. A cousin of confirmation bias is “selective perception” – a similar habit of avoiding emotional discomfort by selecting only information friendly to prior viewpoints.
I’m always interested to hear stories with confirmation bias at play, and I recently ran across one that is a classic business blunder we might relate to. The key here is to not feel superior when you read this. These were smart people who were stuck in a confirmation loop that you may very well be in yourself right now.
The story came via the Fortune Power Sheet, and concerned a story that writer Geoff Colvin had written about Sears, which based upon recent announcements appears to be in a painful death spiral:
In early 1991, when I was doing a temporary stint as business editor of our sister magazine Time, I published an item noting that Sears was about to be overtaken as the top U.S. retailer by a company many Americans had barely heard of, Walmart. Sears was indignant and told me the article was irresponsible and misleading, and that even if Walmart happened to beat Sears in a given month, it could never overtake Sears long-term. The lines crossed the following month and never went back. Even as Sears was losing its crown, it refused to believe what was happening.
The nature of scale and dominance are different today, largely due to the importance of data. Google, Amazon (who themselves caught Walmart napping when eCommerce started, much like Walmart caught Sears) and others are sucking up so much consumer data that their dominant positions could be enlarged by a virtuous data cycle where data is absorbed, analyzed, and deployed to generate more data and greater insights.
That said, history shows that in the seeds of confirmation bias and eventual decline exist deep within these companies’ dominance.
The key here is for us to be humble and take a moment to step aside and think about how we might be committing confirmation bias to the detriment of our business teams.
It ain’t easy, but if it were, they wouldn’t need you in the position you’re in.
Good luck!
I am a business leader in the tech industry and write about leadership, innovation, and personal effectiveness. 