Growth Insights for CEOs

Decision Bias – Are You Letting it get in the Way of Growth?

Posted by Gary Fassak



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Bill Gates is one of the smartest and most accomplished people on the planet. But even he is wrong sometimes. When he first assessed the impact of the emerging Internet on Microsoft’s desktop PC based software that had made him a billionaire, he thought the Internet was a passing fad. He even wrote about it, and made sure that his company stayed focused on the PC based desktop because that is where the growth would come from. Year after year, the Internet grew and grew, and Microsoft watched, still believing it was a flash in the pan despite the geometric growth of Internet based applications. Only years later, with a new CEO, has Microsoft embraced the Internet with its Office web based product. 

Why would the smartest guy in the room, and his team, ignore the Internet for years despite evidence to the contrary? Well, it happens all the time to all of us. In our busy business lives, we have to be decisive, move forward, and make things happen. We leverage our experience and view of the business world to quickly move things along. Our ability to do that in most cases is a good thing that benefits our companies and employees. BUT, and it’s a big BUT, that bias toward pursuing our own beliefs can be a trap with very bad consequences. 

Nike learned a big lesson in its early days when it was focused solely on performance running shoes. Newcomer Reebok entered the market with comfort walking shoes. Nike, built to serve athletes, thought comfort shoes were ridiculous. Nike shoes were tough, durable, rugged, used to run many miles each day by their owners. They were not particularly comfortable, but the idea that people would wear casual exercise shoes to just walk around? Never happen. They continued in this belief year after year even as they watched Reebok’s sales climb. Their belief, based on their bias towards professional athletes, was that Reebok was just a short-term trend that wouldn’t last. As a result, Nike let Reebok gain momentum in the market and establish itself before finally realizing the importance of the “comfort” segment. 

Are you on guard to make sure your own decision bias isn’t putting your company in danger? It’s difficult to do. After all, you have been successful based on your experience and the calls you’ve made on key decisions. But ask yourself, what happens in your Company when someone is pushing an unconventional or uncomfortable thought? Maybe they are saying that competition has a great new product that your Company can’t answer. Maybe they are saying that the go to market approach that has worked so well isn’t working so well any more because competition has moved on and changed the game. What happens? Do you carefully consider their point? Or do you ignore or belittle what they are saying because it doesn’t fit your own bias? 

Airlines teach pilots something called cockpit resource management to guard against decision bias. In the early days of aviation, the Captain was king and there were a number of accidents that could have been prevented if the First Officer had spoken up, or the Captain had listened. In one case, the Captain was obsessed with a broken switch not essential to flight, and despite his crew warning him of a descending airplane, he did not listen. Today pilots are taught to speak up, to bring information and if necessary to challenge the Captain if they have information that would change the course of action. The Captains for their part are taught to include the rest of the crew in their decision-making, and to listen even if, and especially if, the input would change how they are addressing a specific issue. 

As you lead your Company, here are some things you can do to guard against decision bias: 

  1. Carefully consider thoughtful input, especially about marketplace conditions, even if it does not align with your thinking. Assume for a moment that what you are hearing is completely true, and if it is true, think though how that would impact your strategy and plans.
  1. Listen to input from unlikely sources. A key driver of decision bias is traveling in a narrow circle, perhaps a few trusted members of your leadership team, or even a few trusted customers. Their input is certainly valuable, but you need to widen the circle. Go visit a customer who is highly critical of your company. You don’t have to agree with everything they say, but they will open your eyes to an external view to balance the internal.
  1. Don’t “shoot the messenger”. The junior sales person who has yet to make their first big sale lacks the credibility of a senior leader who has “done it all.” But the fact that they are junior means they don’t carry the baggage the rest of the team does. Same as the customer, you don’t have to agree or even act on their input, but it would be worth your time to think through the implications to your business if what they are saying is true. 
  1. Do a “bias check” before launching an initiative, the same way you buckle the seat belt as your start your car. Have I considered what’s really happening in the marketplace, unfiltered, so that I’m dealing with reality?

Alan Mulally, of Boeing and Ford fame, tells a story of the first person on his Ford leadership team who took a risk and changed their decision bias based on feedback from his organization. This executive was in charge of a new car launch. At Ford at the time, launch dates for new cars were etched in stone. An executive who missed the date lost his or her job. It didn’t matter if the car wasn’t ready, it launched anyway with the resulting consumer dissatisfaction. This executive heard from a junior engineer that a key part of the car wasn’t ready. Not a safety issue, but clearly a customer issue. His bias was to act the way he always had – launch on time regardless. But this time, with a new CEO, the executive listened, stepped up at the next leadership team meeting, while his peers jaws dropped, not comprehending this new behavior, and delayed the launch until it was fixed. No one at the meeting wanted to hear about pushing back a date, but Mulally, trying to create a new culture, applauded the executive for doing the right thing. The result was a delayed but successful launch of a best seller. 

Is that executive you? Are you willing to be open to the facts of the marketplace, or your organization, willing to listen to voices inside your company that you don’t agree with or simply annoy you, and are you willing to listen regardless of where the input comes from? If you are, you will give yourself a key competitive advantage for your company.  

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Author

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Gary Fassak is a Philadelphia, PA-based CMO with Chief Outsiders, specializing in Growth Strategies, Consumer Goods & Services, Distribution Optimization, Go to Market Strategy, and Sales. Contact Gary at GFassak@ChiefOutsiders.com.

 

Topics: Strategic Insights, Customer Feedback