Home > Uncategorized > Confirmation bias in Business.

Confirmation bias in Business.

Last time we looked at how your business decisions may be affected by the availability bias, if you’re wondering what I’m speaking about, just click here to read the article on Availability bias. Now let’s look into a completely different perspective when it comes to bias, I’m talking about confirmation bias.

So when was the last time you were in a conversation with your boss and found it hard to convince his/her approach to a problem is wrong?

He/she would tune you out when you talk about things that aren’t in line with and what they think. But here’s the interesting part, as soon as you talk about what they know to be true, they’re all ears. Their pupils dilate, their posture changes, and they give you their undivided attention. It’s the confirmation bias at work.

Master and the dog

A mind of a human is divided between a master and his dog, while we often think of the master as the one in control of the dog we often forget that the master is only the guide. We usually call our master consciousness and our animal unconsciousness and it’s the divide between them that makes us think we are right when we are actually wrong. Guess what, it doesn’t matter how smart you are or if you’re liberal or conservative you are first in foremost a human, which means that you are also biased toward yourself, your beliefs and your values. Bias is simply when we think in a way that leads us to be wrong, it’s unavoidable and hard to recognize. There are literally hundreds if not thousands of different types of bias, but one of the most familiar to us is called confirmation bias.

Confirmation bias is our tendency to search for and favor all information that confirms our beliefs while ignoring or devaluing information that contradicts our beliefs.

Snowball theory

Ok, let’s take an example, Climate crisis is one the most debatable topics among the politicians, we often see politicians deny the effects of the climate crisis and only present the facts that support his/her claim, it doesn’t necessarily need to be a single person that we are talking about!

If your an entrepreneur or an investor or your job requires you to make important decisions every day this could be pretty dangerous. Let’s say a guy comes up with an idea for the “next big thing” so he asks his team to conduct market research to explore its feasibility. The team then conducts surveys, focus groups, and competitive analyses with this in mind. Do see how there is confirmation bias in this scenario?

He’s using market research as a sham to confirm his preconceived beliefs about his idea. He’s not letting data do the talking at all. Next, the team is launching into the product development process as for their boss’s requirement. As a result, the questions they craft for their research will likely be biased to give him the answers that he wants. While this is a hypothetical scenario, it’s all too common for companies to do this today.

As business leaders and decision makers, how could you avoid such costly mistakes? I highly recommend you to look into the numbers before making a decision. If your collecting data, what your collecting and how you’re measuring them really matters. Let’s say you’re about to take a survey on your idea to a solution, the results of the survey will be the outcome of what exactly you wanted to measure. This does not just revolve around the top management decisions in an organization, but also could be seen in a basic recruitment decision. An executive in HR might give a softball question, just because he/she likes the candidate and end up giving the job to the candidate not on the basis of his/her suitability but as for the recruiters wish, this results in high labor turnovers.

Unfortunately, we all have confirmation bias as humans. Even if you believe you are very open-minded and only observe the facts before coming to conclusions, it’s very likely that some bias will shape your opinion in the end. It is difficult to combat this natural tendency. On contrary, we still could reduce the effect of this bias using independent perspective or even AI-based tools that give the outcome based on just the data. Beside you as a leader questioning yourself in order to be more rational, these tools could also help us see the bigger picture with facts before we make a million dollar decision.