November 1, 2011

Confirmation Bias in Business

You wouldn’t buy a business or make a big investment without taking the time to investigate the facts and circumstances relevant to your decision, right? In business we perform due diligence in all kinds of transactions. We expect all the cards to be on the table, and we’re rightfully upset when important details are deliberately concealed. But all the diligent fact-finding in the world won’t stop us from concealing things from ourselves when a confirmation bias gets in the way. Also called a “my-side” bias and recognizable as “wishful thinking” in some, this is the tendency to give more credence to information that confirms our beliefs while ignoring input that would create discomfort if we really let it in.

A scientist knows he needs a built-in safeguard to protect against confirmation bias; it’s basic to any research design. A good scientist will actually spend quite a bit of time trying to disprove his hypothesis. He may even go so far as to enlist another scientist with another point of view.

So why don’t we do the same in business? Sometimes we do. We hire consultants who don’t share our presumptions, beliefs and expectations. This is a large part of the value a consultant brings; he or she is able to challenge the prevailing belief system. Too often, though, people who don’t share our biases make us squirm. We question their loyalty, wonder if they’re team players, and spin our wheels defending our existing beliefs instead of simply sitting with the discomfort and taking action, based on the facts. We might even avoid fact-finding altogether if the implications are more than we’re willing to look at. This is how business activities get backlogged or sidelined.

We’re somewhat predictable, we humans: people will opt for a pleasant thought or pleasing future scenario over an unpleasant one. And we’re also over-stimulated. Who doesn’t take in far more information and detailed bits of data than he or she can realistically process in a day? No wonder we push aside unpleasant details that conflict with our preferred view of things. It’s a problem that’s as old as the hills… or at least as old as the Greeks. As Thucydides wrote nearly 2500 years ago: “it is a habit of mankind… to use sovereign reason to thrust aside what is not fancied.”