Board Blind Spots: 12 Cognitive Biases that can Hamper Corporate Performance
By: Christos Tsolkas
Tags: Behavior Change, Culture, Cognitive Bias, CEO, Board Of Directors

4. The Bandwagon Effect / Group Think

It’s incredibly easy to develop group think and follow the herd in tight cultures, especially when that herd is thriving and smart. Boards need to encourage systems that reward, select, and promote people who fit the culture but broaden perspectives, interests, and approaches.

They also need to be on the look-out for ideas that gain momentum because they fit expectations or goals. Hard questions and analysis are required to test assumptions. Conformity is death.

Remedies:

a. Do frequently — at least once a year — STOP & THINK. It can be a highly regenerative and creative process if well prepared. In such an approach, you challenge your assumptions and build future scenarios.

b. Invite outliers, non-conformists, even kids into a Board Meeting. They are practically not framed by any corporate culture or group norms. Let them observe and talk.

c. Play a competition “war game.” Split your Board into two groups; your company and your primary competitor. Compete against a target under a specified scenario. Being in the shoes of your competitor -even temporarily — forces you to think differently and alleviate corporate myopia.

Infographic created by the author

5. Ingroup Favoritism

It’s easy for executives, managers, and influential peers to treat people like them as unique. It’s easy to put the golden halo on those we agree with, but this creates clusters of like-minded people and gives them preferred status. As a result, those who disagree or think differently get quiet or go elsewhere. Worse, they squelch their own ideas and instincts to try and win their way into the circle.

Boards can encourage executive leadership to build teams and departments that break rather than create clusters and in-groups.

Remedies:

a. Reverse mentoring is a way to expose senior people to ideas and ways of working; they might otherwise under-value or dismiss.

b. Cross-functional moves and periodically changing hats can be another approach. The incomer always has good chances of breaking the “boys club” culture.

6. False Consensus

The hardest thing for a CEO or senior leader is getting the information they don’t want to hear or know. The easiest thing is to push, overtly or inadvertently, a point of view onto others and feel validated when that thinking gets reflected.

Just because people tell the leader that they are right does not mean that confirmation is accurate, positive, or helpful. Think of the famous tale of Hans Christian Andersen’s “The Emperor’s New Clothes.” Sometimes, they pretend they agree, but in essence, they follow their own agenda.

Created by the author

Remedies:

a. Expand the classic notion of diversity (color, gender, beliefs, etc.) into “brain diversity.”

Boards should encourage leaders to have key critical thinkers on their teams or run ideas or plans by — people they can trust to argue a different point of view or call the leader on their BS.

b. Reward the opposite opinion, timely and adequately expressed.

Stay tuned for more cognitive biases next week that can help the Board avoid blind spots.

CTdec20

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Christos Tsolkas is an Independent Business Advisor, Entrepreneur, and Author of the new book, The Gift of Crisis: How Leaders Use Purpose to Renew their Lives, Change their Organizations, and Save the World.

He has spent more than 25 years in positions of significant responsibility (general management, sales & marketing) with multinationals in the fast-moving consumer goods sector, leading senior teams to achieve high performance and change. His educational background in chemical engineering & business, and he is dedicated to continuous learning.