Are You Anchoring Your Business to the Wrong Data? (Video and Podcast)
By: Dr. Gleb Tsipursky
Tags: Behavioral Economics, Decision Making, Leadership, Pandemic, Cognitive Bias

Anchoring keeps you shackled to initial information and keeps you from moving forward. Make the best decisions to propel your company by breaking free from this mental blindspot. That’s the key take-away message of this episode of the Wise Decision Maker Show, which describes how to avoid anchoring your business to the wrong data.

Video: “Are You Anchoring Your Business to the Wrong Data?”

Podcast: “Are You Anchoring Your Business to the Wrong Data?”

Links Mentioned in Videocast and Podcast

Here’s the article on Are You Anchoring Your Business to the Wrong Data?

The book Resilience: Adapt and Plan for the New Abnormal of the COVID-19 Coronavirus Pandemic is available here

You are welcome to register for the free Wise Decision Maker Course

Transcript

Hello, everyone, and welcome to the Wise Decision Maker Show, where we help you make the wisest and most profitable decisions. Today, I want to talk about anchoring, specifically, whether you’re talking anchoring your company to the wrong data. Now, what’s up with anchoring? What is this concept? And why is it bad? Well, anchoring has to do with how we perceive information, how we hear information, and how we get attached to the initial information we hear on any topic. So any topic whether we learn about a person, or an event, or development, business trend technology, the first piece of information that we hear about the topic tends to very much anchor us and color our future impressions of this topic, it’s very hard for us to switch our perspective from this initial anchor. So what happens is that the initial piece of information, especially if it comes from our source that we trust that we perceive as credible, valuable, that it’s trustworthy, we tend to see all of this information through this lens, all the information that we’re getting through the lens of initial information. That’s why it’s especially important to be careful about the first information you hear, and to be very willing to update your mind to change your mind based on new evidence. Because most of us don’t actually this is a tendency, cognitive bias, a dangerous judgment error called anchoring. So if you’ve been watching, checking out the wise decision maker show for a while, you know, we talk about cognitive biases quite often see, these are the dangerous judgment errors that cause us to make really bad decisions, to have bad perspectives on reality to not see reality as it is, and then come to wrong conclusions, whether in business, whether in life, all of these sorts of things. So you’ve got to be very careful about anchoring. Because often, when new evidence is actually quite a bit more persuasive, objectively, you know, when you’re looking from outside, you will tend not to update your beliefs to change your mind based on this new evidence, you’ll tend to stick to what you know, it’s comfortable. That’s what our gut intuition tells us to do, to stick to what we know to our pre-existing beliefs, conceptions, information, and then not change our minds based on new evidence. So you have to watch out for this anchoring. It’s a pretty bad tendency. As an example, let’s think about this pandemic. covid 19 coronavirus, pandemic, huge, huge example of anchoring. I’ve been so frustrated with so many people who have been anchored on the initial information they received. So that’s been really bad, really, really bad. I mean, you probably know that, let’s say the Centers for Disease Control, they changed their guidance based on new evidence. So they came up with some initial guidance that said, you know, prepare for two week disruption or something like that. And, you know, don’t need to wear masks, but COVID-19 spreads mainly through touching surfaces. Over time, they changed their guidance, they said that no, you actually need to prepare for a much longer disruption than two weeks, it’s going to be much more serious, that COVID-19 mainly spreads through airborne particles, and that you actually do need masks that are very protective, especially protective of you, it helps you protect yourself when you wear a mask. And it helps protect other people from if you have COVID-19 without knowing it, because so many of us are asymptomatic. When we have COVID-19 this information, this new information. This is how science works. You get new information, and you change your beliefs. And this is how business works. You really know how hard you should work to get new information. And you change your beliefs based on this new information. Unfortunately, many business leaders don’t approach business this way, even though they should stick to their initial decision. They say, okay, we made this decision, and therefore we’re going to stick to it. That’s what makes us good leaders. That’s a terrible, terrible perspective. And that is one of the worst aspects of anchoring this really negative impact on leadership, where leaders perceive themselves as having to stick to their initial judgment. So they have got some initial information, they stick to it, even though new information causes them to change and should cause them to change their minds. And this is how really high make the biggest profit in business and how to protect your health in this pandemic. So another aspect of anchoring with COVID-19 was that there were a number of recent pandemics, that h1 f1, flu, the swine flu, all of these pandemics that had an impact in Asia, or Africa or the Ebola virus, that didn’t really have much of an impact in the United States. I mean, some impact of course, but not a huge impact, not nearly as big as COVID-19 So folks, anchored under previous impressions. You don’t necessarily anchor on the immediate thing you hear about COVID-19, you can anchor on your previous impressions of pandemics as a whole. So that’s another tendency that we have anchored on previous information we got about the topic and not changed our mind about based on new evidence, which showed that COVID-19 is clearly going to be much worse than these other pandemics. Then, of course, many leaders unfortunately compared COVID-19. To the flu, Elon musk famously compared COVID-19 to the flu, many other business leaders, as well as other leaders, political leaders, civic leaders, comparing COVID-19 to the flow. Of course, that’s a bad comparison. As we know now, I mean, many people wish really, we knew then, and these leaders had perhaps some ulterior motives for comparing COVID-19 to the flu, based on them not wanting to disrupt their business processes, and so on, which really is not a good idea. Because in the end, of course, it’s much better to face reality, accept reality, rather than hope for and wish for an optimistic outcome, which is definitely not going to come COVID-19, of course, is much more deadly than the floor, about five to 10 times more deadly. And it seems about as contagious, maybe even more contagious, more problematically, we don’t have any defenses against COVID-19. Whereas, of course, against the flu, we have a number of treatments. And we also have vaccines, which are somewhat effective. So that’s a bad comparison, even though it’s much more contagious and much more deadly than the flu. So those are some bad tendencies when comparing an COVID-19. When anchoring to initial evidence, you heard on COVID-19, whether about masks, whether about its comparison to the flu, whether previous pandemics and this is something that unfortunately, a lot of companies run into. So for example, one of my consulting clients, was a company, a fin tech company, 130 people fin tech company in Texas, which initially, the CEO and CIO on the C suite had an impression of COVID-19 is no worse than the flow, not a big deal, you know, don’t really need to prepare for any serious disruptions. And so they didn’t treat it seriously. Well, unfortunately, not treating it seriously, not instituting the kind of precautions the CDC mandated as something that really businesses should be doing led to a major outbreak in the office. And including some C suite leaders who got sick, the CEO had to go to the hospital. And numbering a couple of employees not C suite level, but older employees died was really bad. And the company got into a lot of trouble with employee morale, people didn’t have good retention. They had bad customer service, of course, because of all these disruptions. So the CEO called me, once she saw me on the podcast talking about her business leaders needed a webinar talking about how business leaders need to pivot for the covid 19 pandemic and for the postcode future. And so we talked about the situation. And I pointed out how anchoring they really should have known by me, which is when this outbreak happened, and when they saw me on the webinar and called me that there was a lot of new information about COVID-19 being much more deadly than the flow. But you really need to take these guidelines from the CDC seriously. And especially in Texas was a problematic situation, because it didn’t close in nearly timely enough manner. And three opened way too fast. And so there was a huge surge in cases. And that was pretty bad around that timeline, with May, April, May, June. So that was pretty bad. And they really should have done much more to protect themselves. So we talked about anchoring, we talked about the kind of strategies that they needed to actually improve their performance. And they went off on a good path. After that. They really had changed their program. Previously, they mandated all employees to come back to the office when Texas reopened, which was way too fast. And that’s what they had an outbreak of. And so instead of that day, rolled out and working from home, everyone who wanted to work from home could come into the office, but they discouraged people from doing so. So only people who really needed to come to office had to choose to come to the office. And that was much more helpful, helping improve employee retention, employee morale and got the company going off on the right track. So that’s the kind of problem that business leaders experience. And professionals experience all sorts when they anchor to the wrong data, whether in the pandemic or any other business development, whether they do that their product will be great in the marketplace. Despite evidence showing that it’s not great in the marketplace. There is a reason about 70 to 80% of all product launches fail because they are people who are to anchor to the initial impressions, they think the product will be good. And they tend to only look at information showing that it’s good, ignoring information that the marketplace is not as receptive to the product as you wanted. So there’s so many other tendencies in business, we’re anchoring trips folks up, you got to watch out for these tendencies. And you have to protect yourself and your business from anchoring. Alright, so this was another episode of the wise decision maker show. And I hope you found this episode beneficial. Please follow us on whatever media you enjoy this episode, wherever both videos and podcasts version, so make sure to check that out. It’ll be in the notes. So if you check me out on the podcast, the video will be noted. If you’re checking out the video, the podcast will be noted in the notes so you can check those out and follow us and the other formats as well as on your favorite formats, whether iTunes, YouTube, wherever you’ll find us across the spectrum. Please click like if you liked the episode, and please comment, we’d really love your comments. And that helps us make the show much better. Same thing for reviews, please leave a review whatever you heard and saw this episode. Of course, as always, there’s a blog with much more information about this show in the notes. So make sure to check out the blog that talks much more about the case study gives a lot of citations with the scientific evidence behind what I’m talking about, and business evidence. So check that out as well. There are a couple of books that are really relevant to this topic. One is my book called never go with your gut how pioneering leaders make the best decisions and avoid business disasters. Of course, it’s about decision making risk management change management. So check that out and then resilience, adapt and plan for the new normal of the COVID-19 coronavirus pandemic. That’s about how you adapt to COVID-19 and the COVID and the post COVID economic recovery. So check that out make sure you read it if you want to make it if you want to protect your business in the context of COVID-19 and the post COVID recovery and of course your career as well. You want to check out a free resource called the wise decision maker course. This is a free course with eight modules, eight video based modules on making the wisest decisions, check that out at disasteravoidanceexperts.com/subscribe. Alright, I hope you’ve enjoyed this episode. And as always, the wisest most profitable decisions to you, my friends

Transcribed by https://otter.ai