Repairing Cognitive Biases. Look at More Than Just the Finish Line.
Blog Posts:Mu Sigma
Published On: 12 February 2015
As human beings, we are blessed with many cognitive abilities, but along with these abilities come cognitive biases which lead to inefficient decision making. Daniel Kahneman, in his remarkable work on cognitive biases, talks about a hundred such biases that human beings possess. In this post, we highlight how attribution bias and recency effect both affect our decision making.
Let’s start with a question about sports. How often do you relish the finish of a close game?
That last strike that resulted in a brilliant goal in a soccer match
That amazing last second basket in the basketball game
Those critical 30 runs of last 10 balls in a cricket match
But do we value the events that immediately precede the flourishing finish?
How mid-fielders spread the opposition to make the last goal possible
How a small forward set a screen, creating just enough space for the shooter
How middle-order built the foundation for attack in the final overs
These instances point to the fact that we often wrongly attribute all value to the finish (or finishers), and not give enough credit to the events ― or plays ― that led to the result. Successful coaches are aware of this bias and have developed cognitive repairs by focusing on combinations of plays rather than just an individual play. This in no way suggests that finishers aren’t vital to wins, just not as important as we often make them out to be.
Such cognitive biases affect decision making in business as well. Decision makers tend to split larger problems into individual problems, but in doing so, make inefficient investments. These ill investments are mostly based on biased attribution of returns, disregarding the effect of small, seemingly disconnected decisions, and the role of interactions of these decisions on the final outcome. For instance, there are many such examples where marketing channels are given more-than-necessary credit for sales, managers given inordinate credit for their team’s success, and most recent decisions given disproportionate attribution for favourable outcomes.
Another important learning from sports finishes is that they are not always the same. And that is the beauty of the game: mid-fielders can score goals, defenders can score baskets, and openers can finish matches. Similarly in businesses, seemingly insignificant decisions can sow the seed for transformational outcomes in time.
We at Mu Sigma believe that the interactions between business problems are often more interesting and valuable than the individual problems themselves and can be solved by a combination of data analytics services and data analytics platforms. We have developed cognitive repairs for ourselves and our clients to most closely attribute the returns to the right investments. Interdependency analysis (muIDA) is one tool that we use as a cognitive repair, to:
Harmonize the mix of descriptive, inquisitive, prescriptive, and predictive analytics when looking at a specific problem set.
Learn from the evolution of problems solved in the past and see a bigger picture in the interconnected problem space.
Accurately attribute the benefits of investments ― by not just looking at disjointed analyses, but by letting a real story unfold.
Let us know how your business recognizes the cognitive biases, and what it does to repair them in pursuit of improved decision making.