In my new course for executives and intelligence analysts, How to Avoid Strategic Mind Traps, I’m examining the categories of cognitive bias that plague intelligence analysts and the decision makers that they serve. In yesterday’s post, we looked briefly at social bias, the difficulties created by the ways human beings organize themselves, establish rank and authority, share information, and more.
This second category, memory bias, deals with the mind itself. As much as we hate to admit it, our brains have the potential for genius, but just as much potential for what the kids are calling total fail. We continually shape our narratives in three directions: back toward the past, down in the present, and ahead toward the future. By shape, I of course mean distort. And for these reasons, we need to be aware of how memory bias can weaken our decision making powers and send us down the wrong path.
Memory bias on display in the boardroom
Despite our conceit, our minds are far from perfect when it comes to accurate recollection of events, as we tend to prefer gauzy, imprecise, self-serving narratives to cold, fact-driven stories of what happened. This might be OK when we’re thinking about going to a high school reunion, but it is much riskier when formulating, say, nuclear non-proliferation policy.
As such, here are a few memory biases to look out for in the field:
Good Ol’ Days Bias
“Everything is terrible compared to when I was younger. (when mortgage rates were 14% APR, violence was 35% higher, and the Russians had nukes trained on us.”
Good Ol’ Days bias is the assumption that the past was easier and more positive than today. This is especially prevalent in politics when people long for a “simpler” time that was, when compared to actual statistics, considerably more complex, dangerous, and full of calamity.
“Of course we knew that housing was a bubble back in 2007. Everybody knew that and we warned against it, kinda.“
Hindsight bias is the tendency to filter past decisions through current understanding, assuming greater wisdom and analytical skill that we really possessed. This bias keeps us from appreciated what has changed in the intervening years, and how our decisions have become more sophisticated.
“Yup, I just made $200 at the craps table. I have a system and it’s unbeatable!”
Self-serving bias is the human tendency to overstate the role of our own skill in positive outcomes and to under-appreciate the role of luck.
This is particularly on display in business executives who saw revenue growth from the post-World War II economic expansion and the Baby Boom as a case of brilliant strategy alone.
“This company has always been global in its thinking, despite being headquartered in Iowa with 99.6% of executives coming from the United States.“
Consistency bias is the tendency to mis-remember that our past beliefs and actions closely resembled the ones we have today. We downplay the amount we have changed as individuals and as an organization, and project our progress back on our past selves when remember how we made decisions.
These are just a few of the social biases we’ll be covering at the International Competitive Intelligence Conference in Bad-Neuheim, Germany on April 22, 2016.
In our next preview, we’ll be covering decision biases.