Cognitive Biases in the Workplace: How to Overcome Them

If you've ever seen Danny Boyle’s brilliant film about the iconoclastic Apple’s founder, Steve Jobs, there is an interesting lesson in cognitive biases. The first act establishes Jobs' obsession with the 1983 TIME Magazine story about him. Jobs believes there is a conspiracy behind the reason why he wasn’t named Man of the Year, and it was also why the cover was a drawing of a man and a PC instead of his photo.

In the third act, Joanna Hoffman (played by Kate Winslet) demonstrates Jobs' reality distortion field (RDF), disclosing that he was never in the conversation for Man of the Year. It also wasn’t a PC on the 1983 TIME cover, but a sculpture of a man and a computer (which would have had to have been commissioned months in advance, so the idea that they replaced Jobs last minute was absurd). 

This information left Jobs in shock—as if it was staring at him the whole time, yet he didn't realize it. 

Cognitive biases, explained

Israeli psychologists Amos Tversky and Daniel Kahneman introduced the notion of cognitive bias in 1972. The pair explained that humans use simple strategies or mental shortcuts, known as heuristics, to process information swiftly and make decisions given limited resources.   

There are various types of cognitive bias, as we shall see in this article, but all of them are psychological processes which are inherent in pretty much all of us as humans.

Steve Jobs’ reality distortion field is a type of cognitive biases called optimism bias. Cognitive biases influence and distort our perceptions and reasoning. The Cognitive Bias Codex categorizes and describes 180+ such cognitive heuristics, most of which you can very well encounter in your workspaces.

Cognitive biases explain why even though human brains are capable of magnificent intellectual feats, they can equally trip us up and lead us to monstrous failures. They're the reasons why geniuses act foolishly, why the smartest people can be spectacularly wrong about many things.

In the workplace, cognitive biases impact how we make decisions, interact and collaborate with others, and recognize and reward people. Unless we're aware of cognitive biases, we'll keep lying to ourselves and falling into common traps that perpetuate false judgments and misconceptions. Understanding cognitive biases is crucial in building a healthy working culture and running a successful business. 

Below we’ll look at the most common cognitive biases that can affect your team and projects; we'll look at techniques to overcome them, and how you can use digital signage to build a work environment that is free from such heuristics.

Cognitive biases in the workplace

1. Confirmation bias

Confirmation bias refers to the tendency to search for, favor, and focus on information that confirms one's preconceptions. This need to be right means we're likely to ignore or reject contradictory information. Confirmation bias results in flawed decision-making that can be costly to a business. 

An example of this might be in launching a new product based on one sided information, or using incomplete data to target a specific audience.

For example, opening a niche diet restaurant in a small town, based on limited data and personal beliefs. Or replacing a popular product with a 'new and improved' version, without considering whether the target audience would also consider the relaunch an improvement.

A high profile example of this is New Coke, which flopped for a number of reasons, one of which is that Coke execs failed to do their research correctly, and thereby challenge their confirmation bias. Their limited research suggested that people wanted a 'sweeter' cola drink, but in fact their eroding market share to Pepsi was mostly down to branding and positioning.

How digital signage can combat confirmation bias in a workplace

In a business environment, it's easy to get tunnel vision. We need to get a result, and we perhaps have experience of getting there before using tried and tested methods. But then if these methods fail, it can be a mixture of surprise and frustration.

Challenging biases isn't something you can do as a one off.

You need a process whereby the work culture nurtures critical thinking, or that encourages personal improvement, thinking outside the box or even taking on different aspects of a job from different angles.

Digital signage as a tool can be used to communicate available data, which can sometimes be the lightbulb when it comes to making decisions.

Offering talks and presentations can be a great way to introduce a different way of thinking. Whether using guest speakers to talk to your workforce, or using opportunities such as brown bag sessions which can be presented in-person or on-screen.

Or, digital signage can be simply used to display motivational reminders, remind us to take breaks or simply to think differently.

2. Dunning-Kruger effect

Psychologists David Dunning and Justin Kruger first coined the eponymous Dunning-Kruger effect in 1999. This cognitive bias refers to our tendency to overestimate our abilities and knowledge while simultaneously underestimating the abilities and knowledge of others. It's like thinking you're the smartest person in the room when, in reality, you might have a lot to learn.

The belief that we're smarter than we really are, combined with the inability to accurately recognize and correct our poor performances, can lead to grave mistakes and frustrating situations at work.

The Dunning-Kruger effect works both ways. Real experts tend to underrate their abilities. Since they know so much about their chosen subject, they can see the gaps in their knowledge and detect when they make mistakes (even if those mistakes are imperceptible to non-experts). 

An example of the Dunning-Kruger effect is a colleague who thinks they're brilliant and confidently tells everyone so. But behind the curtain, other people have to pick up the slack and fix their mistakes.

It's dangerous for an organization to promote people like this to leadership positions as this can quickly breed bad decision-making, resentment, and unfair situations, causing poor team collaboration, low employee engagement, and ultimately business failure.

How digital signage can combat the Dunning-Kruger Effect in a workplace:

By providing a steady stream of feedback and reminders, corporate digital signage can help keep egos in check.

Whether it's highlighting team accomplishments, sharing constructive feedback, or displaying examples of excellence from within the organization, digital signage can help serve as a gentle reminder that there's always room for growth and improvement.

3. Sunk cost fallacy

Often referred to as throwing good money after bad, the sunk cost fallacy describes our tendency to increase investment in a decision or continue an endeavor based on previously invested time or resources, even if the current costs outweigh the benefits. 

An example of this is when someone takes a chance and invests in a new project or business that then doesn't go as well as they expected. Maybe there are some early successes that convince them that they could do well, or they have been given bad advice. Even when it's clear the project has failed, they keep putting more money and resources in it, convincing themselves that they can salvage the situation.      

Another example is a company that spends millions of dollars on a new product that bombs. Instead of scrapping that product and trying something else, the company continues to run it in the hope of getting some returns on their initial investment.

How digital signage can combat sunk cost fallacy in a workplace:

While the sunk cost fallacy usually affects the senior or financial managers of a business, it can be useful to give your workforce the ability to be open and critical of the business processes. You might not necessarily want to give the entire workforce a say in the financial planning of a business.

But giving employees the ability to have their say on the current state of the business, or their feedback on the processes around a business or product, can both encourage critical thinking and ensure that business managers are accountable for the broader results of their decisions.

There is nothing quite as sobering as multiple people asking whether a specific strategy isn't just a complete waste of money.

4. Optimism bias

We opened this article discussing Steve Jobs' reality distortion field and how it blinded him to an obvious truth. This was an extreme form of optimism bias, which refers to our mistaken belief that we're less likely to experience negative events and more likely to attain positive outcomes.

Nobel Laureate Daniel Kahneman describes this cognitive bias in his book Thinking, Fast and SlowThinking, Fast and Slow:

"Most of us view the world as more benign than it really is, our own personal factors and attributes as more favorable than they truly are, and the goals we adopt as more achievable than they are likely to be."

While optimism is a great way to reduce stress and maintain an upbeat approach, seeing the world as a lot rosier than it is can be dangerous. Optimism bias can drive foolish decision-making and harmful behaviors, such as assuming that everyone will love your business/product/service, even without testing or marketing.

And in our personal lives, this cognitive bias also explains why 80% of New Year's resolutions fail by the second week of February. Lofty goals without proper preparation or analysis of the facts can quickly lead to disappointment and abandonment.

Consider the world of banking and finance as another example. Financial analysts, investors, and government officials with unrealistic expectations of financial success tend to make extremely risky bets. Even despite clear and contradictory evidence. Neuroscientist and author of The Optimism BiasThe Optimism Bias, Tali Sharot points out that optimism bias has been named as one of the core causes of the financial crisis of 2008.

How digital signage can combat optimism bias in a workplace:

Whether it's by displaying project milestones, financial performance metrics, or customer feedback, digital signage can provide a constant reminder of the complexities and uncertainties of the business world.

By encouraging a more nuanced understanding of risk and reward, digital signage can help teams make more informed decisions and avoid the pitfalls of optimism bias.

5. Bandwagon effect

Also known as groupthink or herd mentality, the bandwagon effect is when we adopt a certain attitude, behavior, or style because other people are doing it, regardless of our personal beliefs. The pressure to conform, the desire to be on the winning side, and the fear of exclusion/ the need to belong are common factors that influence the bandwagon effect.

The impact of the bandwagon effect is prevalent in many aspects of our lives, from music, fashion, and diets to businesses and politics. 

A study by Northwestern University and the University of Maryland suggests that Oprah Winfrey's endorsement was responsible for approximately 1 million additional votes for Obama during the 2008 presidential election. The same study also mentions Winfrey's influence on the striking sales volumes for two books (Anna Karenina by Leo Tolstoy and Love in the Time of Cholera by Gabriel Garcia Marquez) after they were included in her book club.

In the workplace, if everyone keeps nodding their heads to whatever idea is presented and nobody is willing to voice a disagreement or alternative opinion, there will be no room for creativity and innovation to thrive. When people copy what their colleagues and leaders are doing, even if those behaviors are negative, the result is a workplace devoid of healthy conflict, productive discussions, diverse perspectives, and unconventional ideas.

How digital signage can combat the bandwagon effect in a workplace:

Digital signage is like your secret weapon for creating a workplace where independent thought and critical thinking thrive.

By providing a platform for open dialogue, digital signage helps mitigate the bandwagon effect and creates a culture where innovation, creativity, and independent thought is emphasized.

6. Planning fallacy

Daniel Kahneman and Amos Tversky first proposed the concept of planning fallacy in their 1977 paper “Intuitive Prediction: Biases and Corrective Procedures”. This cognitive bias describes our tendency to overly underestimate the amount of time it will take to complete a task, along with the costs and risks associated with that task.

In Kahneman's words: "The planning fallacy is that you make a plan, which is usually a best-case scenario. Then you assume that the actual outcome will follow your plan, even when you should know better."

The planning fallacy is the culprit behind many massively failed or delayed projects. 

The Boston Big Dig is a mega road infrastructure project that began construction in 1991 and was originally estimated to be completed in 1998 at a projected cost of $2.8 billion. However, the project was behind schedule for nearly a decade and the overall cost ballooned up to $22 billion (with interest).

Another famous example is the Eurofighter Typhoon joint defense project, which was delivered 54 months late for £20 billion instead of £7 billion. 

You don’t have to work on colossal projects to fall prey to the planning fallacy. You predict you’ll finish a new project within a couple of weeks when the work actually requires a month. You estimate it takes 20 minutes to get to work, yet the actual time turns out to be 45 minutes. The planning fallacy can also explain why about 90% of professional writers miss their deadlines.

How digital signage can combat planning fallacy in a workplace:

One of the main challenges with big projects is communications, managing cross departmental goals and tracking factors such as legal, financial or workforce based demands.

Screens can be used to highlight specific data within departments. For example ensuring project managers are kept informed about project milestones or local delays. Or ensuring the financial department have real-time insight into the cost that a delay has on the overall project delivery.

Digital signage can also be instrumental in streamlining communication, especially for deskless workers. And when dealing with a huge and diverse workforce, effective communication can have an incredible impact on delivery times, costs and staff efficiency.

7. Anchoring bias

Also known as focalism, anchoring bias means we rely too heavily on the first piece of information we receive when making decisions. When we tunnel vision onto a specific idea or plan, we’re more unwilling to evaluate new information objectively, leading to skewed judgments and to conclusions based on distorted perceptions.

This specific cognitive bias can also be the foundation for many other of the biases on this list. Consider how being focused on one piece of information can impact our decision making processes and cause impacts ranging from bandwaggoning or confirmation biases to the more damaging sunken cost.

Anchoring bias is visible in everyday life. For instance, when department stores and retail outlets offer sales and promotions, it triggers consumers to compare the discounted price against the original or ‘anchor’ price and think they’ve got a great deal. When Williams-Sonoma first introduced a bread maker to the market in the 1990s for $275, they were disappointed by its tepid sales. They decided to offer a slightly bigger and better bread maker for double the original price point. Interestingly, the sales of the $275 model immediately skyrocketed.   

Another example of anchoring bias is salary negotiation. According to this article, "the first salary an employer sees during a negotiation can have a significant influence on the ultimate offer: Seeing a low number right off the bat can lead employers to make lower salary offers than they would have otherwise."

How digital signage can combat anchoring bias in a workplace:

Because anchoring as a cognitive bias is often based on the information we have ready access to, the trick to challenging it with digital signage is to regularly update your info. This might be offering regularly refreshed data, company news and information, competitor information or even customer feedback and reviews.

By displaying a steady stream of new and relevant information on screens throughout the workplace, digital signage helps to expand our perception. This allows us to break free from those mental anchors and explore new possibilities, which can also inform many of the other common cognitive biases on this list.

8. Self-serving bias

Self-serving bias is when we credit positive events to our character or actions, but blame outside factors for negative events. It's a defense mechanism we use to protect, maintain, or boost our self-esteem. It also occurs because of our desire to appear a certain way to other people. This cognitive bias can lead to a severe lack of critical analysis and resistance to criticism (even constructive criticism) and eventually damage our professional and personal lives.    

When a candidate is offered a new position, he believes it's because of his skills and achievements. When he doesn't receive a job offer, he thinks it's because the interviewer doesn't like him.

When a meeting with a potential client goes south, a salesman attributes losing the account to a competitor's unethical business practices. 

A leader who is more interested in taking all the glory for themselves and avoiding accountability for failure can destroy trust and team morale, resulting in an unproductive and toxic work environment that suppresses real talents.

How digital signage can combat self-serving bias in a workplace:

Digital signage creates a level playing field where everyone's achievements and shortcomings are on display for all to see.

This transparency encourages honest self-reflection and discourages self-serving behaviors. After all, it's a lot harder to take credit for something when the evidence is right there on the screen for everyone to see.

9. Hindsight bias

Ever look back on a situation and think, "Oh, I knew that was going to happen"? That's hindsight bias at work. It's like suddenly having perfect vision in reverse, where everything seems so obvious after the fact.

Hindsight bias can rear its head in all sorts of situations. Think about that project that went off the rails or that investment that tanked. Suddenly, it's easy to convince yourself that you saw it coming all along, even if you didn't. This bias can lead to overconfidence in our ability to predict outcomes and make sound decisions, which can be a recipe for disaster.

Consider the world of politics as another example. How many times have we heard pundits and analysts confidently proclaiming, "I told you so" after a major event or election outcome? Hindsight bias can make us believe that we knew the outcome all along, even if our predictions were based on little more than gut instinct or wishful thinking.

How digital signage can combat hindsight bias in a workplace:

Human memory is far from perfect, but human judgment is often based on memories and learned experiences. As such, it can be hugely beneficial to review results, good or bad, with a view to improving on future performance.

By keeping everyone on the same page and providing a constant reminder of the here and now, digital signage can help reduce the impact of hindsight bias and promote a more proactive and forward-thinking approach to problem-solving and decision-making.

10. Overconfidence bias

Overconfidence bias is like optimism bias's slightly cockier cousin and as Nobel Laureate Daniel Kahneman describes it, it is the tendency of the human brain to overestimate our own abilities and underestimate the risks involved.

Overconfidence can be a double-edged sword. On one hand, it can give you the boost you need to take risks and pursue your goals with gusto. But on the other hand, it can lead to some pretty poor decision making. Think overspending, taking on more than you can handle, or jumping into risky ventures without fully considering the consequences.

Take the world of entrepreneurship, for example. Overconfident entrepreneurs may overestimate the demand for their products, underestimate the competition, and ignore warning signs that their business model isn't sustainable. It's like they've got blinders on, only seeing what they want to see and ignoring the rest.

How digital signage can combat overconfidence bias in a workplace:

With many cases of cognitive bias, challenging the root problem often comes down to looking at the facts and the data. As such, digital signage can be a powerful tool for promoting self-reflection among team members with employee performance data, KPI data, customer reviews or comments, company mentions and even social media content.

Another simpler method is to use screens to display quotes, articles, or thought-provoking questions that encourage employees to take a step back and evaluate their own beliefs and assumptions.

How to overcome cognitive biases?

1. Build awareness 

Acknowledging that cognitive biases exist everywhere and affect everyone (remember the Steve Jobs story earlier?) is the first step to prevent you from succumbing to them.

Leaders should not only be mindful of their psychology, but they should also provide resources to help raise awareness and understanding of cognitive biases among their team members. 

2. Challenge your beliefs

Our in-grained belief bias can have a big effect on many things in our life, and our work. In some cases this can even affect rational judgments.

To escape old ways of thinking and expand our knowledge, we need to continuously examine and challenge our existing beliefs and assumptions. Here are some questions to help you get started:

• What is the source of your belief? 
• Is your source trustworthy?   
• Is there any evidence? Does it prove that your beliefs are true?
• Is it always true in every situation?
• Is there any evidence that could change your mind?
• What is a more useful way of thinking about it?
• Is there anything you need to do to change your way of thinking?

This is not just a useful way to change your cognitive processes at work, but can affect many other elements of your life.

3. Seek multiple perspectives

Invite honest advice or feedback from smart, trustworthy people who are not afraid to disagree with you, question your own views and decisions, and point out your blind spots. Team meetings are a popular way to do this. But you can also initiate open forums or town hall meetings, have one to one sessions, and invite external auditors or speakers to give their take on your situation.

A progressive and healthy workplace embraces diversity, as well as fresh perspectives, heated debates, and the difficult conversations that come with it.

4. Reflect on past events

It's easy to selectively focus on certain results, often ignoring important elements that had a bigger impact on the final result.

So taking time to reflect, as a group, can be a great method of understanding what went wrong or right, and helping to challenge any cognitive bias before it is formed.

This can be especially useful when planning projects, or when taking stock of a completed project.

5. Employ decision-making frameworks 

Applying well-designed frameworks can improve your decision-making process and reduce cognitive biases in the workplace. Below are a few decision-making tools you can try out:

• The SPADE toolkit: Developed by Gokul Rajaram and has been successfully implemented at Square, SPADE stands for Setting, People, Alternatives, Decide, and Explain. It's used to help teams make difficult decisions while delegating ownership, coordinating execution, and being inclusive.     
• Circle of Competence: Warren Buffett and Charlie Munger initially developed this mental model to help investors focus on areas they know best. Knowing your circle of competence enables you to avoid problems, identify room for improvement, and learn from others. 
• Six Thinking Hats: Edward de Bono introduced this method in the 1980s and wrote a book about it. This powerful technique incorporates parallel thinking, in which all participants focus on a specific direction at any given time. The Six Thinking Hats method gives people a more rounded view of the situation, inspires creativity, encourages cooperation, reduces conflict within a team, and improves decision making.

Human judgment is full of flawed thinking patterns that can lead us on the wrong path. Be it with proper knowledge or by using decision making frameworks, there's an equal multitude of options you can choose from to combat such biases in the workplace.

As we've seen, there are many ways to manage and improve the thinking behind many business decisions. We'll sum up quickly by looking at how to use digital signage as a key part of your workplace, especially when it comes to managing large, diverse or fragmented teams.

Managing teams and projects using digital signage

From confirmation bias to groupthink, our brains are wired to take shortcuts and make snap judgments, often leading to suboptimal decisions and teamwork.

Communication is more important than ever, in our work of digital tools, remote working and a multi-tasking workforce. Here is how office digital signage can help to manage teams and promote more positive aspects of human thinking to improve results and performance.

1. Visual reinforcement

Ever heard of the phrase "Out of sight, out of mind"? Well, it applies to project management too. Digital signage allows you to display relevant performance metrics, analytics and insights in real-time, empowering teams to make informed decisions based on objective data rather than subjective opinions or biases.

Such a data-driven culture helps minimize cognitive heuristics like anchoring or availability bias, where individuals may rely too heavily on initial information or recent experiences when making decisions. By shining a spotlight on the facts and figures, you make it harder for biases to cloud judgment.

2. Transparent communication

Another benefit of using digital signage for team management is transparent communication. By sharing updates and important announcements on screens for everyone to see, you're building a culture of transparency.

This also helps remove cognitive biases brought about by miscommunication or misunderstanding as you'd be presenting the information in a format that is easy to digest and visually appealing.

3. Improved collaboration

One of the great things about digital signage is that it is an open display, where anyone present can see the content. This makes it unique as a communication tool as it allows us to present or consume content that might not necessarily be relevant to us, but can still be useful or informative.

How often do you hear team members complaining that they never know what the other parts of the business are doing?

Using digital signage to share updates, information and data means that employees can be aware of happenings outside of their sphere. And while this might seem like an inefficiency, a study from the American Management Association found that 36% of employees feel like they hardly ever know what's going on at their workplace. And this includes management.

4. Personalized feedback and recognition

Giving feedback is a huge part of modern business, and can help to break down those cognitive biases.

While personal feedback and recognition are important, often it's team congratulations that have the biggest boost on morale. Especially if there is a job well done that has earned a collective high-five.

With digital signage, you can publicly acknowledge and celebrate individual and team achievements in a way that's visible to everyone. This also allows the rest of the team to extend their own recognition, which goes a long way to improve many workplace factors from job satisfaction to team bonding.

And of course, by providing personalized feedback and recognition, you can help combat biases like the fundamental attribution error, where individuals may attribute their successes to their own abilities while overlooking the contributions of others.

5. Encouraging continuous learning

Digital signage can be a powerful tool for promoting continuous learning and growth. Use screens to display educational resources, training opportunities, and thought-provoking articles, which in turn will encourage team members to expand their knowledge and skills. By creating a culture of lifelong learning, you can help team members overcome cognitive biases and stay ahead of the curve in an ever-changing world.

Improving workplace communication with ScreenCloud

One thing with cognitive biases is that we don't usually know that we have them, hence the fact that they are a thing. And because our own biases can affect the broader decision making processes within the workplace, being able to access information and communications has a bigger impact on the broader business.

ScreenCloud is a user-friendly and efficient tool to reach a wider audience across your workplace, enabling IT and HR teams to communicate and challenge those cognitive biases.

Best of all, ScreenCloud can be easily set up using consumer grade hardware. No expensive equipment needed. And once up and running, the user dashboard is intuitive, integrates easily with many popular business apps and can be operated remotely.

Need to create a world class communications network for your organization?

Find out how ScreenCloud can help with a free trial, or schedule a demo today.