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#721: Use Cognitive Biases to Your Advantage

Posted By Mark Haas CMC FIMC, Monday, December 19, 2011
Updated: Monday, December 19, 2011
I would expect that all advisors want their recommendations to be judged fairly by the client and not be unduly influenced by either extraneous information or bad logic. How do we make sure that the information we present gets a "fair hearing"?

None of us is immune to cognitive bias, regardless of how much we'd like to believe we could impartially decide on the facts alone. Even where we take an oath of impartiality, there is an expectation that some biases are still present and the best we can do is to recognize them, disclose where possible, and compensate or recuse ourselves as appropriate. As a consultant, you have to sometimes work hard to avoid such biases.

When it comes expecting clients to judge your work impartially, it is up to you to understand the different kinds of biases and deliberately structure our presentations to use techniques to level the playing field. Note that deliberately introducing bias in client decision making to favor your position starts you down the path to unethical behavior.

We can't go over all the dozens of biases here but here are a few of the most important for consultants to be aware of:
  • Recency Bias - giving greater importance to the most recent event (e.g., the person who presents last before a decision is to be made has a slight advantage).
  • Anchoring - the tendency to overweigh in importance a dominant statement presented or experience already known (e.g., describing the problem in terms that discount alternative explanations or focusing on only one aspect of a complex problem before offering a solution that resolves only that aspect of the problem).
  • Normalcy Bias - discounting outcomes that rarely or have never occurred before (e.g., discounting a looming disaster even though the precursors to that disaster that have already occurred also are rare).
  • Confirmation Bias - The tendency to favor an approach or piece of information that is familiar or consistent with one's world view or history (e.g., a proposal to do "more of the current approach" has higher intuitive appeal than one based on a novel approach).
  • Halo effect - the tendency to attribute greater value to suggestions from a well-known entity rather than the merits of the item (e.g., giving greater credibility due to position or perceived market brand)
  • Loss Aversion - the tendency to place greater emphasis on avoiding the loss of something than the potential gain of the same amount of that thing (e.g., using fear to promote saving something in danger of being lost rather than using desire to promote the potential acquisition of something).
Tip: As you can see, each of these biases can be at work in how you approach your own work as a consultant but also are present in your clients when they are deciding on the merits of your recommendations. For a pretty good review of these biases and some practices to manage them, consider (among many other sources) Smart Choices: A Practical Guide to Making Better Decisions. Many of the best decision making work was done in the early 1990s and the best resources are from that era, one of those instances where newer is not necessarily better.

© 2011 Institute of Management Consultants USA

Tags:  assumptions  attribution  decision making  interpretation  learning  methodology  presentations  professional development 

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Dan Callahan says...
Posted Monday, December 19, 2011
Mark - when you posted this, I was reviewing the trends in scientific bias! This topic of realizing one's own bias--inany field of endeavor, is the ultimate step of maturity. Would that more professionals opted for it.
Your post is a timely and helpful reminder with a solution as well!
Thanks.
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