Bias hurts ability to make wise business decisions

I just read a book that bowled me over.

It’s titled “Mistaken Identity: Two Families, One Survivor and Unwavering Hope.”

The five authors, members of the VanRyn and Cerak families of Fort Wayne, Ind., tell the story of a shocking experience that landed them on the cover of People magazine about 10 years.. The hardback fills in numerous blanks never revealed to the news media.

“The book weaves a complex tale of honesty, vulnerability, loss, hope, faith and love in the face of one of the strangest twist of circumstances imaginable,” says the front cover flap.

Believe it or not, the sentence is a vast understatement.

In a nutshell, Whitney Cerak and Laura Van Ryn were involved in a horrific car crash in 2008. The Ceraks buried their daughter while the Van Ryns kept a lengthy vigil at their child’s bedside.

Six weeks later, medical authorities discovered that the two college students had been erroneously identified following the accident.

The Van Ryns learned that the girl they had been nursing was Whitney. Their daughter was dead.

The amazing thing is that for more than a month the Van Ryns failed to notice that the recovering coed was not their child.

They repeatedly ignored small clues such as a navel piercing no family members knew about.

It was a colossal case of cognitive bias, a human tendency to see what you want to believe.

“We’re all subject to cognitive bias, those annoying glitches in our thinking that cause us to make questionable decisions and reach erroneous conclusions, writes George Dvorsky at www.gizmo.com.

While the Cerak-Van Ryn situation is a personal story, cognitive bias greatly affects businesses as well.

A case in point is Home Depot’s decision a few years ago to open about 100 stores in China, just like the ones you probably have shopped at in Downingtown, Exton and other Chester County municipalities.

Corporate executives moved at the speed of a Black and Decker drill to beat possible competition.

Unfortunately, sales were abysmal. So Home Depot hired a marketing research firm that discovered that Chinese up-andcomers had zero interest in doing their own home repair and improvements. In general, the growing middle class regarded such work as beneath their status.

Eventually, Home Depot closed all its stores in Bejing, Shanghai and other Chinese cities.

Like the Van Ryn family, the mammoth chain was blinded by its own interests.

According to psychologists, cognitive bias comes in as many as 20 different but interrelated forms.

“Cognitive bias really screws up our decisions,” write Samantha Lee and Shana Lebowitz at www.mentalfloss.com.

Luckily, you can develop safeguards to ward off such distorted thinking. Some ideas:

• Admit your tendencies. According to media studies, Republicans tend to watch Fox News, known to have a conservative bent. Democrats, on the other hand, prefer the liberal slant of MSNBC. In essence, both groups exhibit confirma-

tion bias, watching programs confirming their existing opinions. Sound familiar? You may want to get out of your viewing rut and occasionally watch commentators who have views counter to yours.

• Do the research. Undoubtedly, Home Depot wishes it had amassed information about the Chinese culture before instead of after investing millions of dollars in Asia. I sympathize because I suffer from anchoring bias, which is a habit of stopping research way too soon in order to save time. If you feel constantly pressured to act quickly in this high-octane world, give yourself a break and take your time on important projects.

• Beware group think. Bandwagon bias occurs when you stifle your own ideas and go along with the crowd. Often, the tendency starts with a squeaky wheel. At a gathering to discuss the site of the next company sales conference, for instance, you think Atlantic City would be the best choice. But others gang up in favor of the more expensive Las Vegas. Stand your ground.

• Take action. Most men and women suffer occasionally from status quo bias. If you remain at a job you despise, chances are that you fear change more than you want a better position. Try to lessen your terror by doing easy tasks such as updating your resume and checking job websites. Remember the old adage about a journey of a million miles starts with a single step,

• Choose diversity. As a

human resources professional, you may often find yourself trying to decide between two qualified candidates. You prefer the one whose background and style resembles your own. You may have blind spot bias, a tendency to reject people and ideas outside your comfort zone. Consider hiring the person whose race, accent and other factors reflect an unfamiliar demographic.

• Cultivate a positive attitude. You may be in charge of the company cafeteria. Employees have been complaining about the food for several months. One person suggests giving the account to another vendor. At first, you slip into negativity bias and say all cafeteria suppliers are equally bad. Stop. Why not sample some lunch items from the recommended company before putting the kibosh on a switch?

• Revisit decisions. A year ago, you launched a weight-loss program for company employees. Although results have been negligible, seemingly because the coach constantly cancels appointments, you insist that the high-priced effort is working. You are suffering from placebo bias, the same thinking that often causes patients to feel better after taking fake medication. That reminds me that, even as I write, I have a nagging headache. Time for a sugar pill.