strategy+business

ISSUE 80 AUTUMN 2015

Beyond Bias
Neuroscience research shows how new organizational practices can
shift ingrained thinking.

BY HEIDI GRANT HALVORSON AND DAVID ROCK

REPRINT 00345
 strategy+business issue 80
feature organizations & people

1
 Beyond Bias

feature organizations & people

Neuroscience research shows
how new organizational practices
can shift ingrained thinking.
BY HEIDI GRANT HALVORSON AND DAVID ROCK

IMAGINE THAT YOU ARE HIRING AN EMPLOYEE for a position in

which a new perspective would be valuable. But while 2
reviewing resumes, you find yourself drawn to a candidate
who is similar in age and background to your current staff.
You remind yourself that it’s important to build a cohesive
team, and make up your mind to offer her the job.
Or suppose that you’re planning to vote against a
significant new investment. This is the second time it’s
come up, and you voted no before. A colleague argues that
Illustration by Lincoln Agnew

conditions have changed, the project would now be highly

profitable, and you can’t afford to lose this opportunity.
Upon closer examination, you see that his data is
convincing, but you vote no again. Something about
his new information just doesn’t feel relevant.
 Heidi Grant Halvorson David Rock Also contributing to this
hghalvorson@ [email protected] article was Matthew D.
neuroleadership.com is cofounder and direc- Lieberman, director of the
is a social psychologist. She tor of the NeuroLeadership Social Cognitive Neuroscience
is the associate director of the Institute, a global initiative Laboratory at UCLA.
Motivation Science Center at bringing neuroscientists
the Columbia Business School and leadership experts
and a senior consultant for the together. He is the author of
NeuroLeadership Institute. Your Brain at Work: Strategies
Her most recent book is No for Overcoming Distraction,
One Understands You and What Regaining Focus, and Working
to Do About It (Harvard Busi- Smarter All Day Long (Harper-
ness Review Press, 2015). Business, 2009). He is also
the CEO of the NeuroLeader-
ship Group, a global
consulting firm.

These are examples of common, everyday biases. can multiply as if in a chain reaction, breaking free of
Biases are nonconscious drivers — cognitive quirks — unhelpful bias has never been more important. That is
that influence how people see the world. They appear why many large organizations are putting money and
feature organizations & people

to be universal in most of humanity, perhaps hardwired resources toward educating people about biases. For
into the brain as part of our genetic or cultural heritage, example, U.S. companies spend an estimated US$200
and they exert their influence outside conscious aware- million to $300 million a year on diversity programs
ness. You cannot go shopping, enter a conversation, or and sensitivity training, in which executives, managers,
make a decision without your biases kicking in. and all other employees are being told to watch out for
On the whole, biases are helpful and adaptive. biases, in particular when making hiring and promo-
They enable people to make quick, efficient judgments tion decisions.
and decisions with minimal cognitive effort. But they Unfortunately, there is very little evidence that
can also blind a person to new information, or inhibit educating people about biases does anything to reduce
someone from considering valuable options when mak- their influence. Human biases occur outside conscious
ing an important decision. awareness, and thus people are literally unaware of them
A number of biases occur so often, in so many as they occur. As an individual, you cannot “watch out
contexts, that cognitive scientists have given them for biases,” because there will never be anything to see.
names. (See “Common Biases,” next page.) Some, like It would be like trying to watch out for how much insu-
3
the confirmation bias (which leads people to discount lin you are producing.
information that disagrees with their assumptions), How then can the negative effects of bias be over-
have been critical factors in financial crises, including come? Collectively. Organizations and teams can be-
the one that began in 2007. This crisis also derived in come aware of bias in ways that individuals cannot.
part from the temporal discounting bias: Bankers chose Team-based practices can be redesigned to help identify
to pursue immediate gains, even if that meant ignoring biases as they emerge, and counteract them on the fly,
long-term risks. Two other common biases, the illusion thus reducing their impact.
of control and the planning fallacy, adversely affected The first step is to identify the types of bias likely
Japan’s preparedness for the 2011 tsunami, as well as to be prevalent in organizations. To that end, we have
New York’s ability to recover from Hurricane Sandy grouped the 150 or so known common biases into five
in 2012. People overestimate the degree to which they categories, based on their underlying cognitive nature:
can control the negative effects of a disaster and under- similarity, expedience, experience, distance, and safe-
strategy+business issue 80

estimate the time and effort it would take to prepare ty. (Our research group has named this the SEEDS™
for one. All of these biases, and others, lead many great model.) Each category has defining features as well as
companies and institutions to make disastrous and dys- mitigation strategies specific to that bias. Once you know
functional decisions. which type of bias you are dealing with, you can put the
In a hyperconnected world, where poor decisions strategies in place and make more effective decisions.
Common Biases
Similarity Experience

Ingroup Bias: Perceiving people Outgroup Bias: Perceiving Blind Spot: Identifying biases in Illusion of Control: Overes-
who are similar to you (in eth- people who are different other people but not in yourself. timating your influence over
nicity, religion, socioeconomic from you more negatively. (“We (“She always judges people external events. (“If I had left
status, profession, etc.) more can’t trust him; look where he much too harshly.”) the house a minute earlier, I
positively. (“We can trust her; grew up.”) wouldn’t have gotten stuck at
her hometown is near mine.”) False Consensus Effect: this traffic light.”)
Overestimating the universal-
ity of your own beliefs, habits, Illusion of Transparency:
Expedience and opinions. (“Of course I hate Overestimating the degree to
broccoli; doesn’t everyone?”) which your mental state is ac-
Belief Bias: Deciding whether Base Rate Fallacy: When judg- cessible to others. (“Everyone
an argument is strong or weak ing how probable something is, Fundamental Attribution Error: in the room can see what I am
on the basis of whether you ignoring the base rate (the over- Believing that your own errors thinking; I don’t have to say it.”)
agree with its conclusion. (“This all rate of occurrence). (“I know or failures are due to external
logic can’t be right; it would lead that only a small percentage of circumstances, but others’ Egocentric Bias: Weighing
us to make that investment I startups succeed, but ours is a errors are due to intrinsic fac- information about yourself
don’t like.”) sure thing.”) tors like character. (“I made a disproportionately in making
mistake because I was having judgments and decisions — for

features title
feature
Confirmation Bias: Seeking and Planning Fallacy: Underesti- a bad day; you made a mistake example, about communica-
finding evidence that confirms mating how long it will take to because you’re not very smart.”) tions strategy. (“There’s no
your beliefs and ignoring complete a task, how much it need for a discussion of these
evidence that does not. (“I trust will cost, and its risks, while Hindsight Bias: Seeing past legal issues; I understood them
only one news channel; it tells overestimating its benefits. events as having been predict- easily.”)

organizations
the truth about the political (“Trust me, we can finish this able in retrospect. (“I knew the
party I despise.”) project in just three weeks.”) financial crisis was coming.”)

of the article
Availability Bias: Making a Representativeness Bias:
decision based on the informa- Believing that something that Distance
tion that comes to mind most is more representative is
quickly, rather than on more necessarily more prevalent. Endowment Effect: Expect- Temporal Discounting: Placing

& people
objective evidence. (“I’m not (“There may be more qualified ing others to pay more for less value on rewards as they
worried about car accidents, but programmers in the rest of the something than you would pay move further into the future.
I live in fear of airplane crashes world, but we’re staffing our yourself. (“This is sure to fetch (“They made a great offer,
since I saw one on the news.”) software design group from thousands at the auction.”) but they can’t pay me for five
Silicon Valley.”) weeks, so I’m going with some-
Anchoring Bias: Relying heavily Affective Forecasting: Judging one else.”)
on the first piece of information Hot Hand Fallacy: Believing that your future emotional states
offered (the “anchor”) when someone who was successful based on how you feel now. (“I
considering a decision. (“First in the past has a greater chance feel miserable about it, and I 4
they offered to sell the car for of achieving further success. always will.”)
$35,000. Now they’re asking (“Bernard Madoff has had an
$30,000. It must be a good unbroken winning streak; I’m
deal.”) reinvesting.”) Safety

Halo Effect: Letting someone’s Loss Aversion: Making a risk- Sunk Costs: Having a hard time
positive qualities in one area averse choice if the expected giving up on something (a strat-
influence overall perception of outcome is positive, but making egy, an employee, a process)
that individual. (“He may not a risk-seeking choice to avoid after investing time, money, or
know much about people, but negative outcomes. (“We have to training, even though the invest-
he’s a great engineer and a take a chance and invest in this, ment can’t be recovered. (“I’m
hardworking guy; let’s put him or our competitors will beat us not shutting this project down;
in charge of the team.”) to it.”) we’d lose everything we’ve
invested in it.”)
Framing Effect: Basing a judg-
ment on whether a decision is
presented as a gain or as a loss,
rather than on objective criteria.
(“I hate this idea now that I see
our competitors walking away
from it.”)
 You can’t change your bias of preference
for the ingroup, but you can bring more
people into that affiliation. Pay attention
to the goals, values, and experiences you
share with the outgroup.

Similarity Biases A board might grant a key role to someone who most
“People like me are better than others.” looks the part, versus someone who can do the best job.
If you are like most people, you are highly moti- The bias is unfortunate because research (including that
feature organizations & people

vated to focus your attention on anything that portrays done by Katherine Phillips) has shown that teams and
you in the best possible light. This motivation affects groups made up of people with varying backgrounds
the way you perceive other people and groups. The sim- and perspectives are likely to make consistently better
ilarity biases are part of your brain’s natural defenses; decisions and execute them more effectively.
they promote and protect those associated with you — The best way to mitigate similarity bias is to find
including your family, team, and company. But they commonalities with those who appear different. You
also perpetuate stereotypes and prejudice, even when can’t change your bias of preference for the ingroup,
counterproductive. but you can bring more people into that affiliation. Pay
The two most prevalent forms of similarity bias are attention (and bring your team’s attention) to the goals,
ingroup and outgroup preferences. You hold a relatively values, experiences, and preferences you share with the
positive perception of people who are similar to you (the outgroup. This causes the brain to recategorize these
ingroup) and a relatively negative perception of those individuals and thus create a more level playing field.
who are different (the outgroup). Even when you are not For hiring and promotion decisions, remove potentially
aware of these two biases, they are reflected in your be- biasing information or features (name, sex, ethnicity)
5
havior. For example, as described earlier, you are more from formal materials. Even though people can’t help
likely to hire ingroup members — and once you hire but be aware of ethnicity and gender in any face-to-face
them, you’re likely to give them bigger budgets, bigger encounter, the absence of formal written reinforcing
raises, and more promotions. cues can help. Instead, cue similarity: Pepper the docu-
Social neuroscience research has shown that people ments with references to the ways in which different
perceive and relate to ingroup and outgroup members types of people contribute, or how someone is “one of
very differently. In fact, merely assigning people to ar- us.” Studies have found, for example, that considering
bitrary teams creates great liking for fellow members of a man and a woman for promotions at the same time
the team, less liking for members of other teams, and leads to fairer treatment of both than considering either
greater activity in several brain regions involved in emo- person alone.
tions and decision making (the amygdala, orbitofrontal
cortex, and striatum) in response to ingroup faces. Expedience Biases
strategy+business issue 80

Similarity biases affect many decisions involving “If it feels right, it must be true.”
people, including what clients to work with, what so- Expedience biases can be described as mental short-
cial networks to join, and what contractors to hire. A cuts that help us make quick and efficient decisions.
purchasing manager might prefer to buy from some- As Daniel Kahneman pointed out in Thinking, Fast
one who grew up nearby, just because it “feels safer.” and Slow, the human brain has two parallel decision-
making systems. “System 1” relies on information that cess, as well as implementing a mandatory “cooling off”
can be retrieved without much effort: Its associations period (10 minutes of relaxation or a walk outdoors) be-
“feel right.” That’s what makes it expedient. When peo- fore making decisions under pressure.
ple need to make decisions based on more objective, less
accessible information, the brain’s “System 2” has to get Experience Biases
involved. System 2 is slower, more difficult to engage, “My perceptions are accurate.”
and less pleasurable. It can be called upon to correct The human brain has evolved to regard its own per-
System 1’s mistakes, but it requires more cognitive ef- ceptions as direct and complete. In other words, people
fort and concentration. Most people naturally tend to tend to assume that what they see is all there is to see,
favor System 1. and all of it is accurate. But this attitude overlooks the
One very common form of expedience bias is the vast array of processes within the brain that construct
availability bias. This is the tendency to make a deci- the experience of reality. Your expectations, past expe-
sion based on the information that’s most readily acces- riences, personality, and emotional state all color your
sible in the brain (what comes to mind most quickly) perception of what is happening in the world.
instead of taking varied perspectives into account. This Experience biases are particularly pernicious when
bias inhibits people from looking for and considering they breed misunderstandings among people who work
all potentially relevant information. It can thus block together. If you hold a strong conviction that you see
the brain from making the most objective and adaptive reality as it is, you assume that anyone who sees things

features title
feature
decisions. The case of the lost investment described at differently must be either incorrect or lying. As social
the beginning of this article shows the subtle, corrosive neuroscientist Matthew Lieberman has noted, when
influence of the availability bias. two people each think the other person is crazy, mean,

organizations
Expedience biases tend to crop up in decisions stupid, prejudiced, dishonest, or lazy, there is often an

of the article
that require concentrated effort: complex calculation, experience bias at work.
analysis, evaluation, or the formation of conclusions It is very difficult to convince someone who has an
from data. A sales rep or consultant who automatically experience bias that he or she might be the one who is
reverts to a few familiar solutions, instead of really lis- mistaken. These biases are similar to visual illusions —

& people
tening to client problems, is probably suffering from an even if you logically know that it is an illusion, your in-
availability bias. So is a doctor who assumes a new pa- tuitive experience of it remains powerful. You may find
tient has a familiar condition, without more carefully it easy to identify other people’s biases, but not your
analyzing the diagnosis. These portrayals of expedience own. (That’s known as the blind spot bias.) You might
bias are examples themselves, since they draw conclu- also fall prey to the false consensus effect: overestimat-
sions without fully exploring the details of the sales ing the extent to which others agree with you or think
6
rep’s or doctor’s decision making. the same way you do. For example, if you prefer vanilla
Expedience biases tend to be exacerbated when to chocolate ice cream, you are likely to think that most
people are in a hurry or are cognitively depleted — ex- people have the same preference. People who prefer
hausted from stress and multiple decisions. To mitigate chocolate, however, will also assume that they are in the
the bias, you have to provide incentives for people to majority. In an organizational setting, this assumption
step off the easier cognitive path. Create incentives for can lead to unnecessary conflicts, especially if leaders
them to challenge themselves and others, perhaps by assume that many others agree with their preferences,
identifying their own mistakes, and foster a culture that and make decisions accordingly.
encourages this. For instance, you might relax a dead- Experience biases often manifest themselves when
line to allow more time for considering alternatives, or you try to influence others or sell an idea. On a sales
ask a sales rep to lay out the reasoning behind his or her call, you might not realize that other people are less ex-
approach with a client, encouraging both yourself and cited by your product than you are. When making a
the rep to identify flaws in the logic. presentation, you might forget that others do not know
You can also mitigate expedience biases by break- the context. If you are a senior leader pushing for a ma-
ing a problem into its component parts. It may help to jor organizational change, you might not see that others
involve a wider group of people and get some outside don’t agree, or that they have legitimate concerns.
opinions as part of the typical decision-making pro- Experience biases respond to an organizational ap-
 It is difficult to manage for bias in
the moment you’re making a decision.
You need to design practices and
processes in advance.

proach, so put systems into place that minimize their global organizations whose managers must oversee and
influence. For example, you can set up practices for develop business and human capital at great distances.
routinely seeking opinions from people who are not on To mitigate this kind of bias, take distance out of
feature organizations & people

the team or project. Other techniques include revisiting the equation. Evaluate the outcome or object as if it
ideas after a break to see them in a fresh, more objective were closer to you in space, time, or ownership. This
light, or setting aside time to look at yourself and your orients you to recognize its full value. Of course, you
message through other people’s eyes. will still consider time and physical distance as fac-
tors when making decisions. For example, as business
Distance Biases strategy writer Pankaj Ghemawat has pointed out, the
“Near is stronger than far.” geographic and cultural distance of another country
Proximity is a salient unconscious driver of deci- should affect any plans you have to expand your busi-
sion making. Brain scan studies have shown that one ness there. And those elements should be consciously
network in the brain registers all types of proximity — considered in the decision-making process, without the
conceptual proximity, such as whether or not you own unconscious influence of a bias that might lead to an
an object, as well as proximity in space and in time. inferior conclusion.
The closer an object, an individual, or an outcome is
in space, time, or perceived ownership, the greater the Safety Biases
7
value assigned to it. “Bad is stronger than good.”
For example, given the choice between receiv- The fact that negative information tends to be
ing $100 today and $150 tomorrow, most people will more salient and motivating than positive information
(quite rationally) wait a day to get the larger sum. But is evolutionarily adaptive. A hunter–gatherer whose
when the choice becomes $100 today versus $150 three brain responds quickly to the threat of a snake would
months from now, the majority will choose the lesser be more likely to survive than one whose brain responds
but more immediate payment — despite the fact that first to the charm of its colorful markings. That’s why,
there are very few other ways to earn a guaranteed 50 for most people, losing $20 feels worse than finding $20
percent return on investment in three months. Thanks feels good.
to a distance bias called temporal discounting, the fur- This principle manifests itself in safety biases such
ther away in time the $150 is, the more its value decreas- as loss aversion. When considering a transaction or in-
es. Psychologically, $100 is worth more than $150 when vestment, regardless of the merits of the deal, you are
strategy+business issue 80

time is a factor. likely to be attracted if you perceive it as a way to avoid

Distance bias often manifests as a tendency toward a loss rather than as a potential opportunity to gain.
short-term thinking instead of long-term investment. You may think of yourself as strongly oriented toward
It can also lead you to neglect people or projects that winning, but your actions are likely more influenced by
aren’t in your own backyard — a particular problem for the need to avoid losing, a very different concern.
 Another safety bias is the framing effect, first iden- 3. In designing bias-countering processes and prac-
tified by Amos Tversky and Daniel Kahneman in 1981. tices, encourage those that place a premium on cognitive
When an opportunity is framed as a gain, people tend effort over intuition or gut instinct.
to be relatively conscious of the risk involved. But if the 4. Individual cognitive effort is not enough. You have
risk is framed as a way to avoid a loss, people are more to cultivate an organization-wide culture in which peo-
likely to ignore or justify it. This is true even when the ple continually remind one another that the brain’s de-
objective information is the same in both cases. fault setting is egocentric, that they will sometimes get
Safety biases can influence any decision about the stuck in a belief that their experience and perception of
probability of risk or return, or the allocation of re- reality is the only objective truth, and that better deci-
sources including money, time, and people. These bi- sions will come from stepping back to seek out a wider
ases affect financial decisions, investment decisions, re- variety of perspectives and views.
source allocation, strategy development, or planning for Although more research and development needs
strategy execution. Examples include not being able to to be done on both the theory and practice of break-
let go of a business unit because of resources already in- ing bias, we believe that this approach can provide a
vested in the project and not being willing to innovate useful step forward. By reducing the unhelpful biases
in a new direction because it would compete with the that are at the heart of many organizational challenges
company’s existing business. today, not only do you reduce the risk of catastrophic
To mitigate safety bias, you can conduct conver- loss — you redefine what it means for an organization

features title
feature
sations that add psychological distance to the deci- to win. +
sion. Imagine that you are giving advice to someone Reprint No. 00345

else rather than making the decision for your own

organizations
enterprise. When making decisions for others, you

of the article
can be less biased because the threat network is not
as strongly activated. Or imagine that the decision
has already been made, and you are seeing it from
a later point in time. Studies suggest that recasting

& people
events this way, deliberately evoking a more objective,
distanced perspective, makes those events less emotion-
al and less tied to the self. Resources

Mahzarin Banaji and Anthony Greenwald, Blindspot: Hidden Biases of

Managing for Bias Good People (Delacorte Press, 2013): Two influential researchers explain
All of the mitigation strategies described in this article many biases, including the ingroup and outgroup fallacies, with perspec-
tive and detail. 8
engage the brain’s ventrolateral prefrontal cortex, which
acts, in this case, like a braking system helping you ex- Daniel Kahneman, Thinking, Fast and Slow (Farrar, Straus and Giroux,
2011): Describes the fundamental theory of biases and their influence,
ercise cognitive control and broaden your attention be- based on the brain’s two parallel operating systems.
yond your own, self-specific viewpoint. As you identify Matthew D. Lieberman, Social: Why Our Brains Are Wired to Connect
and mitigate biases in your organization, keep four gen- (Broadway Books, 2014): Community perspective — seeing ourselves as
eral principles in mind: others would see us — is a powerful way of counteracting bias and other
harmful impulses.
1. Bias is universal. There is a general human pre-
Katherine Phillips, “How Diversity Makes Us Smarter,” Scientific Ameri-
disposition to make fast and efficient judgments, and
can, Sept. 16, 2014: Why teams with people from different backgrounds
you are just as susceptible to this as anyone else. If you are more creative, more diligent, and more hardworking.
believe you are less biased than other people, that’s prob- David Rock, “Managing with the Brain in Mind,” s+b, Autumn 2009: As
ably a sign that you are more biased than you realize. with biases, people bring cognitive responses to work, and they need to be
2. It is difficult to manage for bias in the moment managed deliberately, not intuitively.

you’re making a decision. You need to design practices NeuroLeadership Institute Breaking Bias Research Project,
www.neuroleadership.com/talent-challenges/bias/: More information on
and processes in advance. Consciously identify situa- the SEEDS™ model and other research in this field.
tions in which more deliberative thought and strategies
More thought leadership on this topic:
would be helpful, and then set up the necessary conver- strategy-business.com/organizations_and_people
sations and other mechanisms for mitigating bias.
strategy+business magazine
is published by certain members of the
PwC network.
To subscribe, visit strategy-business.com
or call 1-855-869-4862.

For more information about Strategy&,

visit strategyand.pwc.com

• strategy-business.com
• facebook.com/strategybusiness
• twitter.com/stratandbiz

Articles published in strategy+business do not necessarily represent the views of the member firms of the
PwC network. Reviews and mentions of publications, products, or services do not constitute endorsement
or recommendation for purchase.

© 2015 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms,
each of which is a separate legal entity. Please see www.pwc.com/structure for further details.