While we - human beings - like to think of ourselves as rational creatures, the truth is we are anything but.
We are prone to over 100 cognitive biases that may subconsciously shape our perceptions, beliefs and decisions.
As one might imagination, innovation and entrepreneurship is not immune from said biases.
Becoming aware of them is step one to designing workarounds so that your company is not over-investing in the wrong idea or under-investing in the right one.
In this post I’ve unpacked 36 cognitive biases that can stifle your innovation efforts, how they might apply to the field and a proposed solution or mitigant for each. If you’ve got some alternative mitigants to address these biases, I’d love to hear from you in the comments.
The tendency to avoid options for which missing information makes the probability seem "unknown".
In innovation: today’s business world is more volatile, uncertain, complex and ambiguous than ever, thanks to exponential technology growth bringing with it low barriers to entry and business model innovation.
Management decisions tend to be shrouded in certainty - “if you fail to plan you plan to fail” is the old adage, and while a certain degree of planning is of course necessary for any venture, over-planning in order to feel in control, is something traditional project management such as the waterfall method teach us. It’s something business cases are designed for, to give decision makers a sense of control and certainty.
The problem with this is that it supports pursuing only that which we can reliably predict which is normally incremental, Horizon 1 innovation.
To truly innovate and stand a chance at surviving in a tumultuous environment, getting better at embracing uncertainty is key.
Solution: Introduce a process that supports taking many small bets to test uncertain assumptions. For more on this topic read: The Business Case Alternative - How to Support Uncertainty and Disruptive Innovation at Large Company
The tendency to rely too heavily, or "anchor", on one trait or piece of information when making decisions (usually the first piece of information acquired on that subject).
In innovation: this is notoriously common during typical corporate brainstorming sessions, particularly where dominant personalities speak up first. What usually happens is everybody else usually anchors their ideas around this first ‘big idea’ rather than coming up with something completely new.
Solution: To combat this ensure people ‘work alone together’ first by writing down their ideas individually, grouping similar ideas and then voting on them in silence before engaging in a wider group discussion.
For more on brainstorming techniques check out How to Run an Ideation Session
The tendency to attribute greater accuracy to the opinion of an authority figure (unrelated to its content) and be more influenced by that opinion.
In innovation: Often manifests itself as HIPPO or highest paid person’s opinion.
See Overconfidence bias below.
For more on hippos, listen to episode #53 of the Future Squared podcast with former Sportsbet head of innovation, Leslie Barry.
A self-reinforcing process in which a collective belief gains more and more plausibility through its increasing repetition in public discourse (or "repeat something long enough and it will become true").
One need not look any further than long held social institutions that trace back to a time when people thought the earth was flat.
The reaction to disconfirming evidence by strengthening one's previous beliefs.
In innovation: Working in the corporate innovation space, I’ve lost count the number of times we’ve run experiments that disprove a sponsor’s initial thinking. More often than not, they take this in their stride and pivot accordingly. However, every now and again, after a company has engaged us to test their assumptions with target customers - and invested both time and money doing so - we hear something like this, and I provide a sanitised quote:
“Company X has decided to accelerate its efforts in respect of Product X and create an enterprise wide program that will touch every facet of our business above and beyond Product X; product and pricing design, operations, corporate social responsibility, brand and reputation, employee engagement and legal and regulatory lobbying.”
We just learned that the market has no appetite for your idea and you’re not only going ahead with it, but ramping up its size and complexity significantly? Okay…
The tendency to do (or believe) things because many other people do (or believe) the same.
In innovation: Whether it's companies simply copying what every other company is doing in the innovation space or whether it’s individuals falling into groupthink and agreeing, or building upon, the idea of others in a group.
Just because Britney Spears has sold over 100 million albums, it doesn’t mean her music is any good.
Solution: On how to avoid the bandwagon effect in ideation and brainstorming sessions, read How to Run an Ideation Session.
The tendency for people to appear more attractive in a group than in isolation.
In innovation: People seem to be somewhat enamored by the startup ecosystem and meetups and conferences that draw hundreds of people. But take the time to individually meet people at such events and you will quickly realise that, oftentimes, 90% of attendees are either from a corporate trying to sell something, recruiters looking for hires or wantrapreneurs that haven’t and probably won’t ever build anything.
Solution: As the great Roman Emperor Marcus Aurelius noted in his journals, “when things have such a plausible appearance, show them naked, see their shoddiness, strip away their own boastful account of themselves. Vanity is the greatest seducer of reason: when you are most convinced that your work (or the work of others) is important, that is when you are most under its spell.”
The tendency to search for, interpret, focus on and remember information in a way that confirms one's preconceptions.
In innovation: Whatever your opinion about whatever the topic, you’ll find data that supports it. However, you will probably find lots of disproving data too.
And you will find that in most cases, there is a correlation between X and Y in the data, it doesn’t necessarily mean that X causes why.
Solution: When building experiments to test your assumptions, always ensure that your hypotheses is:
Or to borrow a leaf from the Hypothesis Kit, below:
1. Because we saw (qual & quant data) 2. We expect that (change) for (population) will cause (impact(s)) 3. We expect to see (data metric(s) change) over a period of (x business cycles)
The tendency to test hypotheses exclusively through direct testing, instead of testing possible alternative hypotheses.
In innovation: An example of this might be testing a pricing model of, say, a $10 a month subscription service.
You might discover that 7% of your website visitors agree to pay this and with a target metric of 3% you’re ready to move on and implement this pricing model.
Or are you?
Have you tested other price subscriptions? Maybe people are willing to pay $20 or even $50 a month for the value your product delivers?
Or maybe there’s a better pricing model? Up-front pricing, value added pricing, scaled transactions, freemium, licensing, metered use, membership and countless other models might be more financially rewarding in the long run.
Solution: identify all key and high risk assumptions underpinning your idea or business model and test all of these assumptions before forming any conclusions on the best path forward.
The tendency to revise one's belief insufficiently when presented with new evidence.
In innovation: See Backfire Effect.
The tendency to give an opinion that is more socially correct than one's true opinion, so as to avoid offending anyone.
In innovation: It is for this very reason that Ed Catmull and the gang at Pixar set up a braintrust, whereby key people come together to give brutally honest feedback about a film they’re working on, where feelings aren’t spared and there is no fear of reprisal.
They credit this with being an essential part of the creative process and of Pixar’s success as an animation studio.
Solution: Create a safe environment or process for giving honest, unfiltered feedback that supports the creative process.
For more on the braintrust and innovation at Pixar, check out episode #122 of the Future Squared podcast with former Pixar CFO, Lawrence Levy.
The tendency to underestimate the influence or strength of feelings, in either oneself or others.
In innovation: Entrepreneurs and innovators have a tendency to fall in love with their solutions, instead of falling in love with identifying and solving the problem.
Solution: Spend time up front on validating the problem using tools such as problem interviews.
For more on this, refer to the return on optimisation curve.
The tendency to place too much emphasis on one aspect of an event.
In innovation: When it comes to innovation, there’s a lot of conventional wisdom to ‘focus on the one metric that matters’ but this can often come at the expense of other metrics.
If I’m too focused on my acquisition rate at the expense of retention, I could be working and spending hard to acquire customers who will never use us again, probably have a lousy experience and tell their friends and colleagues about it too and thus the snowball effect kicks in.
Make no mistake, no matter how good your acquisition numbers may look, this is not where you want to be - one step removed from being a snake oil dealer.
Solution: Map out your entire funnel - acquisition, activation, retention, revenue, referral. Define what Sean Ellis from Growthhackers.com calls a ‘north star metric’ with a number of underlying metrics.
For example, Airbnb’s north star metric might be nights booked but underlying metrics might be return trips. Does a first time user use the platform again? Do they have a great experience and give their host 5 stars? Focusing only on nights booked at the expense of these metrics might mean neglecting the customer experience and over time losing out on retention and referral and operating on a costly, unsustainable paid acquisition model.
Limits a person to using an object only in the way it is traditionally used.
In innovation: During our ideation bootcamps, we usually run a warm-up session that basically challenges participants to come up with as many uses for a pencil as possible, to break them out of functional fixedness.
From back scratchers to audio cassette tape winders, we’ve had groups of small teams come up with over 100 uses in under 10 minutes.
Breaking people out of the mould helps to not only come up with new, novel uses for existing products, but business model innovation too.
The tendency for people to over-emphasize personality-based explanations for behaviors observed in others while under-emphasizing the role and power of situational influences on the same behavior
In innovation: If you’re expecting your team to behave like an Elon Musk but your processes are more attuned to a Dilbert, then you can’t blame them for not coming up with and/or developing the next breakthrough business model or idea.
Solution: If you want to get ‘X’ behaviour out of people you need to create the supporting ‘Y’ environment. For more on creating a culture that supports innovation...
The biased belief that the characteristics of an individual group member are reflective of the group as a whole or the tendency to assume that group decision outcomes reflect the preferences of group members, even when information is available that clearly suggests otherwise.
In innovation: Perhaps this is why so many opinion pieces and articles start or end with “views are my own”, even though this Forbes article suggests that won’t be enough to save your job.
Solution: When it comes to innovation though, if you’re targeting a particular customer segment and the data has either validated or invalidated your assumptions about that segment, make sure you’ve got enough data to reliably conclude as much.
On the flipside, when you’re developing your customer persona - before you’ve even started testing - ensure that the attributes you identify are reflective of the broader group and not just a handful of people you’ve interviewed from that group. The last thing you want to do is to target your customers on Twitter because that was your interviewee’s preferred place to hang out online, whereas your target group is actually more inclined to be on Facebook or Instagram.
The tendency for a person's positive or negative traits to "spill over" from one personality area to another in others' perceptions of them
In innovation: This plays out in a number of ways.
From BMW selling a 1-Series that is cool by association or a person’s professional career having us presume that they’re awesome at home.
But success of excellence in one area usually doesn’t translate into other areas.
Cases in point:
Solution: When evaluating opportunities, be they businesses, people, or products, try not to let preconceived notions about quality or lack thereof, affect your ability to make impartial, objective judgments based on the data at hand.
For example, just because X worked or Y didn’t work previously or for somebody else, it doesn’t necessarily hold true on this occasion and in this context.
Define key metrics of success or performance that matter to you and evaluate things based on their resective merits - a healthy dose of professional judgment paired with hard data usually works best.
The tendency for people to place a disproportionately high value on objects that they partially assembled themselves, such as furniture from IKEA, regardless of the quality of the end result.
In innovation: I see this play out repeatedly with technical folk - designers and developers mostly - who get so enthralled in what they’re working on, investing tonnes of sweat equity, only to get defensive when their business model or the commercial merit of their offerings are questioned, because they’ve worked oh so hard to bring them to fruition.
The flipside is you can integrate this into your product offerings, whereby customers develop a sense of ownership for ‘things’ they have built using your product or platform - this could extend to online graphics tools such as Canva just as it might to social media platforms like Instagram.
Inaccurately perceiving a relationship between two unrelated events.
In innovation: Mistaking correlation with causation and allocating resources accordingly is unfortunately, a well traveled path.
Solution: You might try A/B or multivariate testing assumptions to determine whether or not correlation also amounts to causation before drawing any potentially harmful conclusions.
The phenomenon where people justify increased investment in a decision, based on the cumulative prior investment, despite new evidence suggesting that the decision was probably wrong. Also known as the sunk cost fallacy.
In innovation: Entrepreneurs are often guilty of this, becoming emotionally attached to their ideas thanks to ongoing investment in them - both of the financial and emotional kind - and while all the signs might point to “this is not working” they just keep on going, convincing themselves that “if they can just *insert external event here* we’ll be fine”.
However, there might be some merit to this. Steve Jobs often spoke of the ‘reality distortion field’ and if you’re doing something truly new and disruptive, then chances are your market will be small initially and it might take years to break through and become an ‘overnight success’, however you should have clear hypotheses and metrics in place from day one to monitor progress and guide the ship as opposed to doing the same damn thing day in, day out, for years on end which as Albert Einstein pointed out, is the very definition of insanity.
Solution: Define your milestones and go/no-go points up front. Ask questions like “what is the worst possible outcome we are willing to accept?” or “at what measurable point do we pull the plug?” and ensure you’re kept accountable to these milestones by a peer or team.
An over-reliance on a familiar tool or methods, ignoring or undervaluing alternative approaches. "If all you have is a hammer, everything looks like a nail."
In innovation: It seems like everybody is a ‘service designer’ these days, or a design thinker.
That’s partly because it’s pretty easy to get swept up in the supposed simplicity of a powerful tool like design thinking, run to the bright lights of being a freelancer and declare yourself a ‘human-centred gamechanger’ to the world on Linkedin.
Such people will look to design thinking to solve any organisational challenge, even though said hammer in this instance might in fact be process change, mindset, environment or other methods such as the lean startup or agile.
So many companies seem to think that the hammer to their innovation nail is building an app and putting it onto the App Store alongside 2.2 million other apps that mostly don’t get any engagement.
Solution: Take many small bets across lots of potential solutions early. To do this quickly and cheaply you might run solution interviews, ads on social media testing your offering and directing interested users to a landing page where they can sign up to ‘early access’ once the product becomes live. We want to test real world customer behaviour.
The tendency to express undue liking for things merely because of familiarity with them.
In innovation: Just because you are not familiar with the workings of something new (eg. an ICO or initial coin offering) it doesn’t mean you should ignore them in preference of say, traditional venture capital, that you might be more familiar with.
Solution: Explore the pros and cons of different options in order to double down on the most relevant and value adding one.
The refusal to plan for, or react to, a disaster which has never happened before.
In innovation: “Neither RedBox nor Netflix are even on the radar screen in terms of competition.” - Jim Keyes, CEO of Blockbuster 2008
Just because something has never happened it doesn’t mean it won’t happen or on a personal level “that kind of stuff happens to other people, it would never happen to me”.
Nothing and noone is sacred.
Kevin Kelly also refers to this as the short-now, basing your beliefs and attitudes about the world on what you’ve only ever known in your short time here. It’s easy to forget that it’s only been in the last 100 years, or the last 0.03% of human history, that has given us automobiles, aeroplanes, computers, the internet, smartphones and so on.
It’s easy to forget that the United States didn’t become the superpower that it is until the 20th Century.
Life wasn’t always what it was before and tomorrow, it won’t be what it is today.
When it comes to disruption, companies need to prepare not for what was or what is, but what will or may be.
Solution: Having people on board who keep abreast of the latest trends and/or engaging future thinkers to advise you on what to look out for is a start.
Simply keeping in touch with such trends by setting up your own Feedly account, listening to innovation and technology podcasts, reading books on the topic and industry reports or attending conferences can also go a long way to shaping your perspectives.
Just make sure you perform an honest and objective assessment by mapping said trends against your business model to identify threats.
And remember, threats are only opportunities that haven’t been responded to in a timely manner.
Aversion to contact with or use of products, research, standards, or knowledge developed outside a group.
In innovation: Public sector organisations are notorious for choosing to develop something from scratch that is readily available as a customisable off the shelf (COTS) product, and not doing a great job of it along the way. See Queensland Health and Myki.
Solution: Perform a cost benefit analysis of buy v build and hold people accountable for cost and schedule blowouts.
The tendency to be over-optimistic, overestimating favorable and pleasing outcomes.
“Tomorrow I’m going to start my diet.”
“This is the year i’m going to get fit.”
“I’m going to start my business this year.”
“I’m going to save 20% of what I earn this year.“
“Once this product is live we’ll kill it!”
“If we can just get the customer to see that…”
We tend to look at the future through rose colored, optimist glasses.
Some call this the optimist illusion and for most people, said diet, workout plan, business launch or increase in savings never eventuate. It’s also why 80% of new year’s resolutions are busted by February.
Solution: It’s a recurring theme but always test your assumptions by placing lots of small bets. This way, we’ll be far more likely not to let over-confidence or optimism about the future unduly result in our doubling down and over-investing in the wrong thing. `
Excessive confidence in one's own answers to questions. For example, for certain types of questions, answers that people rate as "99% certain" turn out to be wrong 40% of the time.
In innovation: This might manifest itself in the HIPPO - the highest paid person’s opinion - at large organisations.
And often-times, when it comes to anything new or disruptive, the HIPPO gets it wrong, because a) breakthrough ideas are usually anything but and are the result of countless iterations and evolutions, b) senior management see the world through a lens of certainty and make decisions only based on what’s known which is not aligned with disruptive innovation and c) senior executives tend to have a narrow lens through which they see the world and don’t spend enough time with customers to have any empathy around problems or enough insights to come up with new solutions.
Solution: Do as Amazon’s Jeff Bezos does and “be stubborn on vision but flexible on the details”.
Be outcome focused.
The tendency to have an excessive optimism towards an invention or innovation's usefulness throughout society, while often failing to identify its limitations and weaknesses.
In innovation: I see this often and it is somewhat similar to the ‘law of the instrument’ bias.
The amount of chat-bot developers who insist that chatbots are the answer for pretty much….anything, or the amount of VR developers, or the amount of blockchain developers...or you get the picture.
Also, a mobile app is not a magic bullet for every problem.
Solution: Perform solution interviews and online tests to determine which solutions actually resonate with users.
The tendency to take greater risks when perceived safety increases.
In innovation: If one has a track record of successfully landing on their feet, then they may be far more likely to jump from the second storey of a building.
Various experiences and circumstances may lead us to underestimate the risk involved and therefore place less than diligent bets. A classic case of this is taking successful concepts from one market and introducing it to a new market expecting it to be just as successful but overlooking cultural, economic, political, technological and social factors.
The tendency to claim more responsibility for successes than failures. It may also manifest itself as a tendency for people to evaluate ambiguous information in a way beneficial to their interests
In innovation: This turns up on Facebook and Instagram where people put their best foot forward.
Solution: Celebrate and share failures which are ultimately learnings in disguise. Take a note out of the agile Scrum methodology and have public validation and learning boards which celebrate both the successes and failures.
This way, people will also be much more likely to be comfortable with their assumptions being wrong, which is a critical part of the incubation of any idea and key to successfully coming up with something new that actually adds considerable value to the world.
Known as the tendency for group members to spend more time and energy discussing information that all members are already familiar with (i.e., shared information), and less time and energy discussing information that only some members are aware of (i.e., unshared information).
In innovation: Human beings are predisposed to doing what’s easier so there’s a lot of thought leadership circulating nowadays that encourages people to, despite their inner voices urging them not to, “do the hardest thing first thing in the morning”.
The same goes for group discussions and brainstorming sessions. We try to simplify and have conversations that are not as demanding on the mind because, well, it’s easier and doesn’t require us to challenge our egos or publicly appear less knowledgeable than we ought to be.
Solution: It can indeed be mentally draining to focus on new information and have to transfer knowledge but do so in a way that is time-boxed. For example, spend 30 minutes or so on such tasks before switching to something else. Just like a workout, high intensity crossfit sessions don’t last for two hours like a slow, drawn out powerlifting session might.
Any high intensity activity, whether mental or physical, should be performed in short bursts. You might introduce or try using a Pomodoro timer to break work into 24 minute chunks separated by short 5 minute breaks.
The tendency, when making decisions, to favour potential candidates who don't compete with one's own particular strengths.
In innovation: Think of the tall guy who takes his short friend out with him to a bar.
In this case, surrounding yourself with people who are not as smart as you for example, can actually be detrimental to innovation.
In fact, people like Richard Branson and Mark Zuckerberg credit surrounding themselves with people smarter than them as key to their success.
Solution: Do as Richard Branson and Mark Zuckerberg do and surround yourself with smart people, inspire them with a worthy mission, give them the environment and tools they need to succeed and get the hell out of the way.
The tendency to like things to stay relatively the same.
In innovation: When Clayton Christensen published The Innovator’s DNA, he called out a number of attributes that underlie your classic innovator - amongst them, ‘challenges the status quo’.
If you’re quite comfortable with things remaining the way they’ve always been then you’re probably not the type of person that would have ushered in the automobile, the telephone or the personal computer.
Solution: When putting together a team, evaluate them against the 15 personality attributes of innovators and entrepreneurs. For more on this, read this article.
Losing sight of the strategic construct that a measure is intended to represent, and subsequently acting as though the measure is the construct of interest.
In innovation: Also known as focusing on the means instead of the end.
In innovation circles, this is getting bogged down in building ‘the thing’ and losing sight of the benefit or outcome that the thing is supposed to create. Benefits realisation becomes an afterthought.
Solution: Testing metrics such as retention and engagement go a long way to telling you just how much benefit your product is creating. Delivering product in incremental, highest value feature first ways, by using agile methodologies such as Scrum, can help you ensure you don’t lose sight of the said outcome as customer feedback is received throughout the product development lifecycle, particularly at the end of every one or two week sprint.
Concentrating on the people or things that "survived" some process and inadvertently overlooking those that didn't because of their lack of visibility
In innovation: When people talk about successful entrepreneurs, they do so by focusing on their wins and often neglect their oftentimes, many more, losses.
Solution: Celebrate failures - see Self Serving Bias.
In innovation: The tendency to give disproportionate weight to trivial issues. Also known as bikeshedding, this bias explains why an organization may avoid specialized or complex subjects, such as the design of a nuclear reactor, and instead focus on something easy to grasp or rewarding to the average participant, such as the design of an adjacent bike shed.
See Shared Information Bias.
The tendency to want to finish a given unit of a task or an item. Strong effects on the consumption of food in particular.
In innovation: This is why it pays to keep those units small - e.g. agile project management v waterfall. We want to finish what we started and a one week sprint is easier and cheaper to finish than a 6 month long stage in a waterfall program.
Solution: Deliver product or projects in small increments so that the cost of any unit bias isn’t large.
Design thinking is a buzz phrase that has been thrown around companies for many years now. It is not a new concept but there are still many large companies that are yet to embrace this modern-day mindset and methodology. This ebook focuses on how organisations can apply design thinking and start to move the needle.