Cognitive Biases and Their Relationship to Organizational Transformation and Excellence – Part One

People are at the heart of everything. Organizational transformation and excellence projects are part of everything; therefore, people are at the heart of organizational transformation and excellence projects. (A bias toward people — just kidding!)

Let us begin a two-part series exploring the relationship between cognitive biases and organizational transformation and excellence.

Before discussing the relationship we continuously observe throughout the projects we deliver, it is important to first introduce the concept of cognitive biases.

Cognitive biases are defined as patterns of deviation in judgment that occur under certain circumstances, leading to distorted perception, inaccurate judgment, or illogical interpretation. Their influence on decision-making has been well established in cognitive sciences, particularly in the field of behavioral economics.

Within the context of organizational transformation and excellence, we often tend to believe that we are rational and logical when making decisions related to continuous improvement and development initiatives. But is that belief always accurate?

As humans, our attention and awareness of these biases and their impact are inherently limited. At ODEL, we reviewed a set of lessons learned from projects delivered in collaboration with our clients and connected them to several cognitive biases.

Through this series, we will take you on a journey to explore these biases within the context of organizational transformation and excellence, accompanied by real-world examples that illustrate their impact.

Outcome Bias

Outcome bias occurs when a decision is evaluated based on its known outcome rather than on the quality of the decision-making process itself.

When making decisions related to organizational development, we may sometimes fall into the trap of seeking a specific outcome. As a result, we interpret the available inputs and steer our thinking toward supporting the result we already expect or want to achieve.

This bias can appear throughout various stages of organizational transformation and development and may take several forms.

For example, you may select a project team whose competencies are aligned with the outcome you already expect:

“Everyone on the team has a technical background, so the solution must be technical.”

You may also collect data that supports the desired conclusion:

“We collected complaints and suggestions from a specific branch, so this branch must be the source of all the problems.”

Similarly, you may consult experts from a particular professional background that supports the conclusion you already want to reach:

“The project experts all have marketing backgrounds, so clearly our long-standing problem must be that the marketing plan was inadequate.”

The Anchoring Bias

Anchoring bias can be described as our tendency to become overly influenced by the first piece of information we receive.

Organizations and their employees may become anchored to information they heard or concepts they learned during earlier stages, regardless of whether those ideas remain accurate, relevant, or effective today.

This can influence current decision-making and prevent organizations from adopting leading practices in organizational transformation and excellence.

This bias can appear in several situations.

For example, a leader may be appointed to a role related to organizational transformation and excellence while carrying previous experiences and knowledge of organizational excellence concepts and practices acquired earlier in their career.

These earlier perspectives may then influence organizational development decisions, causing them to be made through a framework that no longer reflects recent developments and changes.

One example is the traditional perception that the concept of “services” applies only to external beneficiaries, while activities involving internal beneficiaries are viewed merely as work procedures rather than services.

This may cause an organization to separate work procedures from services and manage them differently, ultimately weakening the governance and control of its operational processes.

False Consensus Effect

The false consensus effect is the tendency to overestimate the extent to which other people agree with us.

When making decisions related to organizational development and transformation, we may sometimes assume that what we believe as a team involved in the transformation process is also shared by all leaders and employees across the organization.

In reality, this perceived consensus may not exist.

This bias can emerge throughout different stages of organizational transformation and development in several ways.

For example, an organizational transformation and development strategy may be established, and the team may assume that the designed model has everyone’s agreement — only to discover during implementation that this is not the case.

Similarly, employees may be asked to document and improve procedures according to an approved methodology. The project team may assume that everyone understands the methodology, its details, and how it should be implemented.

However, once implementation begins, the reality may prove otherwise.

See you soon in Part Two.

Thank you.

Knowledge Library Team
ODEL
Riyadh