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Sammy-Jo LiefveldHow come we keep holding on to a situation, even though we know it will not be successful in the long run?
Sometimes we are simply so invested in a situation – we have put our hearts, money, and resources into it. And then it’s hard to take the decision to change drastically, acknowledge our losses, and steer in the direction where, in the long run, we will be in a better position.
We tend to:
- Assume things will work out, as they always will (optimism bias)
- Stick to what we already know (confirmation bias)
- Prioritize our own position over the common good of our community (agency problems and self-interest)
- Protect our reputation and self-image (ego threat and conformity bias)
- Find it difficult to accept losses (sunk cost effect)
In 2015, my colleague Fleur Lamers and I performed research on cognitive biases in project decision-making where we identified signs and causes of “escalated commitment” to failing courses of action in the context of business transformation projects.
I am sharing a summary of our findings while putting them into a business sustainability context – an area where these biases also have a massive impact. Our brains are wired to focus on surviving here and now. This makes it for example harder to grasp future impacts of climate change or to recognize social inequality if we are not confronted with it directly.
These biases tend to have a strong effect on decision-making and are holding back business leaders when it comes to committing to, investing in, and realizing sustainability approaches and projects in their companies. Often, we do not recognize our biases and therefore do not realize how they influence our decision-making.
Read on to identify ways to recognize these patterns and how to tackle them in our journeys toward a sustainable world.
Optimism and illusion of control
“wishful thinking”
We tend to overestimate the likelihood that positive events will occur and underestimate the likelihood of negative outcomes[1].
Our brains are not made to focus on risks in the long-term and our future scenarios are difficult for us to grasp. Our brains tend to build general conclusions and predictions based on a number of consistent observations. We tend to simply assume that things will work out well, even though data suggests problems will arise.
How to act?
- Find ways for people to really understand and experience the effects of future scenarios with their senses through narratives, visuals, and sounds rather than abstract data[2].
- Focus messages on the severe consequences of our current actions (rather than abstract numbers or complex mechanisms)
- Find relatable examples where the unthinkable turned out to be true and deduce learnings out of them.
- Perform “premortem” exercises to assume the worst outcome and analyze the main reasons why we failed. This allows us to shift our way of thinking, spot weaknesses in the current course of action, and plan better going forward. The same exercise can also be done the other way around: imagine the best possible outcome and find the main reasons why we succeeded (what needs to be done).
Confirmation bias
“sticking to what I know”
We tend to actively seek out information that supports our (initial) decisions or existing beliefs[3] [4].
In the overload of information that our brains have to process, they tend to selectively focus on specific pieces of information that resonate with what we already believe to be true.
How to act?
- Provide information, focusing on consistency rather than quantity. It is better to have a few credible resources than to overload the audience with more and more viewpoints.
- Repeat messages in different forms aligned with our specific contexts in order to stick. We are all busy and have “other priorities” in our daily lives. Sending a strong message once or twice will not be enough to stick.
- Start messages or conversations with what we know and recognize (e.g. our current business priorities or challenges) and use evidence to support the message that fits into our conceptions of the world.
Agency problems or self-interest
“misaligned goals”
Agency problems relate to the Agency Theory where one party (the principal) hires another party (the agent) to perform work on the principal’s behalf. We humans sometimes can have the urge to pursue self-interests instead of working towards the principal’s goals[5]. In a business context, the agent will have an incentive to present information in a more positive way than reality in order to protect his/her position.
In a sustainability context, this same mechanism relates to what is sometimes called the “tragedy of the commons.” In our daily lives, we tend to prioritize our own position and interest over the common good of the community or a larger group of unrelated people[6].
How to act?
- Connect shorter-term consequences to decision-making, e.g. through reward and penalty incentives that align with long-term community goals. Also, provide insight into short-term progress toward long-term goals.
- Find ways to make the impact of certain actions more relatable and personal (e.g. by emphasizing effects for our children or grandchildren)
- Emphasise shared objectives in conversations and try to find win-win situations
Ego threat or conformity bias
“fitting in”
A change in viewpoints may harm our self-image or self-esteem. We tend to protect our reputation and we want our beliefs to fit in with other people we relate to. Research has also shown that our egotism is more at stake when we were responsible for the initially chosen courses of[7].
In other words, we find it difficult to admit mistakes we made in the past and change our viewpoints and actions towards a better (long-term) outcome, because we want to protect our reputation.
How to act?
- Help us sell the story of sustainable solutions to our superiors or stakeholders (our boss, our boss’ boss, our shareholders, our suppliers, our clients, etc. etc.)
- Show examples of others (preferably relatable, powerful persons) that are showing the desired behavior.
- Active participation in forming future plans can be a good tool to create our commitment to sustainable solutions.
- Focus on perspectives for action. Rather than just convincing us we need to do something, help us see how we can proceed (and help us look good in the process).
Sunk cost effect
“avoiding losses”
We tend to consistently continue a chosen course with negative outcomes rather than alter it – simply because we have invested so much in it. We prefer a chance to create value with current activities we invested in over the sure losses we face when abandoning these actions. Ironically, in trying to avoid sure losses, we are also facing the risk of even greater negative consequences[8].
How to act?
- See if sustainable solutions can be integrated into approaches to solve “traditional” problems (e.g. a more sustainable product design that reduces dependency on that specific supplier or scarce resource)
- Present changes in terms of gains instead of losses and circumvent the loss felt when we are asked to invest funds. Provide support to acquire the necessary funds for the transition.
- Create a story different from loss: what are we gaining? For example more rest, less rat race. Do not (just) address people as consumers, regulators, or CEOs, but as citizens, changemakers, parents, etc.
[1] Taylor, S. E. (1989). Positive Illusions (pp.441-85). New York: Basic Books.
[2] van Vugt, M., Griskevicius, V., and Schultz, P. W. (2014). Naturally green: harnessing stone age psychological biases to foster environmental behaviour. Soc. Issues Policy Rev. 8, 1–32. doi: 10.1111/sipr.12000
[3] Wason, P. C. (1960). On the failure to eliminate hypotheses in a conceptual task. Quarterly journal of experimental psychology, 12(3), 129-140.
[4] Bazerman M. H. (2006). Judgment in managerial decision making, Wiley, sixth edition.
[5] Mahaney, R. C. & Lederer, A. L. (1999). Runaway information systems projects and escalating commitment. In Proceedings of the 1999 ACM SIGCPR conference on computer personnel research (pp. 291-296). ACM.
[6] Hardin, G. (1968). Tragedy of the commons. Science 162, 1243–1248. doi: 10.1126/science.162.3859.1243
[7] Zhang, L. & Baumeister, R. F. (2006). Your money or your self-esteem: threatened egotism promotes costly entrapment in losing endeavors. Personality and Social Psychology Bulletin, 31(7), 881-893.
[8] Staw, B. M. (1997). The escalation of commitment: an update and appraisal. Organizational decision making, 191, 215.
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