Has your company anchored to the wrong data on the pandemic?
Has your company anchored to the wrong data on the pandemic? Find out you could be suffering from a dangerous cognitive bias.
Do you know people who stuck to their initial views on the pandemic’s business impact? Unfortunately, many of us refuse to change even misinformed stances on the virus.
This is made even worse by leaders who spread the wrong information. For instance, Elon Musk disparages COVID tests, and criticizes efforts to decrease COVID spread, while saying he will refuse a vaccine.
They even reject requests from state and health officials to practice social distancing and work from home so that hospitals won’t be overwhelmed with the alarming third wave of COVID-19. Likewise, they oppose research proving that crowded indoor spaces such as hotels, gyms, restaurants and the like drastically increase the chances of catching the virus.
Why anchoring is a dangerous judgment error
Whether we admit it or not, we tend to hold on to our beliefs based on information we initially received. This is because of a cognitive bias called anchoring.
Anchoring is one of many dangerous judgment errors, or cognitive biases, that cause us to make the wrong decisions. Cognitive biases harm our decision making not only in business, but also in other life areas, from politics to shopping as revealed by survey research.
Acknowledging their danger and taking steps to address them will aid us in making better decisions so that we can survive and thrive in this pandemic and manage risks wisely. For instance, in shopping we can limit our choices to 10 pre-selected top options using this website.
Similarly, we can use research-based steps to address anchoring in our business decision making.
Anchoring in fintech – a case study
I’ve helped several businesses fight against cognitive biases specific to this pandemic since March, but I can especially recall one case of anchoring that put a business in serious peril.
When Lauren, the CEO of a 130-people fintech startup based in Texas, first learned about COVID-19, she wasn’t concerned at all. In fact, the whole leadership team waved it off as just a passing thing.
The executive team didn’t bother to prepare for a work disruption of more than two weeks, choosing instead to follow early guidelines from the CDC to get ready for just a short interruption due to a short-term virus outbreak.
Due to this lack of preparation, the leadership team instructed all its employees to go back to the office as states reopened, essentially dismissing news reports of a worrying rise in cases in Texas. Due to the senior executives’ unconcerned attitude towards the virus, neither they nor the employees followed social distancing guidelines or wore masks when they went back to the office.
Unsurprisingly, this led to one problem to the next, starting with an outbreak of COVID-19 in the office which originated from a company-wide meeting. Several employees, including the COO, were hospitalized. Two older employees died. The resulting shock and outrage within the company led to a massive downturn in productivity and morale.
Lauren realized she would not be able to handle the chaos alone and that she needed help. She decided to contact me after watching a webinar I held on how companies can handle challenges and spot opportunities during this pandemic.
Adapting to the new abnormal
The first piece of advice I gave to Lauren, the company’s COO, and HR head when we had our first Zoom call was that denying the chaos brought about by COVID-19 will only lead to further disaster. Stubbornly refusing to get off the path they were on may very well result in the closure of their business.
Instead, companies should avoid relying on just emergency measures through the minimal two years of the pandemic. Leadership teams have to craft long-term, proactive measures if they want to thrive.
Moving forward from anchoring
Immediately after our coaching sessions, Lauren and her executive team decided to do the following:
- The leadership team promptly held a company-wide virtual town hall to halt and debunk the wrong information on COVID-19 on which many of the employees had been anchored.
- Only a few days later, a comprehensive work from home program was rolled out. The executive team made sure everyone who needed to work remotely was provided with tech and equipment assistance.
- The marketing team quickly revamped its internal and external collateral to incorporate fresh information on the company’s COVID-19 initiatives. This included the actions taken to make its physical and virtual spaces safe for all stakeholders.
- To round out the company’s pivot, the COO and HR rolled out a retention program to head off any additional attrition.
When Lauren and I last spoke a couple of months ago, she told me that the initiatives they rolled out led to great results. It finally set the company back onto a productive course.
Lauren cited that the company was able to control and minimize the risk of COVID-19 infections due to their stringent policies when working onsite. This led to a decreased risk of accountability in case of an outbreak in their office. It was definitely a relief to the whole executive team and helped them improve both morale and retention.
Lauren said she was relieved they took the needed action once the COVID-19 cases started to increase, which led to another pause of the reopening process, which eventually resulted in a cycle of reopening and restrictions.
Dr. Gleb Tsipursky is on a mission to protect leaders from dangerous judgment errors known as cognitive biases by developing the most effective decision-making strategies.
A best-selling author, his new book is Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters.
His expertise comes from over 20 years of consulting,coaching, and speaking and training as the CEO of Disaster Avoidance Experts. It also comes from over 15 years in academia as a cognitive neuroscientist and behavioral economist with dozens of peer-reviewed articles published in academic journals.
Photo by engin akyurt