Tag Archives: Cognitive bias

Updates from McKinsey

Bias busters: Avoiding snap judgments
Despite their best intentions, executives fall prey to cognitive and organizational biases that get in the way of good decision making.
By Tim Koller, Dan Lovallo, and Phil Rosenzweig – The board of a mining company thinks it’s time for a new CEO, one who understands the increased role of technology in the industry and can inspire the next generation of mining leaders. The hiring committee has a few internal candidates in mind—namely, the heads of the copper, nickel, and coal divisions.

All three have similar years and types of industry experience and comparable P&L responsibilities. But the front-runner in the minds of many on the committee is the head of the copper division. After all, copper has contributed the most to the bottom line over the past few years, while the other divisions have been lagging. It must be because the unit head is a tech-savvy people person, with a good understanding of industry trends, they reason. “Seems like a no-brainer,” the head of the hiring committee notes.

But how can the board be sure that it is picking the best candidate for the top job?

These distortions don’t apply only to company performance; the halo effect can also alter how we view individual performance. That’s what happened in the case of the mining company. The front-running CEO candidate’s division had performed well in large part because of a significant spike in the price of copper, something over which he had no control. Yet the halo of high profits shined on the business-unit leader, the hiring committee’s initial impressions of him stuck, and he was appointed CEO.

Much to the board’s dismay, the new CEO did not demonstrate either skillful use of technology or strong leadership, two capabilities that were critical for this role. Early in his tenure, the company incurred billions of dollars in losses. more>

The tech bias: why Silicon Valley needs social theory

BOOK REVIEW

Mapping Israel, Mapping Palestine, Author: Jess Bier.
Normal Accidents: Living with High-Risk Technologies, Author: Charles Perrow.
Living a Feminist Life, Author: Sara Ahmed.

By Jess Bier – Social theorists in fields such as sociology, geography, and science and technology studies have shown how race, gender and class biases inform technical design. So there’s irony in the fact that employees hold sexist and racist attitudes, yet ‘we are supposed to believe that these same employees are developing “neutral” or “objective” decision-making tools’, as the communications scholar Safiya Umoja Noble at the University of Southern California argues in her book Algorithms of Oppression (2018).

In many cases, what’s eroding the value of social knowledge is unintentional bias – on display when prominent advocates for equality in science and tech undervalue research in the social sciences.

Science and tech are viewed as revenue-generating down the line, but the cost-saving benefits of improved social understanding, and the benefits that go beyond costs, tend to go underappreciated.

Ironically, the same discriminatory systems targeted by social theory end up blocking underrepresented groups from getting a toehold in academia, the very seedbed of these ideas. Sexual harassment and racism are much more than individual incidents; they’re institutionalized mechanisms for maintaining systemic barriers. more>

Why Anger at Elites Was Channeled Towards Voting for Brexit

By Chris Dillow – What’s going on here is a concern for relative status. People try to preserve their self-image by holding others down.

This is entirely consistent with attacks upon immigrants and benefit claimants.

Here’s another example: wishful thinking, or the optimism bias. John Steinbeck [2, 3, 4, 5] once said that there’s no socialism in the US because the poor think of themselves as temporarily embarrassed millionaires.

A similar thing happened in the U.K. in the 2015 election. The Tories said they’d cut welfare benefits. What voters heard was benefit cuts for other people.

I could go on. There’s the just world illusion, status quo bias and adaptive preferences.

Put all these together and you have what John Jost calls system justification theory (pdf) – a set of ideas that sustains inequality and injustice. more> http://goo.gl/OTHQ2w

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