Avoid the pitfalls of cognitive bias by tapping into diverse perspectives

In an environment characterized by rapid geopolitical, regulatory, and business shifts, organizations today are facing heightened levels of strategic risk. What exactly are strategic risks? In short, the risks that threaten to disrupt the assumptions at the core of an organization’s strategy. Think everything from black swans to political upheavals and financial crises, as well as new technologies that can render a business model obsolete.

To mitigate the potential negative outcomes these risks present, your business strategy must provide you with creative options for responding to a crisis, industry disruption, or brand threat. Too often, however, the people who set strategy rely on a set of common assumptions and beliefs that the organization rarely questions.

What happens if those assumptions turn out to be wrong?

Bringing unconscious beliefs to light

Organizational beliefs are intriguing because our biases prevent us from even realizing we’re relying on assumptions in the first place.

For instance, if you’re an experienced executive, you may have been through enough business challenges to recognize the odds of a new risk materializing are low. Your assumption that this new risk will blow over may stop you from taking important preventive action. Similarly, let’s say your organization’s new product launch has an unexpectedly low response from the market. You may immediately assume a design fault led to the product failure, but perhaps the real issue is that customers have lost trust in your products.

Although such cognitive biases are normal, they aren’t unusual. In fact, they can be averted by intentionally seeking outside views from non-traditional sources—including members of the board—who can challenge your habitual thought processes.

Inviting effective challenge

In essence, you’re looking for people capable of providing effective challenge. Whether at the board or management level (or both), these are people who have the courage to ask the tough questions and challenge some of the assumptions and beliefs underlying your strategic choices. They should be willing to look beyond the status quo to assess if the organization is taking on too much risk—or perhaps not enough. They should also help evaluate big strategic decisions, exploring both the risk of taking action and the risk of not doing anything to determine the impact of either decision on your revenue, market positioning, brand, and competitive advantage

To mitigate the potential negative outcomes these risks present, your business strategy must provide you with creative options for responding to a crisis, industry disruption, or brand threat. Too often, however, the people who set strategy rely on a set of common assumptions and beliefs that the organization rarely questions.

Attracting diverse perspectives

A mix of people from different backgrounds with unique perspectives can help challenge organizational assumptions, uncover new ways of thinking, and prevent team members from reaching the same conclusion. In fact, research shows that thought diversity can help organizations make better decisions because it triggers more creative information processing, which is often absent in homogenous groups.

To harness this power, organizations and leaders must consciously make choices to bring in people with different perspectives. This includes creating a diverse workforce composed of people who approach issues from a wide range of viewpoints. Notably, this type of diversity is not confined to gender, race, or sexuality, but extends to diversity of thought, background, education, and job level.

Although diverse thinkers may take more time to arrive at a solution than a homogenous group, the solutions they generate will typically be more innovative than those proposed by people who think alike. As an added advantage, diversity of thought can help organizations both reduce their risk exposure and identify opportunities to turn risk to their benefit by encouraging teams to explore both upsides and downsides they may never have otherwise considered.

To learn more about improving strategic decision-making by understanding the risks created by organizational biases, download 10 questions to embrace risk and lead with confidence.