Outsmart Your Instincts

How The Behavioral Innovation™ Approach Drives Your Company Forward

Adam Hansen, Ed Harrington, Beth Storz

• Publisher: Forness Press
• Year: 2017
• Print ISBN: 9780997384505
• eBook ISBN: 9780997384512
• Topic: Business
• Subtopic: Strategia di business
• Index: Business

Evolution is killing innovation!
"Just trust your gut" is great advice when your instincts tell you to run from a lion in the jungle. But when it comes to thinking innovatively about your business, those same instincts can be your own worst enemy. Cognitive biases—the instinctual mental shortcuts we all have in our brains that shape how we see and respond to the world around us—can also be the archnemeses of innovation/innovative thinking. New ideas appear too risky. Data gets discounted if it doesn't match the hypothesis of the researcher. And even like-minded innovation enthusiasts can find that enacting disruptive change is tough when they all see things the same way.
It's time to let go and learn a new way to think.
Created by innovation experts, Outsmart Your Instincts cleverly merges behavioral science with business savvy. Using the trademarked Behavioral Innovation™ model, the authors provide an in-depth examination of eight unique biases (Negativity, Confirmation, and Conformity among them) that get in the way of creativity/creative thinking—and show us how we can overcome these barriers and break from the status quo.
?With clever, thought-provoking activities, accessible writing, and easy-to-follow advice, Outsmart Your Instincts shows us how and why we react to new ideas the way we do, and then—helps us rethink what-we-think. Once we learn to outsmart our own instincts, we can take on challenges as true innovators who rely on all of our brains' powers—not just our guts—and be equipped to outsmart the competition.

1

Introduction

YOUR GREAT-GREAT-GREAT-GREAT-GREAT-GREAT- (YOU GET THE POINT) grandfather and his friend are out walking in the jungle one bright, fine day. They hear a rustling in the bushes. The friend goes out to investigate. He finds himself cornered by a tiger and—pardon the horror—meets his demise as a delicious side of man-kabobs for the hungry predator. Your ancestor runs the other direction, and so lives to see another day. His takeaway? What you can’t see might kill you. So it’s safe to assume the unknown might just be another tiger looking for a meal. Bottom line: stay away from the unknown.

Fast-forward a few hundred generations. The same kind of reaction toward the unknown occurs again and again—those who take quick, decisive action to avoid novelty are more likely to have stuck around long enough to pass on their DNA. We are the descendants of the savants of risk aversion. We come by this impulse honestly. Our bodies and minds are still structured for the needs of millennia past; and just as the real threat to our bodies now isn’t caloric scarcity, but caloric overabundance (despite having bodies still wired to avoid caloric scarcity), our minds are also still wired to avoid existential threats and other now-rare problems. Many of our instincts are still prepared to deal with a reality that no longer exists.

We learn from the field of Behavioral Decision Making, which draws on Psychology and Behavioral Economics, that this is just one of the many Cognitive Biases humans have developed—Negativity Bias. Cognitive Biases are a collection of mental shortcuts that have evolved in our brains over time, shaping our judgment of the world. And social scientists confirm that all humans have them—across age groups, across cultures. To be human is to have Cognitive Biases.

Although they were once a useful tool to keep us safe from threats (like hungry tigers) and aid in quick decision making—all important when survival was what most aspired to—when it comes to the world of innovation, Negativity Bias and other Cognitive Biases can stymie even the most adept thinkers. You’ve seen it time and time again. A manager who’s afraid to try a new product development process because it’s just too unproven. Or a researcher who discounts suspect data— nonconsciously—to confirm what he thinks he already knows. Or a group of like-minded colleagues who are eager to enact real change, but still encounter roadblocks, often within themselves, without entirely understanding why.

Cognitive Biases make innovation difficult. From the momentum-killing lead shoes of Negativity Bias to the limiting blinders of Availability Bias; from the “stay-in-bounds” electric fence of Conformity Bias to the revisionist history we get from the Curse of Knowledge, we see these biases every day, unnecessarily making the challenge of innovation trickier. And we’re far from immune—we see it in ourselves daily.

But we have a secret. With the right tools and techniques it’s possible to transform biases from roadblocks that hinder innovation into exciting opportunities to think differently. We believe that with awareness of these Cognitive Biases, we can not only overcome them, but increase our understanding of all the people involved in the effort to go from concept to market—our customers, our partners, and ourselves.

It’s why we were compelled to write this book. We think the best place to start is awareness. So let’s start at the beginning and focus on the star of this show: your brain.

System 1 and System 2 Thinking

Your brain is one of the hardest-working organs in your body, consuming about 20 percent of your energy while representing only 2 percent of your body mass. As such, your brain has developed ingenious ways to conserve energy—powering up and down its processing power based upon the demands of each task.

In his book Thinking, Fast and Slow, Daniel Kahneman describes how our brains have two distinct modes of thinking to help us make the most of our resources.

System 1 (Fast) is the “easy” type of thinking that our mind defaults to unless there’s a compelling reason to take on harder thinking. It’s also referred to as intuitive thinking. It’s nonconscious and automatic. It takes almost no effort for System 1 thinking to kick in and direct the show, so it’s also pretty energy-efficient. Behind this efficiency is a very sophisticated pattern-recognition system. It seems simple to us because lots of hard work has already been devoted to programing System 1 for “automatic pilot” by dealing with complex subtleties and inferring consistencies, all outside our awareness. For example, you might remember how much attention and concentration it took to learn how to drive when you were a teenager. You had to pay attention to the hundreds of details such as the sides of the road, the car ahead of you, the car behind you (that you saw in that little rearview mirror in front of you), and when it was time to put on the blinker before you made a left-hand turn at a busy intersection. After many years on the road, the process has become automatic, and we don’t always know when to switch back from “automatic pilot” to more careful attention.

In the same manner, our brains shift most of our habitual decision-making to automatic pilot, and for many daily tasks and decisions, System 1 thinking does most of the work—the heavy lifting. You have undoubtedly driven all the way home from work without any conscious memory of going through the motions of driving the car. The same process takes place when we decide what we like and don’t like, or what we think will work and what won’t work. We don’t take the time to evaluate every variable and look for new or subtle sources of information. We react automatically and direct our own behavior accordingly. We couldn’t get through the day without the efficiencies of System 1.

One of the places we see System 1 thinking most frequently in our business is during the idea-generation phase. This phase is usually fast paced and lots of fun. Our brains are making lots of nonconscious and intuitive connections. As facilitators, we’re often directing participants in drawing pictures and playing games to stimulate new thinking and get past the habitual, logical, and limited. For most people, it’s an engaging and enjoyable process.

But, the System 1 thinking that makes all that efficiency possible is also home to our nonconscious Cognitive Biases. These mental shortcuts are always influencing our thinking, and potentially hindering our range of ideas, even when it feels like ideas are flowing freely.

For example, these Cognitive Biases often influence our decision making when it’s time to choose which ideas to move forward. Because a large share of processing happens outside of awareness, we can be blind to the cognitive errors that ensue. And to make matters worse, System 1 can also lead us to be unjustifiably confident—like Steve Carell’s character, Michael Scott, in the US version of The Office—so when we rely solely on this intuitive thinking, we can make errors and omissions, often unknowingly. It’s like the old adage, “It is when you think you are the most right that you are at risk of being the most wrong.” Anyone who has ever been married can vouch for this assertion. We need to be aware of our various System 1 instincts that both make our life easier and can trip us up at important moments.

System 2 (Slow) is thinking that requires more effort, more focus, and more conscious thought. It’s often called conscious thinking, or reflective thinking. It’s the more deliberate and deliberative part of our thinking process. Think of Rodin’s statue “The Thinker.” A hard cognitive task just might require us to sit down and ruminate for a bit, perhaps with our chin resting on our hand. System 2 requires a lot more energy. To conserve our mental “bandwidth,” our brains don’t like to be bothered unnecessarily if System 1 thinking can handle the task. While both modes of thinking are happening all the time, System 2 is generally relegated to monitoring and ratifying the decisions of System 1. System 2 is only activated in response to particular circumstances—like when the stakes are high, when an obvious error is detected, or when careful reasoning is required.

Robust innovation and creative problem-solving processes require some serious System 2 thinking. While there’s plenty of System 1 thinking involved along the way, if you neglect System 2 thinking when it’s needed, you will miss out on some really good ideas; you might even make some bad judgment calls that could have been avoided if you had engaged System 2 more.

We frequently see our clients trying to avoid engaging in System 2 thinking immediately after Idea Generation, when it’s time to select which ideas will move forward. That’s the time when we have to take a deliberate look at all the great ideas we have generated and narrow them down to a manageable set to move forward. Suddenly, it all becomes . . . A lot. Less. Fun.

At this point, it’s pretty typical for teams to start avoiding System 2 thinking (even though they’re not consciously aware of their resistance), and it’s our job as Facilitators to counter the objections and ensure that the needed deliberate thinking will happen. The objections will be couched in seemingly rational arguments. For example, people will say, “It takes too long to review all the ideas. We don’t have time,” or “Let’s just have everyone champion a few ideas instead of reviewing all of them. The ones we remember are probably the best ones anyway.” But don’t be fooled by these clever excuses. It’s merely a group of brains trying to conserve energy.

But to be clear, System 1 thinking isn’t just random associations. There are some real benefits that can be used to our advantage for fast decisions when the stakes aren’t too high:

• System 1 works well when the choice between Option A and Option B simply isn’t a big deal or is a habitual choice. Think about different brands of pasta sauce, or weekend video-on-demand options. These choices aren’t ones you’re going to take too much time on . . . unless you’re a really discriminating marinara connoisseur or have a deep-seated love for John Cusack movies.
• System 1 is especially helpful when we have developed enough expertise in a given area that we can rely on our well-honed powers of pattern recognition to guide us quickly without having to think very hard. This is actually the brilliant observation behind Malcolm Gladwell’s best-selling book Blink. Experts have ways of knowing (System 1) that they can’t even explain (with System 2). Gladwell points out that an experienced art appraiser can spot a forgery but may not be able to say exactly what’s wrong with the piece. You and I will also have our “gut reactions,” but we wouldn’t want to spend a lot of money without consulting an expert, who has trained intuitions from facing certain decisions so many times that the patterns become automatic.

Bounded Rationality

A slightly different take on this process is the concept of Bounded Rationality. Classical economics has at its root the idea of the Rational Actor, who is assumed to have:

1. Unlimited time.
2. Unfettered access to information.

Under these mythical conditions, the hypothetical “Rational Actor” will always make the most logical and value-maximizing decisions that are always in their own best interests. And while computers can do the calculations to determine how the “Rational Actor” would behave, real people never make decisions that way. The fact is, time and access to information are always limited—or at least bounded by practical constraints and daily pressures. Herbert Simon, who first proposed this concept, suggests that we more often use rules of thumb, or “heuristics,” rather than rigid rules of optimization, because we have other important decisions to make elsewhere, and our brains aren’t designed to make these kinds of calculations at all. Life is short. The modern trend of “so much to do, so little time,” requires more and more efficiency and multitasking. Luckily, a lot of our decisions don’t really require much attention, so it’s often adaptive to make use of our own heuristics. And they serve us pretty well—as long as we don’t mind “thinking inside the box.”

Behavioral Economics Moves Forward

We’ve recently seen the key insights from Behavioral Economics (BE) move into other fields of human endeavor, such as Behavioral Ethics, Behavioral Law, and Behavioral Health Policy. One of the lead BE researchers, Professor Cass Sunstein, even served as the Administrator of the Office of Information and Regulatory Affairs in the Obama administration. One of his primary contributions was to incorporate key BE insights in communicating and incentivizing regulatory compliance, and this approach has also been embraced by British Prime Minister David Cameron’s team. BE principles transcend political parties, as they speak to what it really means to be human, on both sides of the aisle.

In a field that is so dependent on applying a better understanding of human behavior, it’s time for Innovation to embrace Behavioral Innovation™. We know by now that we are all “predictably irrational” (as Dan Ariely observed)—hardly the Rational Actor that was proposed by Simon in the 1970s. Through the lens of Behavioral Innovation, many conundrums that “innovationistas” have wrestled with for decades are becoming more understandable. We now know better than ever how to recognize and overcome some of the more vexing obstacles in our own cognition, and facilitate more creative thinking in the stakeholders we serve—including customers, channel partners, and regulators.

The Cognitive Biases of Innovation

So, now that we know we are fighting against our own prehistoric cognitive wiring, what can we do? We need to work constantly and consciously on compensating for these “bugs” in our cognition to reduce their innovation-inhibiting forces. The first step is to recognize the role of specific Cognitive Biases when they are operating nonconsciously in System 1 so we can strategically call upon System 2 to take us to another level of innovation. While it’s helpful to be aware of the longer list of Cognitive Biases, there are eight biases that we see impeding innovation on a regular basis, including:

• Negativity Bias: “Bad is stronger than good.” Since the Cognitive Biases were developed to keep us safe from perceived threats, “bad” is always more salient than good. We fear loss more than we appreciate gain. As such, negativity has a more powerful effect on our thinking and behavior than positivity does. Metaphor: lead shoes unnecessarily slowing you down when you’re trying to move forward.
• Availability Bias: “What you see is all there is.” When making decisions, we tend to go straight to what we can recall most quickly and easily, and often miss things—such as valuable information and a more realistic sense of likely outcomes—that could lead to better decisions. More vivid memories (including more negative ones) will stand out and skew our judgment. Metaphor: horse blinders focusing you only on what’s right in front of you.
• Curse of Knowledge: “Well, it’s just obvious that . . .” Once we become experts in something, we have a hard time placing ourselves back into a position of someone who lacks that knowledge, no matter how much we believe we can. We assume that others have waaay too much prior knowledge and have trouble taking their perspective and explaining our ideas in a way that they understand. As difficult as it can be to know something, it is also difficult to “unknow” it. Metaphor: revisionist history that comes to be accepted as conventional wisdom, but isn’t quite the whole story.
• Status Quo Bias: “The bird in the hand.” In every proposed course of action, the automatic default/safest position is to keep things as they are and to ratify previous decisions. We believe that we can’t be criticized for making a bad decision if we merely endorse the Status Quo—incumbency gives it power that it often doesn’t deserve. Metaphor: balloon ballast keeping you from getting very far off the well-trodden ground.
• Confabulation: “Of course that’s why I did that!” We often make decisions emotionally—and not as systematically as we believe— and then pull together plausible-enough justification for these decisions. We usually believe that our manufactured rationale is true. We’re not lying, we’re just not fully aware of why we chose what we chose. And besides, it sounds so plausible. Metaphor: unreliable eyewitnesses who believe fervently they saw what they say, but in reality saw only a fraction of what happened, and even that was influenced by the emotion of the moment.
• Conformity Bias: “Play along to get along.” This is the need for agreement in a group that keeps us from exploring alternative perspectives. By putting more focus on agreement than on the quality of the decision itself, we end up making worse decisions. Metaphor: a pet’s “electric fence” collar keeping us well within the safest boundaries, usually to excess.
• Confirmation Bias: “Just as I thought.” This is the tendency to seek out evidence that supports the position we’ve already embraced— regardless of whether the information is true—and ignore anything that contradicts our preconceived notion. We subconsciously skew how new evidence is evaluated depending on its support of our previous decisions. Metaphor: the royal courtiers in the “Emperor’s New Clothes” who strain to maintain the agreed-upon reality.
• Framing: “Like a fish in water.” This is how individuals, groups, and societies organize, perceive, and communicate about reality. Our frame is the mental picture we have of our world; it’s the paradigm through which we perceive r...

Table of contents

• Cover Page
• Title
• Copyright
• Contents
• Foreword
• 1: Introduction
• 2: Negativity Bias-Bad Is Stronger than Good
• 3: Availability Bias—What You See Is All There Is
• 4: The Curse of Knowledge—Well, It’s Just Obvious that.
• 5: Status Quo Bias—The Bird in the Hand
• 6: Confabulation—Of Course That’s Why I Did That!
• 7: Conformity Bias—Play Along to Get Along
• 8: Confirmation Bias—Just As I Thought!
• 9: Framing—Like a Fish in Water
• 10: Steps Forward
• 11: Conclusion
• Acknowledgments
• Notes
• Self-Assessment and Activity Guide Index
• Index
• About the Authors