Your business is only as successful as the choices you make. Sound reasoning results in more convenient deals and a stronger bottom line. But what happens when our decisions are marred by errors inherent to the way we think? Keep reading to learn more about cognitive biases and how to fix them.
What Are Cognitive Biases?
A cognitive bias can be defined as a systematic error in the way we think that leads us to misinterpret information and curtails our decision-making.
Cognitive biases are far from exceptional. Actually, they can be considered the norm. The trick is to be aware of our biases, so we can make better decisions.
The examples below will help you gain a deeper understanding of cognitive biases and their impact on the way we do business.
Some Common Examples of Cognitive Biases
- Sunk-cost fallacy. This term refers to our tendency to follow through with a decision not because it is convenient, but because we have already invested too much money or resources in it. To fix this bias, learn to cut your losses and acknowledge when you no longer have a good reason to keep pursuing a project.
- Planning fallacy. This cognitive bias leads us to underestimate the amount of time it will take to bring a project to completion. Needless to say, this type of miscalculation can wreak havoc on your deadlines—and on your relationships with your clients. To overcome this bias, compare the task at hand with similar projects you or other companies have carried out in the past. This way you will get a more realistic timeframe to guide your decisions.
- Conservatism bias. Do you find it hard to incorporate new information into your decision-making? Then you may be displaying conservatism bias. This thinking error consists in assigning more importance to pre-existing information than to new data. To balance this tendency, consider new information carefully and act resolutely once you have determined its importance.
More Tips and Ideas
Read these previous posts for more tips that cover every aspect of the management of your organization, from communication to online security.
- Here’s how consumer demand will change after the pandemic
- The importance of taking microbreaks
- Flexibility, one of the most important lessons from the pandemic
- What to do if you receive a phishing email
- How to help your team deal with burnout
About the Greater Riverside Hispanic Chamber of Commerce
At the Greater Riverside Hispanic Chamber of Commerce (GRHCC), our core mission is supporting small businesses and economic development with advocacy, business referrals, marketing opportunities, training programs, student internships, and scholarships.