Cognitive Biases in Business: Recognising and Overcoming Mental Blind Spots

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Cognitive Biases in Business: Recognising and Overcoming Mental Blind Spots

Cognitive biases in business are important to be aware of, particularly when it comes to business decision-making. The Balanced Mindset’s business coaching sessions can help you restore and clear your biased thinking, allowing you to make rational and unbiased decisions. 

In this blog, we will explore how our business coach can help you recognise and overcome these cognitive biases in business, and the impact of such biases. 

What are Cognitive Biases in Business?

When you make decisions based on subjective preferences, beliefs, and experiences, this is often due to cognitive biases. Some common cognitive biases in business are: 

  • Confirmation Bias: Seeking information that affirms existing beliefs, while overlooking information that might prove otherwise.
  • Anchoring Bias: Fixation or over-reliance on the first piece of information that is encountered, even if outcomes change. 
  • Sunk Cost Fallacy: Continuing a project because of the investment that you have already put in, despite cons outweighing the benefits. 
  • Overconfidence Bias: Overestimating your ability or judgement 

These above biases can lead to poor business choices and missed opportunities, as seen in the following case study. 

Case Study: Blockbuster Video

Blockbuster Video was a renowned American brand and chain that provided video rentals, video on demand (VOD), and more. At the start of the 2000s, Blockbuster had the opportunity to purchase a 49% stake in Netflix for a mere 50 million US dollars (which would be around 80 million today). 

However, Blockbuster’s leadership firmly believed that online streaming wouldn’t be as popular nor profitable and rejected the proposal. This is a prime example of confirmation bias, where Blockbuster held on to the belief that their current business model would continue to thrive in the foreseeable future. 

In 2010, Blockbuster filed for bankruptcy and Netflix, in 2024, has become one of the leading platforms in online streaming. 

Overcoming Mental Blind Spots

To avoid a demise like Blockbuster’s, it’s important to understand how you can overcome these mental blind spots. Here are examples of techniques for self-awareness and identifying these mental blind spots: 

  • Challenge your beliefs – Constantly challenging your beliefs, especially when you receive new information is an effective way to debias your thoughts and expand your awareness. 
  • Seek feedback – Others’ feedback can help you better understand others’ perspectives and gain new insights. 
  • Balance intuition and analysis – While a gut feeling can sometimes be the right choice, it’s crucial that this is combined with rational analysis to affirm that you’re making an informed decision.  

Within your business, you may want to consider the following strategies for overcoming and mitigating cognitive biases: 

  • Creating a bias-aware culture – Setting up policies and guides that address cognitive biases is essential to making both yourself and your employees aware of cognitive biases in business and what to do about them. 
  • Invest in learning and training – Learning about cognitive biases and empowering yourself with the tools and knowledge to overcome them is how you can effectively mitigate biases in business. Our business coaching will dive deep into the power of thought and how a shift in mindset can help your business thrive.  

Recognising Biases and Evaluating Strategies  

Recognising cognitive biases isn’t a one-time event — it’s ongoing, and if you’re truly willing to overcome them, you must commit to learning about them and adapting your mindset in order to debias your thoughts. For sustainable business success, your cognitive biases must be eliminated. 

The effectiveness of bias mitigation strategies can be evaluated by assessing changes in decision-making and outcomes, analysing performance before and after the implementation of these strategies. By reviewing these strategies, you’ll be able to gauge how effective they are at identifying and correcting biases — which can help you make decisions on how to improve these strategies. 

With our business performance coach, we can help you recognise, identify, and overcome cognitive biases so that you are able to make rational and informed decisions for your business. Never miss an opportunity to grow your business, break through your cognitive biases, and achieve ambitious goals with our business coaching. Contact us today for a free, 30-minute consultation. 

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