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How personal biases can affect business continuity decisions

Managerial biases such as overconfidence and myopia can explain many failures in business decisions but new research shows how personal biases can be used to improve decision making.

Conventional approaches to eliminating biases focuses on ‘changing the mind’: if people can be trained to recognise their biases and think more logically, better outcomes are likely. However, increasing evidence suggests that such a de-biasing approach is not enough for effective decisions, because it only deals with our conscious half – what Daniel Kahneman famously called System 2. Our automatic half – Kahneman’s System 1 - also plays a role in determining a decision and it is sensitive to our surrounding environment. Even contextual factors, such as the weather being sunny or cloudy, can significantly influence the decisions made. 

Are these biases fixable? In a forthcoming paper ‘Strategizing with Biases: Engineering Choice Contexts for Better Decisions using the Mindspace Approach’, due to be published in California Management Review, the authors, Chengwei Liu, Ivo Vlaev, Jerker Denrell and Nick Chater, of Warwick Business School, and Christina Fang, of Stern School of Business, suggest they are.

The researchers looked at how biases could be turned on their head, where better decisions are more likely by ‘changing the context’: engineering the context to ‘initiate a bias’ to overcome a damaging bias.

In the paper, managers are introduced to the Mindspace framework, which is the mnemonic of nine contextual forces grounded in the latest findings in the behavioural sciences: Messengers, Incentives, Norms, Defaults, Salience, Prime, Affect, Commitment and Ego.

“Mindspace offers a toolbox for managers to reframe the decision context so that different contextual forces can be employed to induce behavioural changes,” said Dr Liu, an Associate Professor of Strategy and Behavioural Science. “We argue such changes are more likely when we ‘go with the grain’ and work with, rather than fighting against, human nature.”

From a business continuity perspective, it is important to recognize that decision making can be impacted by contextual factors. The implication is that during an incident the business continuity manager may make different decisions on a sunny day than on a wet and windy day; or a business impact analysis workshop may produce different results depending on whether it is held during the summer or during the winter, for example. Such considerations mean that the Mindspace framework may be worth an examination.


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