Most CEOs are fairly confident they have a sound perception of what’s going on inside and outside their company. After all, as the one at the wheel, it’s their job to know where to steer.
As the Managing Director of global polling firm Ipsos MORI’s Social Research Institute (a position he held until 2018) it was Bobby Duffy’s job to know exactly how people perceive things. He’s got a warning for cocksure CEOs: you're probably not as right as you think you are, but it’s not entirely your fault.
In his book, The Perils of Perception, using studies from over 40 countries, Duffy argues that the human brain suffers from two natural flaws that affect how we perceive the world around us.
Concerned that our own grip on reality might not be as tight as we'd thought, Management Today cornered Duffy following his appearance at the CIPD’s The Future of Work is Human Literary Festival and asked him to enlighten us.
So why are we wrong about everything?
There are generally two big flaws in our thinking that impact how we perceive the world around us.
The first is that the human brain is naturally drawn to focus on more extreme, highly emotive and potentially misleading stories over less the extreme. Studies have shown that mental reactions are entirely different when people are shown pictures of dead cats over pictures of Ferraris and pizza. It’s an evolutionary hangover that has hardwired the human brain to identify immediate threats and react to them.
Take public perceptions of teenage pregnancy rates as an example. When asked to hazard a guess at what percentage of girls aged between 15 and 19 give birth during a year, the average answer that people give is 10 per cent. That’s one or two girls in an average mixed class of 30 students, which is ridiculous when you actually think about it. The reality is just over one per cent.
From a management point of view it can be problematic because we often overestimate the appropriate response and underestimate the time we have to react. It’s also amplified by highly emotional situations.
The second, and most damaging to our general perceptions, is what psychologists call realistic ignorance. This is where we think that we’re normal and that the way we see and do things is perfectly representative of everybody else. It’s compounded by our natural desire to associate with people similar to ourselves. (Management Today’s mind drifts to the perennial battle to improve boardroom diversity.)
It’s not some dumb fault of our brains, it's actually quite a psychologically frugal way of doing things. Having lots of different opinions in a room can be mentally quite tiring, but it means that we can form our own echo-chambers filled with people who share the same views and this can lead to confirmation bias, and losing perception as to what is normal for both an organisation and society.
Okay, being wrong about teenage pregnancy rates is one thing, but why is it a problem for businesses?
We asked internet users in India what percentage of the population have access to the internet. The average guess was 60 per cent. But at the time of the study the reality was 20 per cent. We were talking to one relatively middle class, connected group of people, who assumed that the rest of the population is like them.
It’s a real problem because this is a powerful growing middle class in India, that are increasingly setting the agenda in companies and in government, but they aren't aware of the actual reality of people’s lives.
It can keep coming up as a management issue, especially when it comes to employee well being or understanding customers, and this is why diversity of boards and diversity of leadership is so valuable.
So if this is all human nature, why are we suddenly getting the headlines about fake news and social media echo chambers?
It really compounds the issues rather than causes them, but it's going to be an increasingly growing problem as the information environment and our access to information changes.
Surveillance is the business model of an apparently free internet, but that makes confirmation bias its currency. Bosses will need to be prepared for a workforce that potentially has much more individualised and tailored views, but that is a problem for wider society as a whole.
This sounds more like a warning than an actual solution. How are leaders supposed to react?
Through my insight work with companies, I’ve found some of the most effective ways of breaking leaders out of their filter bubbles have been ethnographic and immersive. So in theory leaders who interact with their services, get out of the board room and recreate the experience of the customer or employee are less likely to fall into the trap. You just can't get that same feeling from figures from looking at spreadsheets.
A practical point is to get more diverse views and opinions directly into your organisation and leadership teams. It’s important for employers to try and give their workforce different perspectives, so mixing up teams and giving people opportunities to work in environments that they wouldn’t normally can only help.
So essentially you’re saying that leaders shouldn’t trust their judgement? Most CEOs would like to say that they understand what is going on within their organisation.
I’m not saying that bosses need to consult loads of people, or ensure that they have all the data before making decisions. This is much more about just recognising when you're being pulled towards something vivid but misleading. Don’t be drawn to the extremes - by all means take them into consideration, but don’t let them cloud your judgement.
Studies have shown that the people who say they’re certain that they’ve given the correct answers to a test are usually the ones who have usually performed the worst. It’s known as the Dunning-Kruger effect. People don't have the ability to spot they're wrong so they assume they're right.
It's quite important for leaders to recognise that overconfidence is not a great benchmark for correctness. You have to be mindful of people who come across as incredibly confident because it's often a sign that they don't understand the extent of the issue.
In general I think leaders are quite good at that. One of the key leadership traits is knowing who really knows their stuff and that is something that you need to get a handle on quite quickly.
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