‘Success is a menace, it fools smart people into thinking they can’t lose‘.

– Bill Gates

Taken from one of my favourite movies of all time, ‘Pirates of the Silicon Valley‘ This quote that the character who played Bill Gates said to Steve Ballmer left me thinking. Bill Gates and Steve Ballmer were at the time negotiating a deal to license an OS to IBM. IBM had just decided to enter the personal computing market to compete with Apple and had approached Microsoft to acquire an OS to run their first line of personal computers. IBM’s executives negotiating the deal were confident that their future business model would be in the sale of hardware, a business they were very familiar with and dominant in. Instead of acquiring the OS, they agreed to Microsoft’s terms of a non exclusive license of Microsoft’s OS to IBM. This allowed Microsoft to retain ownership of their OS while also technically giving them the ability to sell to IBM’s competitors in the future. Ironically, IBM didn’t even know it at the time but Microsoft didn’t even have an OS that Bill Gates was selling them! Paul Allen, Bill Gate’s parter purchased the shelf OS was purchased from a small time software company for just 50K dollars which Microsoft repackaged as MS-DOS and licensed this to IBM. IBM realised the folly of this decision when they soon found themselves battling for survival in a crowded PC market where the reducing cost of hardware left it unable to compete against cheap competing clones that also ran MS-DOS. Bill Gates had sensed IBM executives’ lack of knowledge of the emerging software industry and the IBM executives’ own sense of overconfidence and used this against them to pull off an audacious sleight of hand licensing deal that made him one of the world’s richest men. IBM’s executives’ had in hindsight made the worst deal in computing history. IBM was so successful at the time and successful startups were so rare that they never even considered the possibility of failing. What could in hindsight be considered a poor decision was quite possibly because of deep rooted bias.

Bias by definition is a cognitive shortcut that allows you to make quick decisions. It’s natures ways of giving our brains conserving energy. Bias in itself isn’t inherently bad it saves our brain from melting down from doing so much cognitive processing. A lot of what your brain does, it does away from your conscious attention. This is why we end up picking up the wrong things while shopping or driving unconsciously to some other destination. It’s also why musicians can play pieces after repeating it many number of times without having to cognitively give it much more thought.

The upsides to bias is it lessens the effort you put on your brain, while the downsides of bias are when it starts influencing people that need to influence as part of their job. Product Managers are exposed to business strategy and product where the effects of their decisions can weigh heavily on the outcome. Conversely, biases can also be used by Product managers especially in product design to elicit desired behaviour either to grow engagement and acquire more customers. That is however material for a completely different blog post. I’ve listed below some of the most common biases that affect both business strategy and product development.

Business strategy biases:

Confirmation bias
This bias shows up with giving more weight to information that is consistent with our own beliefs and experiences while discounting any information that contradicts it. A good example of confirmation bias is seen in many right wing groups that consistently refute any evidence no matter how strong it is that contradicts their belief.

Overconfidence bias
This bias shows up as an over estimation of our own abilities. In IBM’s case, its executives were so confident of their success that they never dug deeper into the licensing deal that they signed with Microsoft and found they ended up with no control of the OS, the very thing that ran their computers. For some individuals this condition is called the Dunning Kruger effect, after a study on it by researchers Dunning and Kruger. The study found that competence and confidence in these individuals were actually inversely proportional. The more incompetent they were the higher their level of self confidence. Anyone, notice something how uncannily accurate this can be seen in this video of Donald Trump.

Product biases:

Bandwagon effect
The tendency to settle in and copy what everyone else is doing usually does mean you’re safe however this can also end up having a ‘me too’ product with no clear competitive differentiator. Knowing when to balance a feature that is required for your product while also having a competitive differentiator is key to creating a product ‘USP’.

Loss aversion
Sometimes carrying on with a failed idea can seem to be more tempting that abandoning it and using that energy into a new pursuit. This is caused by a loss aversion bias because of the emotional attachment and toll of having sunk time and effort into it. This can be seen especially with developers who may have spent a long time on a feature that has stopped yielding any results or for a stakeholder that has invested in a platform but knowingly continues to invest even if it adds to technical debt.

Law of instrument
“To a carpenter with a hammer everything looks like a nail”. This can sometimes be seen from product people that have competencies in a different discipline and tend to rely on the knowledge they have acquired in that background. For example a product manager with a technical background may tend to be more reliant on using a technical solution to solve a problem over any other approach.

Base rate fallacy
We tend to ignore general information and tend to focus on specific cases in isolation. Sometimes quantitative data alone may not be good enough and may require qualitative data to get the full picture for evidence. This can be seen profoundly in Marissa Mayer’s 40 shades of blue experiment where she insisted on using quantitative data over trusting a designers intuition, honed through years of experience.

Authority bias
We attribute greater weight to the opinion of a person in authority than someone lower down the chain. This is a tough one to go around especially in company with well established hierarchies. This is why more startups are beginning to adopt flatter structures to reduce the effect of this bias on decision making.

Belief bias and Disconfirmation bias
This is where we are more likely to accept an argument in favour of us while rejecting counter argument. This is strongly tied to a person’s own ego and insecurity. So this can be a hard one to check and leave at the door unless you’re very self aware. The most effective way to get past this as a bias is through lean UX techniques that creates a culture of experimentation with the intention to learn.

Curse of knowledge
When we are experts in a field we automatically assume that others may understand what we already know. Sometimes explaining to developers or designers the intended vision and strategy allows them to align themselves and deliver better rather than just asking them to execute a piece of work.

Planning fallacy
We tend to underestimate as product managers the time it takes to complete a task. It’s one of the biggest reasons why projects get delayed and deadlines are missed. The effort taken to create possibly jointly with a Business analyst or a developer a well defined story will offer a higher fidelity of detail to assess what the real effort is likely to be.

Parkinsons’ law of triviality
We tend to waste time on trivial stuff and ignore the big looming issues. As Product Mangers, a lot of this is unintended as we get deeper into the product details or have fires to fight, however reprioritising your own tasks based on the vision can make a significant change where you need to spend your time.

The Ostrich effect
We deliberately avoid negative information hoping bad feedback will disappear. The best thing to overcome this is develop you own sense of empathy and live in your customers shoes and see what they are struggling with, that could well possibly be a fix that could make a significant impact to any of your golden metrics.

Blind spot bias
If you’ve read through this list and begun thinking you’ve seen this in others. It’s possibly because you haven’t seen them in yourself. Learning to be aware of your own biases is as important as checking these in others.

Bias can be tackled at a cultural level by ensuring diversity in a team and allows divergent thinking to be a norm. One tip on when to think things through to allow for a deeper level of cognitive processing comes packaged as a great tip from Jeff Bezos’ letter to shareholders. ‘Take time over decisions that have a big impact, spend very little time on decisions that have a minimal impact’. That will free up your cognitive processing to concentrate on the big decisions.