Debiasing Decision-Making in Marketing Management

Cognitive biases can have significant consequences for companies – from poor decision-making to negative impacts on corporate culture and morale. Managers subject to cognitive biases may overlook important information, use incorrect assumptions as a basis for decision-making, or not consider alternative options at all. To avoid costly mistakes and foster a culture of informed decision-making in their organizations, leaders should understand and mitigate their own cognitive biases.

Are managers aware of their cognitive biases in decision-making? To answer this question, NIM, in cooperation with the Institute for Media and Communication Management (MCM) at the University of St. Gallen, conducted a survey with five hundred high-level managers. They all work for companies in the U.S. and Europe that are listed in the “Forbes Global 2000” list of the world’s largest companies. The participants hold high-level management positions and have responsibility for important business decisions. The survey was conducted using a mixed-method approach of computer-assisted telephone interviews and screen-sharing for questions with longer lists of items. The goal was to find out which biases are most relevant to people in marketing and strategy today, which ones they recognize in the behavior of others, and which ones they recognize in their own behavior. In addition, extensive information on decision-making styles was collected.

• Managers are aware of cognitive biases in decisions. In surveys, they identify significantly more biases in others than in themselves. This is an indication of a blind spot that could lead them to overlook their own decision-making biases and make decisions that are not in the best interests of the company.
• The so-called in-group bias is the most frequently perceived cognitive bias, followed by confirmation biases and the illusion of cognitive superiority. Managers need to be aware of these biases so that they do not overlook important information, make inaccurate assumptions, or disregard alternative options.
• The blind spot among managers depends on the individual decision-making style. The rational, dependent, and spontaneous decision-making styles have a larger overall blind spot for cognitive biases.

According to the results, the most frequently perceived bias is the so-called in-group bias, i.e., the preference for members of one’s own group. Other frequently perceived cognitive biases include confirmation bias and illusory superiority, e. g., the overestimation of one’s own skills and abilities. The study also found that managers notice significantly more biases in others than in themselves. On average, respondents noticed 3.1 biases in others, while they recognized only 2.7 biases in their own behavior. This so-called blind spot could cause them to overlook their own decision-making biases and, as a result, make decisions that are not in the best interests of the organization. At the same time, as the study also shows, certain decision-making styles seem to be more susceptible to certain biases. There are also individual differences in susceptibility to blind spots. The study results suggest that individuals who know and understand their own decision-making style are better able to recognize the blind spots described. This underscores the importance of self-awareness and the need for leaders to be aware of their own cognitive biases in order to make more informed decisions.

In the study, NIM and MCM also evaluated thirteen so-called de-biasing techniques based on how helpful they are to decision-making practices and how often they are actually used. The results show that managers know about these techniques, but they do not use them regularly. Thus, indicating a need for training and education.