How Effort Justification Bias Can Impede Innovation and What to Do About It
Don't Let Effort Justification Bias Hold You Back
Have you ever found yourself defending a decision you made, even when you knew it didn't turn out the way you wanted? Or maybe you've seen a team or company justify their efforts on a project that ultimately failed to meet expectations. The more effort we put into something, the more we tend to justify it. This is the essence of effort justification bias, and it can lead us to hold onto bad ideas and outdated products for far too long.
Effort justification bias is a tendency to attribute greater value or importance to an outcome that required a high degree of effort or sacrifice to achieve. While this bias helps us reduce cognitive dissonance, it can hold businesses back from reaching their full potential. Business schools are filled with case studies of companies that have failed or struggled to make progress due to this bias. Whether it's a reliance on outdated technologies, an aversion to change, or a lack of creativity and innovation, businesses can fall prey to effort justification bias in various ways. Ultimately, this bias can be a major roadblock to success for businesses, stifling innovation and hindering their ability to adapt to new market conditions.
To combat this bias, business leaders must recognize its risks and apply strategies to mitigate its effects. In this blog, we’ll delve deeper into this topic and provide examples to illustrate its impact on businesses.
Pitfalls of Effort Justification Bias
If left unchecked, the Effort Justification Bias can have significant negative consequences on businesses. Here are some common pitfalls to be aware of:
1. Overconfidence and Complacency: This bias can cause business leaders, including engineering and product teams, to become overconfident in their own products or platforms, leading them to ignore the potential threat of competitors or new technologies. This overconfidence can cause teams to neglect market research and fail to identify changes in customer preferences, leading to a loss of market share and even obsolescence.
For example, Nokia, the company that dominated the mobile phone market in the early 2000s, failed to respond to the rise of smartphones and touchscreens. The company was so confident in its own products and platforms that it dismissed the threat of competitors like Apple and Samsung. Nokia's engineering and product teams failed to recognize the shift in customer preferences towards touchscreens and app-based ecosystems, causing the company to lose its market share to its competitors.
2. Resistance to Change and Feedback: When teams become overly attached to their ideas, they may resist feedback and ignore evidence that their solutions are flawed or ineffective. This can result in wasted resources, missed opportunities, and even cause harm in some cases.
One notable example is the Challenger space shuttle disaster, where engineers designing the solid rocket boosters ignored warnings that the O-rings could fail at low temperatures due to thermal contraction. Despite concerns raised by other engineers about launching the shuttle on a cold day, the design team was so confident in their solution that they dismissed the warnings, leading to the loss of seven lives in the tragic accident.
3. Lack of Creativity and Collaboration: Effort justification bias can make engineering and product teams less willing to consider alternative perspectives or ideas that may challenge their own beliefs or require additional effort. As a result, teams may become complacent in their thinking, favoring solutions that are incremental or require less effort to implement. This can stifle creativity and innovation within the team, leading to producing mediocre or redundant outcomes that fail to meet customer needs or expectations.
For example, a software development team may spend a lot of time and effort creating a complex feature that they think is innovative and useful, but that is actually redundant or unnecessary for the users. They may reject simpler or more user-friendly solutions proposed by other teams or stakeholders, because they are attached to their own idea.
4. Overestimation of Value: When engineering and product teams invest a great deal of effort and resources into a product or service, they may start to overestimate its value or worth. They might assume that customers will be willing to pay more for it because of the high level of effort and resources that were put into it. However, customers may not see it that way and may be unwilling to pay the high prices. This can lead to losing customers. Additionally, if the product or service fails to meet customer expectations despite the high price tag, it could result in negative reviews and publicity, further damaging the company's reputation.
Blockbuster, a dominant video rental company of the 90s and 2000s, overestimated the value of its product. Ignoring the increasing popularity of online streaming services like Netflix, Blockbuster for a long time continued to charge high rental fees for their DVDs. They overvalued the appeal of their brick-and-mortar stores, presuming that customers would prefer the in-person experience of browsing and renting movies. As a result, Blockbuster lost customers to more affordable and convenient online streaming services and ultimately went bankrupt.
Combatting Effort Justification Bias
So, what can businesses do to overcome effort justification bias? Here are a few strategies:
Foster a culture of experimentation: By encouraging experimentation and a willingness to take risks, leaders can help to create an environment where new ideas and approaches are welcomed and valued. This can help to counteract the natural tendency towards effort justification bias, by promoting an attitude of continuous learning and improvement.
Embrace feedback and data: To avoid getting too attached to a particular idea or approach, it's important to be open to feedback and data. Leaders should be willing to listen to feedback from customers, employees, and other stakeholders, and use data to inform their decisions.
Be willing to pivot: Sometimes, no matter how much effort has been invested in a project or idea, it simply isn't working. In these cases, it's important for leaders to be willing to pivot and try something new. This can be difficult, particularly if there are sunk costs involved, but it's essential for staying competitive in today's fast-paced business environment.
Set clear goals and criteria for success: To focus on actual value impact rather than subjective perceptions, engineering and product teams can define specific goals criteria for evaluating performance progress. Setting clear goals can help teams stay focused and aligned, leading to better outcomes.
Challenge assumptions: Finally, to overcome effort justification bias, it's important to challenge assumptions and be open to new ideas. This means questioning the status quo and being willing to think outside the box. By doing so, leaders can help to ensure that their organizations remain innovative and adaptable in the face of change.
Conclusion
Effort justification bias can be a major obstacle for businesses. It can lead to resistance to change and feedback, stifle creativity and collaboration, and cause overestimation of high-effort outcomes. But it’s not insurmountable. By embracing strategies like fostering a culture of experimentation, welcoming feedback and data, being willing to pivot, setting clear goals and criteria for success, and challenging assumptions, businesses can effectively combat this bias. Doing so creates an environment that encourages innovation and adaptation to change - key ingredients for success in today’s fast-paced business world. Recognizing and addressing effort justification bias is essential for businesses to remain competitive.