Optimism bias is a frequent issue in executive coaching and consulting to boards, steering committees and others. It is often considered a cause of budgets being exceeded and expectations not met.
It is valuable first, to differentiate optimism bias from the popular notion of ‘unconscious bias’. Optimism bias is a belief, conscious or not, that some outcome may be positive regardless of all data to the contrary. The meaning of ‘unconscious bias’ is a lot less clear. It implies consistent behavioural choices for one particular outcome over other equally effective alternatives; and is much like a habit or simply a preference.
The dynamics of optimism bias
There are four dynamics of optimism bias
1. The value of optimism bias
As with any presenting problem, particularly in executive coaching it is wise to look at the value, often unrecognised by the client of maintaining the problem. For example, continuing to fund an organisational project against a sense that things aren’t going well, may have the value of avoiding a harmful review for the leader or governance group.
Project leaders are frequently selected based on success in their normal roles but they may not have the expertise to identify and articulate issues surrounding change management for example. This sense that expertise may be lacking is ameliorated by continuing to ‘optimistically’ fund the work
2. Cascading optimism throughout a project structure
Maintaining such optimism is made easier for the committee or project director when reports from within the project err on the side of optimism. At operational levels staff may provide optimistic reports that issues are solvable, which in addition to perhaps being genuinely believed may in part serve to avoid scrutiny and maintain their position.
Optimistic reports cascade upwards within a project hierarchy and provide support for positive bias in reports by each successive level.
3. The ‘optimism fog’
The cascading of optimistic reports to a management group which itself tends to optimism creates an optimism fog, as I like to call it. To call for a review or to halt the work within the fog would focus attention on previously unsupported optimism and reflect on management capability. As a result, the director and group sees continuation of the work as their only viable option so long as it is accompanied by optimism for a successful outcome.
The fog produces a particular form of project logic that focusses on adjustment of the project plan, may build excessive ‘team comradery’ and provides justification for additional funding tranches.
4. The collapse of the ‘fog
As a project is increasingly disrupted by failing tasks and budget pressures, the optimism bias cannot be sustained, the difficulties are too obvious within and beyond the work. Tensions then arise within the governance group and individual members can become increasingly detached from the work. Individual executives may be challenged and feel pressure to justify their decisions and position.
Managing optimism bias
It may seem trite but the discipline of building periodic and random reviews into project schedules is the most effective intervention to avoid optimism bias. The reviews should be independent and conducted by different groups each time.
The overwhelming benefit of the reviews is to provide a sense of ‘containment’ for the normal and exceptional difficulties faced by projects. The containment encourages open discussion of issues as they arise since everyone is subject to review.
The terms of reference for these reviews must be crafted to identify optimism and avoid attributing it to anything but the normal project or organisational process. A detailed method for the reviews will be described in a following blog over the next few weeks.
Criticism of executives and governance for project difficulties frequently overlooks the powerful and understandable dynamics of optimism bias. Oscar Wilde wrote that the basis of optimism is sheer terror which certainly applies within the organisation. The suggestion of periodic independent reviews is a straightforward and supportive management approach.
Executive coaching is provided face-to-face and on line. Consultation is also offered for stakeholder management strategies and project reviews.