Failing to Change When Faced With Negative News

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I recently read about a new study by Bradley R. Staats and his co-authors titled “Maintaining Beliefs in the Face of Negative News: The Moderating Role of Experience” in Management Science.  They set out to study how decision-makers react when faced with negative news.  The scholars chose to look at how expertise affects our likelihood to adjust our behavior in light of new negative information.  They assembled an interesting database about cardiac stent use in Pennsylvania from 2003-08 involving nearly 400 cardiologists. During this time, the Federal Drug Administration (FDA) recommended that doctors reduce their use of drug-eluting stents, but it did not ban the use of these devices.  The scholars set out to see how much the FDA's announcement affected behavior.  In particular, they wanted to see how experts reacted, as opposed to doctors with less experience.  Would overconfidence lead some experts to discount the new negative information?  Here's what they found: 

"For each standard deviation increase in experience, cardiologists were 6.3% more likely to use the drug-eluting stents before the FDA warning. Afterward, their use of the stents fell, but they were still more likely — 2.8% for each standard deviation increase in experience – than average to use the drug-eluting stents."

An article on the University of North Carolina's Kenan-Flagler Business School website summarizes the results and implications of this study:

It’s a kind of paradox. Are more experienced individuals – because of their presumably greater expertise – more likely to change their behavior when confronted by new information? Or are they more likely to resist new decisions because they’re confident about relying on their experience?  That’s the fundamental question tackled by Brad Staats, professor of operations and faculty director of the Center for the Business of Health at UNC Kenan-Flagler.  “Ideally, when you receive new information, you quickly adjust your decision-making – and you would expect the most experienced people would do so most accurately,” says Staats, “but our research indicates that might not be the case when they get negative news.”

Preparing for a Meeting: You Do Better When You Anticipate Conflict

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This week, I read an interesting interview with several scholars from the Kellogg School of Management. In the interview, Professor Cynthia Wang describes an interesting study that she conducted with Denise Loyd, Katherine Phillips, and Robert Lount, Jr. They published their findings in an Organization Science paper titled, "Social Category Diversity Promotes Premeeting Elaboration: The Role of Relationship Focus."   Wang reports that people tend to prepare better for meetings when they anticipate interacting with others with whom they expect to have conflicting views.  This preparation and introspection leads to better decisions.  Here's Wang commenting on the research:

Sometimes conflict can actually be productive. When you go into a group meeting with somebody who is very different from you, the assumption that there’s going to be a conflict actually leads to better outcomes because you prepare better. For example, in one study, Katherine Phillips and I gave people tasks and said, “Hey, you’re going to be working with a stranger from the opposite political persuasion.” We then saw that knowing this leads you to start preparing a little bit more for the discussion, because you assume that there is going to be conflict. This drives better decisions in the end, because you’re more prepared and more introspective. On the other hand, if we come from the same group, we don’t challenge each other as much.

The Charade of Consultation

Years ago, my friend Mike Watkins, author of the best-selling book The First 90 Days, coined the term "charade of consultation."  He used it to describe instances when leaders would hold meetings, ask for input and advice, and yet do not genuinely provide an opportunity for those participants to influence the final decision.  He described these situations as a charade because the decisions were pre-ordained, a fait accompli.  Leaders were simply using the meetings to pretend that they were giving employees voice in the decision-making process.  Somehow, they thought that soliciting input would build buy-in, without recognizing that employees would see right through the charade.  

What are the negative consequences of engaging in a charade of consultation?

1.  Leaders diminish the extent to which their employees trust them.  That loss of trust adversely affects commitment, engagement, and morale.  

2.  Implementation efforts falter, because employees have not bought into the decision that was made.  They perceived the decision process as unfair, and therefore, they fail to commit the selected plan of action.  

3.  Employees opt out of future opportunities to participate in decision-making processes.  They think to themselves, "What's the point?  They aren't really listening to us anyway."   

4.  Leaders find themselves only hearing from people that agree with their proposals and plans.   Dissenters have opted out, and thus, leaders find themselves operating in an echo chamber. 

Does this mean that leaders always have to do what employees think is best, over their own better judgement? Of course not.  The opposite of the charade is not workplace democracy.  It's a thoughtful, robust, open process of dialogue and debate.  After hearing diverse viewpoints, the leader can then make a more informed and prudent decision.  

Is Avoiding Losses Actually a More Significant Motivating Force Than Realizing Gains?

For decades, psychologists and behavioral economists have proclaimed the importance of loss aversion, one of the most prominent cognitive biases identified by researchers. However, a recent thought-provoking article in Scientific American by David Gal challenges the conventional wisdom. Gal writes about the research he has conducted with David Rucker and published in the Journal of Consumer Psychology. 

Source:  Blue Diamond Gallery

Gal argues that, "Loss aversion is essentially a fallacy." The statement surprised and intrigued me. Could it really be true that such a prominent theory was incorrect, and that a great deal of evidence existed to contradict it? Gal explains in more detail:

That is, there is no general cognitive bias that leads people to avoid losses more vigorously than to pursue gains. Contrary to claims based on loss aversion, price increases (ie, losses for consumers) do not impact consumer behavior more than price decreases (ie, gains for consumers). Messages that frame an appeal in terms of a loss (eg, “you will lose out by not buying our product”) are no more persuasive than messages that frame an appeal in terms of a gain (eg, “you will gain by buying our product”).

People do not rate the pain of losing $10 to be more intense than the pleasure of gaining $10. People do not report their favorite sports team losing a game will be more impactful than their favorite sports team winning a game. And people are not particularly likely to sell a stock they believe has even odds of going up or down in price (in fact, in one study I performed, over 80 percent of participants said they would hold on to it).

To be sure it is true that big financial losses can be more impactful than big financial gains, but this is not a cognitive bias that requires a loss aversion explanation, but perfectly rational behavior. If losing $10,000 means giving up the roof over your head whereas gaining $10,000 means going on an extra vacation, it is perfectly rational to be more concerned with the loss than the gain. Likewise, there are other situations where losses are more consequential than gains, but these require specific explanations not blanket statements about a loss aversion bias.

Perhaps most interestingly, Gal goes on to offer an explanation for why loss aversion has become such a prominent principle generally accepted by many scholars as truth.  He explains that another key cognitive bias, confirmation bias, has been a major factor. Scholars have tended to look for evidence that confirms and bolsters the theory of loss aversion, while dismissing or discounting contradictory or discordant findings. Other social forces too have helped to maintain and preserve the conventional wisdom. Gal concludes, "Wrong ideas can persist for a long time despite contrary evidence, and therefore, that there is a need to critically assess accepted beliefs and to be wary of institutional consensus in science and otherwise."

Working Backwards to Innovate at Amazon

Recently, Lisa Eadicicco wrote an article for Business Insider titled, "This is the test Amazon uses to decide which ideas are worth turning into new products."  She describes the "working backwards" methodology that Amazon routinely uses during its new product development process.  Here's an excerpt: 

And while Amazon's product portfolio may be larger and more diverse than ever, there's a simple process the company uses to figure out which ideas are worthy of becoming real products: writing a press release.  This is what has come to be known as the "working backwards document" within Amazon, a mock press release that describes the product and the problem it's trying to solve.

"Everything starts as a working backwards document," Miriam Daniel, Amazon's vice president of Alexa and Echo devices, recently said to Business Insider following the company's fall product launch event. "The reason we write a press release is, when we read it, we want to be able to say as a consumer, 'Wow, I want that.' We write with that end in mind."

All of the devices Amazon unveiled during its event at the end of September started as a working backwards document, says Daniel. The goal of the working backwards document is to help the product team focus on what the main use case for a particular product would be.

Often, at Amazon, they not only draft the press release as part of this working backwards process.  They also write the frequently asked questions document that will be provided to customers if the product/service is built.   These documents help Amazon's managers envision how customers will react to the new product, and in particular, whether it will fulfill a customer need or alleviate a key pain point for users.   

I wrote about the working backwards approach in my book, Unlocking Creativity.   It's a powerful technique that can help individuals step back and gain some distance from a challenging problem.  They can look at the problem in a new way by jumping forward in time and trying to predict how others will react to our solution at that point in the future.  For more on how and why this type of approach is worthwhile, check out the video below: 

 

The Benefits of Giving Advice (not just receiving advice)

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Lauren Eskreis-Winkler, Katherine Milkman, Angela Duckworth, and Dena Gromet have conducted some fascinating new research on the benefits of giving others advice.   Of course, we all believe that we can learn and grow by seeking advice and feedback from others, perhaps with more experience and expertise than us.   However, this study examines the benefits from giving advice to others.  How does the giver benefit?  According to the authors, giving others advice, even on an issue about which you are struggling or feeling challenged, can raise your self-confidence and motivation.  In so doing, it can help us achieve our goals more effectively. 

The scholars conducted an experiment with approximately 2,000 high school students.  Eskreis-Winkler explains the research and their findings in this article for Knowledge@Wharton:  

We recruited about 2,000 students and randomized them to one of two conditions. Either they’re in the treatment, which is that they give advice to younger students, or they’re in the control condition, which is practice as usual and they didn’t receive anything in particular. The program was online, so teachers took their students to the computer lab and students signed in. There was this very aesthetically pleasing, graphically designed program that students walked themselves through. They were asked to be coaches. We said, “Help us help other students.” Then the treatment — they went through a series of exercises that tried to elicit their advice.

There were some multiple-choice questions that asked them to advise on optimal study locations. There were some open-ended questions where they were writing notes of advice to younger students. The whole experience was short, but it was meant to make them feel like bona fide advisers. They had information to give, and we were getting it, and we were actually going to give it to younger students.

The hypothesis was that this act of stepping into the adviser role would raise the students’ confidence, increase their motivation. It was a pretty high bar, but we were hoping and expecting that it would, in turn, raise the students’ achievement levels. We collected the students’ grades over the academic quarter to see whether this intervention, which was delivered to students at the beginning of the third quarter, would increase their grades. And it did. We specifically pre-registered and predicted in advance that it would raise their grades in a target class. This is a class in which students self-report that they’re most motivated to improve. Math is a subject that’s notoriously difficult to change student achievement and a subject in which many students lack confidence. We thought this advice-giving intervention would be effective in math, and we did find that the students’ target grades and their math grades improved relative to students in the control condition.

Put Your Work (and Yourself) Out There!

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Last week, Renee Fleck authored a blog post titled, "The best creative advice of 2019: Words of wisdom for every designer."   There are some gems in there from various design professionals.  My favorite is from Lisa McCormick, a freelance illustrator and graphic designer.   Her advice:  "Be a factory, not a warehouse."   Here's the explanation:

“My college professor said this and it really stuck with me. It’s a reminder to not be “too precious” about your work and hide it until everything is absolutely perfect (that day will never come). Swallow your pride and put yourself out there and share your work. Keep making things, try new ways of creating, and take risks. It’s better to keep creating and putting yourself out there so you can get honest feedback and move forward.  So, be a factory by continuously creating and putting your work out there. Don’t be a warehouse, storing work in a dark corner that never sees the light of day.”

I concur completely.   Unfortunately, many of us await perfection before putting our ideas and our work out there.  We lose precious opportunities for feedback, adaptation, and iteration.   We censor ourselves because we are afraid of the judgment of others.  If we want to boost our creativity and our learning potential, we have to overcome this self-made obstacle.