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Bikeshedding and Boards

Boards have made progress over the years in keeping their focus on the strategic and out of the operational “weeds.” But this is an ever-present tightrope walk with many falling regularly into minutia. Our brains may be working against us on this one. Acknowledging and paying attention to cognitive bias will help directors and CEOs keep things on track. It will take some work.

By Kevin Smith

A couple of months ago while preparing for a webinar on cognitive bias I had an “a-ha,” lightbulb moment. I was thinking more carefully about the concept of Bikeshedding, also known as Parkinson’s Law of Triviality. You may remember that I wrote about cognitive bias a year ago, on Oct. of 2022. A quick reminder: a definition of cognitive bias from Gleb Tsipursky, PhD. – “a predictable pattern of mental errors that result in misperceiving reality and, as a result, deviates from reaching goals, whether in relationships or other life areas.” These are aspects of our brains that developed when the world was vastly more dangerous, but also more simple. Many of these biases helped us make quick decisions that kept us alive. However, in our more complicated world, these biases, wired in our brains, can work against us and cause us to make bad decisions that run counter to our rational desires and goals.

 

Board Work and the Implications

Let’s set the stage here before we get to Bikeshedding. One of the first things I learned about board governance almost 20 years ago, was the importance of making sure that boards stay at the strategic level and stay out of the operational ‘”weeds. As a matter of fact, this was the conversation that I heard more consistently than almost anything else. This was (and remains) a persistent issue in board work and one that CEOs bend my ear about regularly (and not because it’s going perfectly). Despite a lot of focus on this desired approach there seems to be an ongoing struggle to stay out of the weeds.

A couple of, ahem, “interesting” examples:

  • I was once privy to a conversation where a board member insisted it was strategic territory for her to have some say on the colors in the logo.
  • Another conversation was a board member who insisted on having a say in which side of the building the drive through was placed. And, no, he was not a civil engineer or anyone with relevant expertise. Just a guy with opinions.

The struggle is real.

 

Bikeshedding

Recently I came across the concept of Bikeshedding, or Parkinson’s Law of Triviality. This is a well-researched cognitive bias, “Our tendency to devote a disproportionate amount of our time to menial and trivial matters while leaving important matters unattended.”

The story goes that Parkinson was a British Naval Officer who explained this through a metaphor of a financial committee with three things on the agenda:

  1. A proposal for a £10 million nuclear plant
  2. A proposal for a £350 bike shed
  3. A proposal for a £21 annual coffee budget

Item 1 was too difficult and complicated and the committee would look past it, giving it short shrift, moving quickly to item 2 and spend vastly more time on it. Finally, they would spend the most time on item 3, the most trivial of the group.

 

The Aha!

It dawned on me (maybe a bit too slowly) that this might be part of the explanation as to why boards fall into the weeds so quickly. Our brains are wired that way. Bikeshedding happens, “because trivial tasks are easier to comprehend than more complex issues; consequently, we feel more comfortable working on and discussing the simple issue.” The majority of directors that I have met don’t show up for credit union service with a great understanding of governance nor a background in board work. More often they have little or none and have to learn (often on the job). And for professionals used to living their working lives in the heart of operational things, focusing here can feel like where we are actually being productive. It takes learning and practice to function at the strategic level if you’ve never done it. And it’s a very different kind of work.

 

Some History and DNA for Good Measure

Eureka! We have reason why boards fall into the weeds. AND it’s based in brain science.

But there may be more going one for us credit union people. When doing governance training, I like to talk about the history of credit union boards and their evolution. We have to remember those great stories of people starting credit unions in factories, schools, police stations, etc. with 7 or 8 people and a cigar box. (It always seems to be a cigar box.) The point I’m trying to make is that it wasn’t so long ago that the board was the group of people literally running the credit union. So that feature is in our DNA. It was the operational work. And we don’t change our board members all that quickly. So that slow turnover can create a climate of “that’s how we’ve always done it.” This is another blog I did some time ago. Take a look here.  Another strong reason why the focus on the operational can be sticky with boards.

 

Fine. Now What To Do About It?

Reasons are fine. Excuses are not. It can be helpful to acknowledge our tendencies, but this is no reason to throw up our hands and accept our inclinations toward the trivial. We have to fight it and work together to do what is infinitely more important, even though the complexity can make us resist it. (And heaven help me here, if I don’t help the CEOs, leaders and colleague board members who have to deal with this on an ongoing basis.) We’ll fight the good fight.

  • Awareness is the starting point for dealing with Bikeshedding. Talk about it. Understand it. Share examples. Laugh about it. But don’t ignore it.
  • Another way to help nudge in the right direction is to make sure there aren’t too many items to tackle at a time. Sometimes, items that are major and complex may demand their own meetings with a strict focus.
  • It can be helpful to assign someone to pay particular attention to make sure we’re not getting in the weeds or spending too much time on the trivial. (Too often the CEO is the default gatekeeper here, which is not fair.)

 

BTW – There is Some Awareness

By the way, this effort to stay strategic is high on the radar of virtually every director and board I’ve met. They are always very well intentioned. But too often, those who insist they stay out of the weeds are not aware enough of what is really going on. I’ve been in the rooms where in one breath a director brags about how strategic they are, and in the next hear them dive into operational minutia with zero awareness. At that point I have eye contact and signals with the CEO to make sure they know, that I know, and will try to help.

I get it. It IS difficult. Particularly when our brains work against us. But it’s important.

Acknowledge. Understand. Learn. Practice.

Oh … and for extra credit: Ask Tim Harrington to tell you his story of being board chair and his colleague directors calling him out for being in the weeds! J It’s a great story. And a great equalizer. We’re all guilty and we’re all part of the solution

As always … tell me your tales. We want to hear from you

Cognitive Bias in the Boardroom

Cognitive bias in the boardroom is a danger to decision making. Boards can (should) mitigate the effects of this by understanding it and calling attention to where it can and does come up in the board room. As a group, directors can hold each other accountable and address bias. A learning board will create systems to counter heuristics that can introduce “sever and systematic errors.” 

By Kevin Smith

Boards of directors are not immune from the effects of cognitive bias any more than any other humans. In fact, the group dynamic of the board room of equals my just up the ante on this issue. Do you know where you’ve had cognitive bias in the boardroom? It’s time for some reflection. 

What is Cognitive Bias

Here I’m going to use the definition from Gleb Tsipursky, PhD. (There are many similar definitions with nuanced differences in this fairly new area of science.) Cognitive bias is “a predictable pattern of mental errors that result in misperceiving reality and, as a result, deviates from reaching goals, whether in relationships or other life areas.” This comes from The Bind Spots Between Us (2020).  This is different than social bias, which is learned and is between different groups and is specific to societies. Cognitive bias is common to all of humankind. It’s hardwired in our brains.

The idea of cognitive bias was introduced by Amos Tversky and Daniel Kahneman in 1972 and grew out of their experience of people’s innumeracy, or inability to reason intuitively with the greater orders of magnitude. Tversky, Kahneman, and colleagues demonstrated several replicable ways in which human judgments and decisions differ from rational choice theory. This discovery grew and developed the science of Behavioral Economics. It’s a relatively new and still unfolding.

https://en.m.wikipedia.org/wiki/Cognitive_bias

The Benefits … may have mostly wanedCognitive Bias Codex

The mental shortcuts, or heuristics, developed as part of our brain’s evolution. In simpler times they helped us make quick decisions that kept us from dying. But that was a different environment than our very modern and complex societies. Nonetheless, our brains are still wired this way, which can push us to decisions that are not supportive of our goals.

There are How Many Cognitive Biases?!

As of a 2020 Wikipedia page, there’s a great illustration of 188 cognitive biases. (Included here. Click it to make it larger.) There are surely more by now. Rest easy. We’re not going through all of them here. But this demonstrates the wide way that these biases can impact our lives and decision making. And studying these can provide great insights to decision making issues in every facet of our lives. Understanding these can help you to counter their negative effects.

What Do Directors Need to Pay Attention To?

So, what is it that directors need to pay attention to in the context of the role of the board of directors? Well, if you listen to Matt Fullbrook of Ground-Up Governance (and you certainly should!), his definition of good governance is “actively creating conditions that are likely to result in an effective decision.” So directors need to examine these biases, understand them and then reflect on how they have, or could, or will, come into play in the board’s decisioning. Identify where you may have already been guilty of succumbing to bias. Then ask what can be done to prevent this going forward.

A Truncated List of Cognitive Biases

Of course, we can’t go through every cognitive bias here. And some of them will be more relevant than others or not relevant at all to the credit union board space. But I’ve identified a short list here that I invite you to review and reflect on. These are things that I see coming up regularly as issues in the credit union space based on the number of board rooms I’ve been in, the number of planning sessions I’ve led, and the number of directors I’ve talked with over the years.

Anchoring Bias

The inability of people to make appropriate adjustments from a starting point in response to a final answer. It can lead people to make sub-optimal decisions. Anchoring affects decision making in negotiations, medical diagnoses, and judicial sentencing.

The Bandwagon Effect

The tendency for people to adopt certain behaviors, styles, or attitudes simply because others are doing so. (Fashion trends are a good example; or remember the GameStop stock event?)

Blind Spot Bias

Recognizing the impact of biases on the judgment of others, while failing to see the impact of biases on one’s own judgment.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms or supports one’s prior beliefs or values. People display this bias when they select information that supports their views, ignoring contrary information, or when they interpret ambiguous evidence as supporting their existing attitudes. The effect is strongest for desired outcomes, for emotionally charged issues, and for deeply entrenched beliefs.

The Framing Effect

Where people decide on options based on whether the options are presented with positive or negative connotations; e.g. as a loss or as a gain. (Think of marketing that says “95% Fat Free!” rather than “5% Fat.”)

Frequency Illusion (Baader-Meinhof Effect)

After noticing something for the first time, there is a tendency to notice it more often, leading someone to believe that it has a high frequency of occurrence. It occurs when increased awareness of something creates the illusion that it is appearing more often. Put plainly, the frequency illusion is when “a concept or thing you just found out about suddenly seems to pop up everywhere.” (It’s happened to everyone who’s bought a car and now sees that car everywhere!)

Sunk Cost Bias

People demonstrate “a greater tendency to continue an endeavor once an investment in money, effort, or time has been made.” Such behavior may be described as “throwing good money after bad.” (This bias plays on at least five other psychological factors at once.)

Zero Risk Bias

A tendency to prefer the complete elimination of risk in a sub-part over alternatives with greater overall risk reduction.

This last one plays heavy on my mind as I work with credit union boards. We are a very risk averse movement. But sometimes we don’t help as many people as we can because of this aversion.

And I have my favorites: the frequency illusion or Baader-Meinhof Effect. This fascinates me. I also think that the Dunning Kruger Effect is a big deal. No. That’s not on the list above. I’m going to make you look that one up.

What to do About This

Awareness is key. Simply knowing and understanding these can mitigate the effects. But you can also put structures in place for your board meetings and decision-making processes to call attention to these. Before making a big decision, call some of these out and make a conscious check that you are not falling prey to your minds subconscious heuristics.

Here’s my challenge to you: At the start of the next board meeting, ask the room, “have you ever heard of Sunk Cost Bias? Do you think we’ve ever been caught by this?” Then have a conversation.

Resources

I refer to Dr. Tsipursky’s book above.  He makes some recommendations for De-baising Techniques:

  1. Identifying cognitive biases & making a plan to address them
  2. Delaying our decisions & reactions
  3. Probabilistic Thinking
  4. Making predictions about the future
  5. Considering alternative explanations
  6. Considering your past experiences
  7. Reflecting on the Future & Repeating Scenarios
  8. Considering Other People’s Points of View
  9. Getting an External Perspective
  10. Setting a policy to guide your future self
  11. Making a Pre-commitment

And I follow Graeme Newell (Better Decisions Through Brain Science). He does a great job of explaining these things in a way that helps you take action. Check out his work here.

 

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