Three Critical Digital Transformation Dangers To Avoid

4 minute read

Time and again, Octana has seen three critical mistakes made by businesses and organisations when it comes to successful digital transformation.

All of these three methods of thinking are to be avoided. More than one, in combination, will likely prove fatal to genuine digital transformation in your business.

They are:

  • 01

    Confirmation Bias

  • 02

    Plan Continuation Bias

  • 03

    Cognitive Bias and Motivated Reasoning


Confirmation Bias

Confirmation bias is a kind of thinking that involves favouring information, confirming what we already believe. Confirmation biases impact how we gather evidence and information, but they also affect how we interpret, recall, and express information.

For example, people who support a particular idea will not only find information to support it, they will also interpret new data in a way that supports their existing ideas. They will also remember details in a way that further reinforces their original thinking.

Confirmation bias isn’t good for digital transformation, for obvious reasons. If the goal for an organisation is not to become the next Kodak or Nokia, confirming you’re just doing great as you are isn’t helpful.

Apolinar sometimes calls this kind of thinking, “Lego Movie Syndrome.”

It’s most often found in cultures that believe, “Everything is awesome, we’re awesome, everything we do is awesome.” While having a positive culture is awesome, there must be room for future-scoping, for innovation, and for exploration. Some good questions to ask might be, “What happens if Amazon enters our industry? What would they do? Will we still be winning?”

Boards are becoming increasingly worried by this kind of thinking in management, because it naturally leads onto the Dunning Kruger Effect, where people wrongly think they are smarter and more capable than they really are.

HX helps identify confirmation bias through having a diverse team representing all the affected stakeholders, and by using formal processes to challenge assumptions.


Plan continuation bias

Plan continuation bias is also unhealthy for organisational digital transformation.

Simply put, this is where plans are made and then executed irrespective of changing conditions. It happens alarmingly often, because it takes real courage to say, “Stop! This isn’t going as well as we thought. We need to potentially write off this investment and reset.”

In the start-up culture of Silicon Valley, venture capitalists who frequently make large investments look closely for this kind of thinking. They have become experts at intervention, adaptation, pivoting, and market refocusing. They prefer to reward CEOs who recognise plan continuation bias and react to it appropriately in their investments rather than punish them - because it almost invariably saves a lot of time and money over the long term.

In bigger organisations, it’s important for leadership to recognise and identify plan continuation bias, or even “sunk cost” thinking, in their teams.

Plan continuation bias is often characterised by a mindset of needing to add more products or features before launch. These kinds of continual delays are not only expensive, but can deprive a product of the lifeblood of real and timely feedback from the people who will use it.

HX mitigates these risks by encouraging honesty, and helping instil a culture of continual testing, revision, and improvement as a way of business.


Cognitive bias and motivated reasoning

Cognitive bias is where decisions are made based on assumptions. We all do it, where we look for things to confirm our assumptions about what we believe to be true.

These assumptions then become established “facts,” and get passed around an organisation. Eventually they distort reality to the point where they create a real danger to effective critical thinking and decision making.

One example in our experience was in the construction industry, where the assumption was builders weren’t using email on their mobile devices. The downstream effects of this erroneous assumption were significant, in particular a failure by large industry organisations to invest in communications and mobile technology.

Motivated reasoning is also about losing objectivity. There is a theatre around decision making, but in reality the decision has already been made. This thinking is typified by management who make decisions, and then look around for evidence to support them.

True digital transformation comes from actually doing the work. It requires the right teams, process, and methodology.

HX mitigates these risks by providing the necessary transparency for good decision making - and leaves a clear history of what was done, and why.

Authored by Jon Beattie

24 November 2021


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