Cognitive biases in entrepreneurship: should we correct them … or learn to live with it?

He launched his box on a whim, convinced that he had “the idea of the century”. She refused a fundraising in principle, convinced that her intuitions would suffice. They continued to bet on a product that did not take off, blinded by their initial faith. In each of these cases, the scenario is the same: biased strategic decisions, not by incompetence, but by the very way in which our brain works.

Biased decisions

In the entrepreneurial universe, intuition, vision, audacity is often celebrated. But we forget that these qualities are also the royal entrance doors to cognitive biases, these mental shortcuts which distort our perception of reality. This, sometimes at the cost of expensive errors.

So, should we fight them? Or should we, on the contrary, learn to recognize them, to tame them, even to exploit them?

Entrepreneurship, fertile land for cognitive biases

Since the pioneering works of Daniel Kahneman and Amos Tversky on rapid and intuitive thinking (Thinking, Fast and Slow), cognitive biases have become an essential field of study in the psychology of the decision. And in the entrepreneurial universe, they find a privileged field of expression.

For what ? Because entrepreneurship is in essence an uncertain, unstable, emotionally busy environment, where decisions must be fast, often with little information. A perfect cocktail to activate our cognitive reflexes… and our judgment errors.

Top 3 most frequent cognitive biases in entrepreneurs

1. The overrinting bias

It is undoubtedly the most famous – and the most dangerous. It pushes entrepreneurs to overestimate their capacities, to believe that they have a unique advantage, even when objective data say the opposite.

2. Confirmation bias

He pushes to seek, interpret and remember only the information that values an already formed opinion. Everything that contradicts is minimized, ignored or disqualified.

3. Distorted intuition (or availability bias)

Intuition is not a bias in itself, but it becomes problematic when it is based on significant but not representative examples. This is called availability bias: what we have in mind is perceived as more frequent or more likely.

Cognitive biases: errors or adaptive mechanisms?

Cognitive biases have long been seen as dysfunctions of the rational brain. But researchers today adopt a more nuanced reading: these biases are sometimes effective shortcuts, especially in an unstable environment.

In reality, the human brain is not designed to maximize perfect decisions. It is made to react quickly with little information. Which is a weakness in certain situations … but an asset in others.

Can we really correct these biases?

Correcting a cognitive bias is not easy. Awareness is not always enough. Even specialists, trained in these biases, succumb there regularly.

What works (sometimes):

1. The confrontation of points of view with a pairs or in a heterogeneous committee makes it possible to challenge the intuitions. Dissonances can reveal dead angles.
2. The decision-making -inspiped world or aeronautical world checklists, these grids make it possible to make cold decisions, by reading the hypotheses, the alternatives, the impacts.
3. The use of third parties neutrally, coaches, consultants can play a role of critical mirror, provided they have real freedom of tone.
4. Rapid experimentation (Lean Testing) testing a hypothesis before adopting it as certainty is a pragmatic way of short-circuiting internal biases.

Which does not work (or little):

• THE “I will be careful” : Biases are unconscious. We cannot deactivate them at will.
• The exclusive use of data: the figures themselves are often interpreted … through our biases.
• Decision loneliness: it accentuates biases, especially during stress or emergency.

Use rather than fight: another way?

What if the solution was not to eliminate biases, but to make them strategic allies?

Some approaches offer to take advantage of biases, provided that they are intelligently offset.

Strategic intuition

Intuition is no coincidence: it is often based on an accumulation of experiences. Among seasoned entrepreneurs, it can be a formidable tool – provided that it validates it by tests.

Confirmation bias… used wisely

Rather than denying this bias, some entrepreneurs use it to strengthen cohesion around a project. By exposing their teams to internal successes, they generate motivation … while keeping a critical space outside.

This is what some start-ups call the “POSITIVITY BUBBLE” : Create a dynamic of enthusiasm without looking at the alert signals.

The scripting of the worst (bias of controlled pessimism)

Conversely, cultivating a deliberately pessimistic bias (eg: “Pre-mortem meetings”) allows to anticipate potential failures before they occur, imagining the worst scenarios.

Framed – 5 bias to know absolutely when you run a company

1. Anchoring biases: attach to the first info received, even if it is wrong.
2. Bias of status quo: prefer inaction or continuity to risk taking.
3. Aversion to loss: overvaluing potential losses compared to gains.
4. Retrospective biases: believe, afterwards, that we “knew it from the start”.
5. Dunning-kruger effect: the least competent often overestimate their skills.