Businesses of all shapes and sizes often operate in a system with the different parts of the system interacting with one another to produce effects or outcomes that are anticipated or not.
Some systems are linear with easily predictable outcomes. Other systems are more complex, more like a spider web, with many of their parts intricately linked and easily affecting one another.
Understanding the pertinent system dynamics is therefore critical for making better, informed decisions.
Unfortunately, the business environment in which key performance decisions are made on a regular basis is not linear and the outcomes easily predicted.
Businesses inhabit and operate in environments that consist of interdependent networks in relationships which connect with and interact with each other to produce outcomes.
In their book Meltdown: Why Our Systems Fail and What We Can Do About It, Chris Clearfield and András Tilcsik saw that even seemingly unrelated parts in a system are connected indirectly, and some subsystems are linked to many parts of the system. In the unfortunate event of something going wrong, problems show up everywhere, making it difficult to understand what’s happening.
So what do complex systems have to do with plan continuation bias?
We can plan for the future, but we don’t have a crystal ball to predict accurately what will happen next week, month, quarter or year. Based on past experiences, and analysis of data, we might have an idea but that is all there is.
In spite of the past not always being the best predictor of future performance, it’s surprising to see the level of system blindness that decision makers still exhibit.
Let’s look at a decision to enter a new international market as an example. The strategy and factors that contributed to success in one market by all means do not guarantee success in a different market.
Instead of following a step-by-step approach to better understand the system dynamics of the new market, most of the time leaders adopt a copy and paste approach resulting in widespread failures.
Even though there are tell-tell signs of the expansionary move heading sideways, leaders push ahead by implementing the bad strategy. An indication that plan continuation bias is probably the contributing factor.
Simply put, plan continuation bias is the tendency we all human beings have to continue on the path we have already chosen or fallen into, or pursue a decision we have made without rigorously checking whether that is still the best decision or not.
In business decisions, this form of bias is prevalent in strategy implementation, project management, as well as forecasting and planning. We often don’t take the time to review the plan against actual results and change course. We persist even when the original plan no longer makes sense.
It could be that the system in which we based our original plan assumptions has significantly changed, ultimately requiring us to take a step back and reflect to better understand what’s going on and decide how to proceed.
Because we are so much fixated on the end goal which seems achievable, we blindly convince ourselves to push ahead or continue even if the current results are telling us otherwise. We continue to pump resources towards the plan or project, eventually resulting in waste and worse results than before.
Sometimes plan continuation bias is a result of the organizational culture. If the culture is one that doesn’t tolerate “bad news” and suppresses speaking up when circumstances change, then chances are high that everyone will become so obsessed with getting there.
Leaders should therefore encourage speaking up, and employees will not be afraid to speak up for fear of being reprimanded.
Rather than reprimand an employee who has identified flaws in the existing plan or discovers an impending project catastrophe, why not publicly praise them given that such a move sends out a message that leaders are open to receiving feedback.
Considering the complexity of today’s business environment and its tight linkages, it might not be feasible to pause each time a key decision is made. You want to avoid a situation where decisions made are more reactive than proactive.
Instead, find a balance between focusing on the tasks or initiatives to be performed and making sense of what is happening. Avoid getting fixated on one or the other.
Making sense of what is happening gives you a chance to notice unexpected threats and figure out what to do about them before things get completely out of hand.
Avoid making key decisions under time pressure and consider all plan possibilities instead of settling just on one.