The Big Impact of Cognitive Bias on Our Teams, Our Customers and Our Products

by Davide Cis and Neil Baron –

Do you remember that time when you thought you had it all figured it out, but your product launch still fell short of expectations and sales did not materialize? How your product failed, despite giving customers exactly what you thought they wanted? What about that time you launched your new product features with a well thought out press release, which you even drafted before beginning development, but your marketing campaign fell on deaf ears?

Despite our best intentions and well-crafted analysis, the outcome of our plans does not always turn out to be what we want. The reason behind our product shortcomings may reside, among other things, in our own cognitive biases.

The impact of cognitive biases on our decisions and actions is a field of research that started with the seminal work of Daniel Kahneman, Amos Tversky and Richard Thaler in the ‘70s and gained Kahneman and Thaler Nobel Prizes in Economics in 2002 and 2017 respectively. Their work built the foundation for behavioral economics.

Analyzing how cognitive biases affect the success or failure of our products, was the topic of discussion at a recent Product Executive Forum organized by the Boston Product Management Association.

While Wikipedia lists more than 150 types of cognitive biases, our discussion focused on four critically important ones.

  1. Confirmation bias: when you look to validate what you already “know” and believe.
  2. Status Quo bias: when you want to keep things just the way they are in order to avoid the risk of changing.
  3. Law of Least Effort: when you avoid taking on tasks that require spending extra intellectual energy.
  4. Overconfidence Effect: most people overestimate their ability to get things done. Why do 93% of people believe they are above average drivers?

Confirmation Bias: I checked. I am right.

We see this bias often in situations where there is an executive that has a great idea and pushes the entire organization to develop the new product, at all costs, based on limited data.

We encounter confirmation bias when we showcase our prototypes (or worse our final product) with great enthusiasm and expect people to be as excited as we are. We find confirmation bias when we get the notorious “happy ears” when asking customers if they like our product. We turn a shrug into an enthusiastic embrace.

In these situations, we assume to know what customers value and end up looking for confirmation of our beliefs. When the uncomfortable reality hits, we find ourselves moaning about the wasted time, mounting frustration, and loss of precious innovation opportunities.

Status quo: If it ain’t broke, don’t fix it.

This is especially prevalent with successful companies who get trapped by their own success. They become reluctant to change because change is hard and scary.

Our customers and prospects also may suffer status-quo inertia and they may have a hard time accepting the changes we introduce. Remember the initial market mistrust for SaaS? There was a clear need, the product framework was superior, and yet customers did not change right away.

A helpful indicator of the negative effect of status quo is captured by BARON’s value equation: Value = Benefits – Costs of Benefit Acquisition. The second element on the right side of the value equation often receives little consideration and is heavily affected by status-quo inertia. We must understand the obstacles that customers may face (both financial and emotional) when implementing our super product.

Overconfidence: I know for sure therefore I can do it for sure.

Overconfidence manifests itself, among other things, in inaccurate estimates, in internally driven requirements, or in authoritarian leadership. The potential negative consequences of the overconfidence bias are several:

  • You end up solving the wrong problem
  • You develop the wrong solution for the right problem
  • Your priorities do not reflect true market demands
  •  Project timelines keep failing, aggressive deadlines are never met,
  • You waste time constantly resetting unattainable goals

Law of Least Effort: Follow the Path of Least Resistance

As humans, we want to do what is easy. However, doing what is easy is not always what will lead to the greatest success. We always tend to focus on what we are comfortable doing which may not be the most important things to do. “ Why bother exploring a new idea, if I need to convince so many other people? This is hard work!”

Due to this bias, we may also limit ourselves to speaking with the same clients since we are most comfortable with them. This may in turn constrict our ability to connect with new customers and explore new opportunities. Similarly, the least-effort choice makes it is easy for us to add more product features instead of investing effort to understand what outcomes customers want to achieve. Meanwhile, we rely on customers to translate our features into benefits for them. It should be no wonder why so many products fail to meet expectations.

What to do?

We spent the bulk of the Product Executive Forum exploring these biases and recognizing how they impact us. The group felt there was a lot of value in simply becoming aware of these biases and how they can impact our product success: recognizing these biases for what they are, will help us prevent them from undermining our efforts.

We also discussed the biological bases for these biases. The fact that they exist is not all bad. Our ancestors were justified in being cautious about change: take too much risk by venturing into unfamiliar territory and you could become a tiger’s lunch.

However, if we were to consider that the ultimate goal of our products is to create value for our customers, supporting our value quest often means confronting our biases. A few suggestions that the forum discussed in order to overcome them include:

  1. Do new things in small bits, analyze the pros and cons, build fast and test fast
  2. Be aware and mindful of everything and everyone
  3. Conduct pre-mortems: imagine in advance the worst possible scenario:product failure. If your plan went sideways, how would you react? Working backward from the failure, what different actions should you have considered and will you consider now going forward?

Overcoming our own cognitive biases is not an easy task as we act on them unconsciously and they are ingrained in our own thinking. A necessary first step though is recognizing their presence. A helpful next step is surrounding ourselves with constructive critics that offer different point of views to help us form a multi-faceted approach to solve the product problems we face.

For additional insights on bias, check out:

  • Predictably Irrational: The Hidden Forces that Shape our Decisions by Dan Ariely
  • Thinking Fast and Slow by Daniel Kahneman
  • It’s All in Your Head: The Effect of Cognitive Bias on Our Decisions and Our Products by Neil Baron and Robert Hatcher, Pragmatic Marketing Spring 2019

This was a summary of the June 2019 BPMA Executive Forum. Are you a current VP or Director of Product Management and Product Marketing and want to learn more about the Boston Product Executive Forum? Please contact Neil Baron


Neil Baron has served in a variety of senior marketing and management roles at companies such as IBM, Digital Equipment Corporation, Sybase, Art Technology Group, Brooks Automation and ATMI. He is passionate about involving customers throughout the go-to-market process. In 2009, he started Baron Strategic Partners, a consulting firm focused on helping organizations launch groundbreaking products and services and re-energize older ones.

Davide Cis is BPMA Blog Manager. Davide is constantly searching and applying best practices of product management to enterprise software. When Davide is not reading or listening about products and strategy, he is probably watching Italian Soccer or tasting Italian wine.

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