Avoiding Heavy Duty Groupthink

Bill Wade

April 6, 2017

Heavy-duty distribution innovation used to feature a linear trajectory from new knowledge to new product or service, to new profit. Now innovation is neither singular nor linear nor obvious.

“The dogma of the past is inadequate in the stormy present … As our case is new, so must we think anew … and act anew. We must disenthrall ourselves.”  Abraham Lincoln, 1862

The heavy-duty parts and service market has taken anything but a predictable path. Why then do we seem to revert to yesterday’s ‘wisdom’ to plan our attack against never before seen competitive twists and turns?

All of our experience, both individual and organizational, has given rise to an important barrier to clarity: BIAS. To be clear: [bahyuh s] a particular tendency, trend, inclination, feeling, or opinion, especially one that is preconceived or unreasoned.

I recently came across a very helpful outline examining the sources of bias that can be affecting our whole market. Kind of a heavy-duty parts groupthink. See if you recognize the following when talking to customers, suppliers or your own fellow managers:

Optimism Bias

Overconfidence is hard-wired into our brains because it is useful. Many of our mental biases evolved because they make us cautious or they otherwise protect us from harm, but overconfidence is part of a suite of cognitive traits that serve to propel us forward.

Just as no one would think to write a children’s book about a train engine that repeats, “I’m sure I can’t,” few explorers would venture into the wild — and few entrepreneurs would start new businesses — unless they believed that they would succeed in the face of long odds.

A bias toward optimism helps to explain why many, if not most, smokers are confident that they will not develop cancer; why many drivers are certain that their texting will not lead to an accident; and why many entrepreneurs believe they can outperform the market just by ‘working harder.’

After too many years in this business, it is clear to me that we have become institutionally programmed to believe that things will work out.

Hindsight Bias

More confounding than the existence of heavy-duty management overconfidence is its persistence: As market changes teach us costly lessons, we should grow humble. But the fact that many do not reflects a sort of self-enhancing psychological process.

One of the biggest esteem builders is hindsight bias, or the tendency to rewrite our own history to make ourselves look good. In a recent landmark experiment, study participants were directed to make predictions about real-life events, then were asked periodically to recall the events and their predictions after the fact.

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The findings? Participants consistently misremembered their forecasts, in ways that made them look smarter. I am guilty of this! Too often we look back not in anger but in awe, at least of our own capacities.

Attribution Bias

Of course, many people easily recall failures, especially of others. This suggests that hindsight bias is not all that powerful. But even when our failures remain vivid memories, we remember them in a way that neutralizes their ability to inhibit our present-day decisions.

When events unfold that confirm our thoughts or deeds, we attribute that happy outcome to our skills, knowledge or intuition. But when life proves our actions or beliefs to have been wrong, we blame outside causes over which we had no control — and thus maintain our faith in ourselves. Heads- I win, tails- there’s a chance.

Confirmation Bias

Finally, even if heavy-duty managers are not rewriting history or blaming outside forces, they are still highly likely to miss signs of their own incompetence. The culprit is confirmation bias, which leads us to give too much weight to information that supports existing beliefs and discount that which does not.

And those existing beliefs need not be long held. Once one entertains the idea that ‘this seems like a good plan, or product or program,’ the processing of relevant information narrows considerably — and in a direction that leads to overconfidence.

Overcoming bias is difficult. More often than not, these four patterns lead us to recall opportunities that soared. That we thought to make but did not — and to forget those that plummeted.

My advice? Consider a strategy of self-distancing,  considering the opposite side of any transaction before making it. Try to boil out the idea that things will proceed as they always have. My bet is that they won’t, and it won’t even be close.

Bill Wade is a partner at Wade & Partners and a heavy-duty aftermarket veteran. He is the author of Aftermarket Innovations. He can be reached at bwade@wade-partners.com.

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