A helpful article by McKinsey’s Tim Koller and Dan Lovallo talks about an interesting decision flaw that affects all of us on the front lines of the freelance revolution. Call it the over optimism bias. As the behavioral economist Daniel Kahneman observed , “Most of us view the world as more benign than it really is, our own attributes as more favorable than they truly are, and the goals we adopt as more achievable than they are likely to be.” This is particularly problematic or even dangerous when organizations are contemplating big, complex and unfamiliar decisions and actions. A well-known consequence of the over optimism bias is innovation failure. We know that 70% of change efforts fail, and that a similar percentage of mergers and acquisitions do not succeed in even returning the cost of capital. We also know that while the failure rate for change is stubbornly high, most change efforts have been thoughtfully identified and are “technically” correct. The over optimism bias, if not checked, leads us to under prepare by underestimating obstacles, overstating our readiness or capability, and exaggerating the likelihood of success. But, while more dramatic in large project contexts, the over optimism bias is […]
