Optimism bias in teams
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The idea of this paper is to look at different behavioural “patterns”, also known as biases. In this paper, there will be a focus on biases which has a tendency to lead to optimism biases. The different biases will be mentioned to be aware of them, we will then examine optimistic bias in regard to teams.
In the paper in will find that optimism bias is important to tackle as it can lead individuals and/or teams to unrealistic expectations, which can have a negative impact on team dynamics and coordination. Optimistic bias can also have positive effects, such as increasing morale and motivation.
Project managers can use several methods to effectively manage optimistic bias in teams. These methods include 1) fostering a culture of transparency and open communication, 2) using data to help uncover overly optimistic assumptions and goals, 3) encouraging a culture of continuously improving, 4) developing a risk management plan, 5) setting realistic expectations, and 6) seeking external opinions. There are also other factors and important steps when creating a team that can help to reduce optimism bias and moral hazards in teams. By using these methods, project managers can help ensure that their team takes realistic approaches to the project and remains focused on achievable goals. Furthermore, it is important to know the difference between optimistic bias and strategic misinterpretation.
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Generel biases in regard to teams and projects
When looking at optimism in teams it is important to look at human behaviours, both from the individuals' side as well as the organisations' mentalities. The following will establish base knowledge about these behaviours. In general biases and optimism is different ways that people are manipulated/influenced, either by themselves or others. With a lot of factors in play. When individuals are influenced by a bias it is referenced as a cognitive bias, which unbeknownst to the individual doesn't reflect reality. Meanwhile, on the other end, there is Strategic misrepresentation, a tool used for the users' benefit.
The general optimism has effects on (look into; different markets, teams, investors, individuals, etc?)(a small intro for the construction etc. but here we are looking at the team, (teams "developing new technology or products?"))
Strategic misrepresentation
Strategic misrepresentation is when someone deliberately presents false information for their own benefit and strategic purposes. This mostly relates to the funding or acceptance of projects, where projects are presented to have lower costs and/or higher benefits than what is actually forecast, to look more appealing on paper. There are a lot of different reasons for the tendencies to make use of such a method and is dignified with the mindset of ‘ends justify the means. Here firms use strategic misrepresentation to get a job/project which can lead to profits. Strategic misrepresentation is seen frequently and at higher altitudes where political organizations are involved, as they have a tendency to participate in big and expensive projects. Where there is a lot of pressure from political organizations, as they tend to put more pressure and attention on the projects. As it is important for political organizations to have their project accepted, as it can have an impact on political purposes. [1]
Tendencies for strategic misrepresentation
- Large projects with a lot of attention, and a high strategic importance usually have a large misrepresentation or bias, e.g. political bias, where there is to an extent a cognitive bias.
- For Smaller projects, with low attention and/or strategic implications, the biases are more likely to be cognitive biases, e.g. optimism bias.
Cognitive biases
Cognitive bias is a term referenced as a broad term, which entails different kinds of biases. Cognitive bias isn't when someone else is trying to manipulate an individual for their own gain, but when the individual themselves contaminates their rationality, hindering them from making rational choices. This doesn't mean that it leads to unpredictable behaviours, but quite the contrary.
- "Cognitive bias refers to a systematic (that is, non-random and, thus, predictable) deviation from rationality in judgment or decision-making." [2]
There are some different suspected causes, with can lead to Cognitive biases, 1) one could be that we as humans have limited cognitive resources and is therefore in need to sort out information because of our limited capabilities, 2) emotion and motivation also play a huge role when in need to make decisions, 3) social influence, can also influence our decision making as opinions of others can affect decision making & 4) mental shortcuts, as taking everything into account isn’t always possible it can lead to taking what seems to be the best option [2]
This article will look at different biases caused by these factors, as well as link them to teams.
- Uniqueness bias
Uniqueness bias in project management is when individuels in the project sees the project or management of the project to be more unique than what is actually is. Instead of looking broth project managers sees their projects as being singular and unique. This uniqueness bias comprehends learning form other projects as project managers sees their own projects as being unique and is therefore different form other projects. Managers who sees their projects as special and unique has a tendency to do worse than project managers who doesn't see their projects as unique. Projects with new technologies has a tendency to increase the illusion of uniqueness in projects, as there is still opportunity draw parallels form other projects. Uniqueness bias can lead to being narrow-minded and optimism, which can leave the project team with wrong estimates of risks, and therefore they might end up taking risky choices. [1]
Looking at individuals, individuals can also have a tendency to see themselfs as unique, especially good looking, healthy, smart etc.
- Base rate bias / base rate neglect
Is a tendency to not look at ones data objectively. As well as putting more emphasis on one's knowledge without looking objectively at new or different knowledge, as well as thinking that one's knowledge is more important than it actually is.
- Anchoring
Anchoring bias is when people tends to anchor on a certain piece of information. (more on later) (this can be caused by the lack of transparency in the teams)
Managing teams
Teams Defining a team “A teams puts their efforts towards reaching a common goal.” It is important to manage a team [3]
Why is it important to manage a team
Risk Assessment in project teams
When project leaders develop or review their project plan, they need to look at risk and know where these risks can occur. One of these areas of risk is staffing, as project managers usually overestimate and can be too optimistic about their staff's capabilities which can lead to understaffing in regard to their project. It is also important to understand the skill level and role each team member has, as well as to establish a chain of communication. Where in smaller teams, all may report to the project leader, but in larger teams or projects that might not be the case. As well as to make an estimate of progress, and react to problems regarding deliverables in contrary to the end date. In estimating how much harm a problem can have on the project there are 3 factors which can help determine the impact. 1) The first one is budgetary impact, which looks at the increase in cost or reduction in funding, 2) Time impact, how will the problem affect the timeline and 3) Quality impact, will it affect the quality or performance. [4]
Optimism bias
Optimism bias is a cognitive bias, which is a human misinterpretation and tends to lead individuals to being way optimistic or casual regarding timelines and planned actions. Not to mistake it for Strategic misrepresentation, as also mentioned earlier is when others they to influence agents for statigic purposes. Here there is talk about the team, experts and/or management themselves having a mis-interpretation of the situation and are themselves not aware of being optimistic.
Mention; example or in depth
It is rare for forecasters to mention optimism bias to be stated as the cause of project delays, going over budget, change of scope etc. Here it is more terms like strategic misrepresentation, scope changes, weather conditions, fluctuating prices etc. which are mentioned. Meanwhile from a psychological point of view, it might be a different story.
Optimism bias can be a double edged sword (both good and bad), as it can be a driver for projects and can breed a positive and active attitude.
- The Planning Fallacy (Writ Large)
When optimistic teams, are planing they have a tendency to plan extremely close to the timeline being optimal, not taking many repercussions and estimating their proces to be close to best-chase scenarios and not making room for failures or delay. (more details later) [1]
Managing teams and optimism bias
- Lobby formation [5] ,
group size [5],
- Generel management, Moral hazards and optimism bias
References
- ↑ 1.0 1.1 1.2 Bent Flyvbjerg, Project Management Institute (2021) Top Ten Behavioral Biases in Project Management: An Overview, DOI: 10.1177/87569728211049046
- ↑ 2.0 2.1 Blanco, Fernando. (2017). Cognitive bias. 10.1007/978-3-319-47829-6_1244-1.
- ↑ DS/ISO 21502 (2020) Project, programme and portfolio mangement - guide on project management
- ↑ Leading Project Teams: The Basics of Project Management and Team Leadership, Cobb, A.T., p. 89-119, SN:9781544302737, https://books.google.dk/books?id=KX9ZDwAAQBAJ,(2011), SAGE Publications
- ↑ 5.0 5.1 Vincent Anesl (2014) Moral hazard and free riding in collective action, DOI:10.1007/s00355-008-0318-8
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