We’ve all been there. We read a magazine article or watch a documentary about a certain subject and in the coming days or weeks, we start seeing it everywhere we look. This is the Baader-Meinhof phenomenon.
The Baader-Meinhof effect can happen in the boardroom and if it takes hold in the minds of your board, it can lead to biased or bad decisions. Read on to learn more about the Baader-Meinhof phenomenon, and discover four ways to prevent it from infecting the boardroom.
What is the Baader-Meinhof Phenomenon?
The Baader-Meinhof phenomenon, or the “frequency illusion,” describes the syndrome experienced after learning about a new concept or piece of information. Once learned, that concept or piece of information seems to appear more frequently. Chances are, what you’ve learned is no more ubiquitous than before, but because you are now paying more attention, you notice it more often. This causes a feedback loop, where your confirmation bias leads you to believe that it’s appearing everywhere.
How the Frequency Illusion Can Plague the Boardroom
The Baader-Meinhof phenomenon can infect boardroom thinking just as easily as it affects an individual. The frequency and appearance of information doesn’t make that information true or a trend. Knowing how the frequency illusion works, and not succumbing to its illogical order, can prevent your board from making poor decisions that may cost you big.
How the Baader-Meinhof Phenomenon is Developed
To prevent the Baader-Meinhof effect, it’s important to first understand how it develops through selective attention, confirmation bias, and acting on unreliable information. By understanding the steps, you can intercede before it takes hold.
The first step that leads to frequency illusion is selective attention. For instance, a director may hear about a new analytics app that’s receiving a lot of buzz. After hearing about the app, this director is subconsciously paying more attention to news surrounding the analytics, and the app seems to be everywhere.
Next, a confirmation bias leads your director to believe that every instance of hearing about analytics is proof the app is everywhere. Perhaps it leads to assuming your competition is already using the app. This confirmation bias may lead your board to believe the app must be incorporated into your business for you to stay relevant and succeed.
Acting on Unreliable Information
The final step involves acting on unreliable or skewed information. The two prior steps of the illusion fallacy may lead your board to believe that due to a trend’s seeming ubiquity, it’s reliable, effective, and safe for your business. In reality, the trend may just be a passing fad and acting on it without thorough research can lead to costly wastes.
How to Battle the Baader-Meinhof Phenomenon in the Boardroom
There are strategies to battle the destructive consequences of the Baader-Meinhof syndrome. Providing effective, accurate and transparent communication helps to prevent your board from acting on the Baader-Meinhof phenomenon.
Here are 4 ways to battle the complex syndrome:
1. Keep Your Board Up-to-Date
The best way to battle the Baader-Meinhof phenomenon in the boardroom is to supply your board with relevant information in real time. Of course, sharing information in real time requires you to communicate with board members in board meetings and between board meetings. This means the CEO maintains a strict “no-surprises policy” with the board, and works to build and maintain relationships.
2. Set Clear Business Goals and Objectives
Preventing the frequency illusion from influencing your boardroom requires setting clear and understandable business objectives and strategic goals. That requires complete transparency, so board members understand the implications of changing your business from every possible angle. By establishing a clear understanding of your business objectives and maintaining greater transparency, board members will be less likely to embrace ideas that stray from your strategic objectives.
3. Providing Your Board with Hard Data
Often, a major component to transparency is data. Providing your board with hard data on a suggested trend or idea can prevent the board from making a bad decision. Just sharing data by itself with your board, however, doesn’t tell your directors the entire story. Preparing highlights and variances on your data is what gives your directors the insight they need. Your highlights and variance-based reporting should provide an honest narrative about your business.
4. Use Board Management Tools
Constantly communicating with your board, remaining transparent, and providing data with highlights and variances requires a well-organized board portal. Traditional board books (or emails with attached information) fail to allow board members to properly assimilate the information. By providing little or no time after receiving a board book, board members may arrive unprepared for a board meeting. Worse, without appropriate preparation, your board may be susceptible to acting on whims; that’s when the Baader-Meinhof phenomenon finds its victims.
How OnBoard Keeps You Safe from the Baader-Meinhof Phenomenon
A board portal, such as OnBoard, keeps your directors on the same page. It enables transparency and sharing information is simple. OnBoard ensures that prepared meetings can focus on the future without leaving your directorship overwhelmed with last-minute stacks of information. OnBoard replaces the traditional board book and it’s the most effective way to securely collaborate, a necessary action to make wise decisions while rejecting the logical allure of the Baader-Meinhof phenomenon.
If you’d like to learn more about our board portal software, OnBoard, we’re here to answer any questions you might have:
About The Author
- At OnBoard, we believe board meetings should be informed, effective, and uncomplicated. That’s why we give boards and leadership teams an elegant solution that simplifies governance. With customers in higher education, nonprofit, health care systems, government, and corporate enterprise business, OnBoard is the leading board management provider.
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