Cognitive bias in digital transformation in New Zealand: examples from the non-profit sector

Digital transformation has been a hot topic in the business world for a few years now but it’s not necessarily seen as a pressing issue in the charitable sector. Perhaps because of cognitive bias! Maybe your governance board has not identified technology as a significant risk. Maybe your board are not technologically confident. And anyway, what does digital transformation actually mean for your organisation? Does it help your mission? Does it mean expensive technology? Does it mean tools rather than people power?Before you can even begin to talk digital transformation with your decison makers you are going to have to tackle cognitive bias!

Cognitive bias is the tendency to make judgments or decisions based on our beliefs and preferences, rather than objective facts. It can affect our perceptions, decision-making processes, and ultimately, the success of our digital transformation initiatives. In this blog, I want to help you to identify whether cognitive bias is an obstruction to your organisation’s digital transformation.

Firstly let’s talk digital transformation. Simply put it, means looking at the way you do things today, and identifying whether they can be done more efficiently, more productively, more effectively by using a technological solution.

Evidences from NZ Hangouts Program

At Matakite Trust Online, we have been working with non-profit organisations in New Zealand to help them with their digital transformation initiatives. One program that we have been involved in is the NZ Hangouts program. During the pandemic, the SeniorNet Federation realised they could not deliver digital learning in a face to face environment. Older people, of course, did not want to put their health at risk with face to face learning. Almost overnight, we created an online platform that allowed any seniornet member, regardless of physical location, to join online learning sessions presented every single day!

In presenting this concept throughout the country we encountered examples of how cognitive bias impacted on digital transformation initiatives. Here are some examples:

Confirmation Bias: Confirmation bias is the tendency to seek out and interpret information in a way that confirms our existing beliefs or hypotheses. In the context of digital transformation, this can manifest as a reluctance to try new technologies or approaches because they don’t align with our current beliefs or practices. We have seen this play out in the non-profit sector, where organisations are hesitant to invest in new technology because they believe it will be too expensive or too difficult to implement.

Anchoring Bias: Anchoring bias is the tendency to rely too heavily on the first piece of information we receive when making a decision. In the context of digital transformation, this can manifest as a reliance on outdated technology or processes because they have been in place for a long time. We have seen this play out in the non-profit sector, where organisations are hesitant to adopt new technologies because they have been using the same processes for years.

Bandwagon Effect: The bandwagon effect is the tendency to do something because others are doing it, rather than because it is the best course of action. In the context of digital transformation, this can manifest as a rush to adopt new technologies without fully understanding their potential impact. We have seen this play out in the non-profit sector, where organisations feel pressure to adopt new technologies because their peers or competitors are doing so.

Addressing Cognitive Bias in Digital Transformation

Cognitive bias can have a significant impact on digital transformation initiatives, but there are ways to address it. Here are some strategies that you could use to mitigate the effects of cognitive bias:

  1. Create a culture of experimentation through a pilot approach: Call your project a pilot and give it a defined time frame to gather your evidence. We call this the “nothing to lose” approach. By making this a project you could probably find a funder.
  2. Challenge assumptions: Encourage volunteers to question their own assumptions and beliefs, and to consider alternative viewpoints. Use a survey to find out what people’s assumptions might be and then seek out examples and evidence for your transformational plans.
  3. Seek out diverse perspectives: Encourage volunteers from diverse backgrounds to participate in a working party. Present their viewpoints to your decision makers. Use endorsements and case studies from other organisations.
  4. Use data to inform decisions: Use data and analytics to make decisions, rather than relying on gut instinct or anecdotal evidence. Point out legislative requirements such as the Privacy Act, health and safety etc which can be mitigated through the wise use of technology.

At Matakite Trust Online, we are committed to helping non-profit organisations in New Zealand navigate the complexities of digital transformation. By addressing cognitive bias and adopting a data-driven approach, we believe that you can achieve your digital transformation goals and continue to make a positive impact in your communities.