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Beware action bias: Sometimes the right thing to do is nothing!

Dec. 19, 2022
Sometimes it's best stay the course and not go chasing after the latest silver bullet

In a world where change is inevitable and timing is everything, leaders are increasingly under pressure to make fast, strategic decisions in technology and investments. The journey through digital transformation has been a bumpier ride than many anticipated. Sometimes slow adoption rates and poor return on investment have led to industry confusion and a lack of clarity in where to go next. Inflated claims of control algorithms with artificial intelligence or predictive capabilities have only added to the noise. And when larger technology providers rush to acquire these companies in a bid to keep up with the rapid pace of ‘cool tech’ and present to the public that they are as current as everyone else, expected growth expectations may not be realized.

As a longtime end-user and integrator in the world of automation, Pete Diffley has frequently been asked to provide his thought leadership and guidance to global organizations when it comes to go-to-market strategies and making the right investments in technology. In his role as leader of global partnerships for Trihedral, a Delta Group Company, he’s been looking at the challenge facing industry leaders in this arena. Control caught up with Diffley to discuss his experiences and to provide some practical advice for those browsing the technology portfolios out there.

Q: In relation to investments in technology, what are some of the reasons that companies jump to what they consider to be the latest trend in technology, only to be underwhelmed by the results?

A: I pondered this myself for some time and was brought around to the notion of action bias. It’s covered well in a book I use as a reference from time-to-time, The Art of Thinking Clearly, by Rolf Dobelli.

Studies were carried out by researcher Michael Bar-Eli, who evaluated hundreds of penalty shoot-outs in soccer—football for my friends outside the U.S.! During a penalty kick, the ball typically takes less than 0.3 seconds to travel from the penalty taker to the goalkeeper; not enough time for the keeper to wait and see what trajectory the ball has and adjust accordingly (very similar to a professional baseball player’s 0.35 seconds to react to an incoming pitch).

In Bar-Eli’s study, he found that one third of the time the ball was kicked to the left, one third to the middle and one third to the right, yet rarely do the keepers remain standing in the middle, regardless of the fact that one in three times the ball landed there. Mostly you will see them diving to save a goal, even in completely the wrong direction, rather than staying where they are. We tend to respond like this because being seen to do something, or “looking active,” is considered instinctively to be better—even if it achieves nothing, or results in a poorer outcome.

In relationship to technology, this bias sometimes makes leaders succumb to the latest buzzwords. Solution providers may rush to acquire start-ups or release solutions that then don’t live up to expectations. Users and technology providers alike may also think that the well-proven solutions they have invested in are now out of date and should be cast aside.

Q: At the end-user level, doesn’t this reinforce a certain level of cynicism towards technology claims?

A: That’s right. The muddying of the waters in terms of what to invest in and what to discard is becoming almost like the format wars of the past… remember VHS versus Betamax, CD versus vinyl, MiniDisc versus Digital Compact Cassette?

Claims by companies that something is “the new thing” and that “you’re all being screwed” need to be taken with a proverbial pinch of salt. So should claims of “unlimited” when it comes to licensing. Some systems have significant performance limitations that are reached way sooner than expected, forcing end users to purchase more and more “unlimited” licenses and/or hardware to reach the performance that other systems can more easily provide.

Q: You recently returned from a major tradeshow where certain smart technology was showcased to an otherwise conservative industry. What kind of insights did you gain?

A: Yes. I attended WEFTEC, the Water Environment Federation's Technical Exhibition and Conference in New Orleans—the largest water conference in North America. Water is in the news almost every day now—water scarcity, water quality, water access and water flooding—so this was a great event that was very well attended, bringing tens of thousands of attendees and exhibitors together over three days. I spoke to leaders of organizations both large and small and on both the provider and user sides of the equation to get some perspective on the challenges they and the rest of the water industry were facing.

While overall there was a positive vibe of opportunity and optimism, they also expressed a common frustration that certain perceived industry trends ultimately didn’t result in a sustainable solution to end customers or achieve a good ROI. Perhaps some action bias at work? Some leading technology providers were now focusing on their company’s core strengths, pushing the proven solutions they are good at, whittling down the number of “difficult to implement, might work solutions” and using a more customer focused, value-driven approach to tackling water challenges.

On my many meetings with start-ups and new-to-market companies, representatives often reported that market penetration and final adoption were a challenge. This seemed to be partly due to collateral damage from unfounded claims of “intelligence” by others. The truly innovative companies and solutions were being confused with the false prophets and go-to market strategies for legitimate players suffered as well.

Q: What advice would you give manufacturers, solution providers and end users regarding innovation adoption?

A: The water industry, which I would note is mostly built on public funding, is called critical infrastructure for a reason. It requires solutions that can perform excellently in less-than-ideal conditions. Those that don’t measure up to this standard are, or will be, called out. “Cool walls” of logos claiming that Utility X uses this or that solution do not prove their use in mission-critical contexts. Track record helps a lot, but be prepared to show your credentials and prove your claims.

In the case of start-ups, try not to be too disillusioned, you may well have an amazing product or solution that could revolutionize industry. Be prepared to seek out end users or public utilities that will do rigorous, verifiable testing or maybe partner with organizations that will help do that with you.

If your solution has some form of “intelligence,” ask yourself if it is using a control algorithm or some form of machine learning before laying any claim to AI. You’ll do yourself a favor in the long run if you can clearly and simply differentiate your solution from all the hype.

Finally, to the leaders of large companies not sure if they should follow the latest trend or not, make sure that you are not just succumbing to action bias, that those advising you aren’t simply building their own empires, and make sure your own goals are realistic and transparent.

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