With avian flu sparking fears of a new pandemic, it is useful to remember just how few governments, businesses, and individual decision-makers were able to respond effectively to the last pandemic.
The primary culprit was normalcy bias.
Normalcy bias causes people to underestimate the likelihood of disruptive events and their potential impact. It leads to a dangerous assumption that the future will function much like the past, despite clear evidence to the contrary. While this bias is common across various domains, its effects in the business world can be particularly catastrophic, especially in today’s volatile, uncertain, complex, and ambiguous (VUCA) environment.
One of the most striking examples of normalcy bias in recent times is the global response to the COVID-19 pandemic. Despite early warnings from epidemiologists, many businesses failed to prepare for the supply chain disruptions, shifts in consumer behavior, and workforce challenges that ensued. Companies that dismissed the pandemic as a temporary disruption faced severe operational and financial consequences, while those that adapted quickly to the “new normal” managed to thrive.
Similarly, the rise of artificial intelligence (AI) has revealed instances of normalcy bias. For years, executives in traditional industries dismissed AI as a distant concern, only to find their sectors upended by rapid advancements in technology.
How Normalcy Bias Harms Decision-Making
Normalcy bias can have several detrimental effects on decision-making.
Critically, it can delay action when action is needed. Leaders often fail to act promptly in the face of emerging threats, waiting until the problem becomes undeniable. This delay can result in missed opportunities or preventable losses.
This same bias can lead to inadequate preparedness, as it can lead organizations to neglect serious contingency planning, leaving them vulnerable when crises do occur.
Finally, it can prompt leaders to underestimate risks by downplaying their potential impacts, leading to insufficient mitigation strategies and overexposure.
For example, many retailers underestimated the shift to e-commerce until the pandemic forced them to accelerate their digital transformation efforts. Those unprepared for this shift struggled to remain competitive.
6 Ways to Overcome Normalcy Bias
Breaking free from normalcy bias requires deliberate effort and strategic interventions, such as:
- Use Red Team Thinking. Red teaming offers a structured approach to stress-test assumptions, identify blind spots, and evaluate alternative strategies. By simulating challenges and engaging in critical thinking exercises, organizations can counteract the complacency that normalcy bias fosters. For example, conducting a pre-mortem analysis can help anticipate potential pitfalls before executing a plan.
- Encourage Diverse Perspectives. Normalcy bias often thrives in homogenous groups where everyone shares similar experiences and assumptions. Including diverse voices in decision-making processes — whether through cross-functional teams or external advisors — can challenge groupthink and expose hidden risks.
- Scenario Planning. Develop and regularly update scenario plans for a range of potential disruptions. By envisioning worst-case, best-case, and most-likely scenarios, organizations can prepare to act decisively rather than reactively. For instance, many energy companies use scenario planning to anticipate shifts in regulatory policies and market dynamics.
- Foster a Culture of Vigilance. Encourage employees to voice concerns and challenge assumptions without fear of reprisal. Leaders should model this behavior by being open to feedback and questioning their own beliefs. This culture of vigilance ensures that emerging risks are flagged early.
- Leverage Data and Trend Analysis. Harnessing data analytics and staying attuned to industry trends can help businesses detect early warning signs of disruption. For example, monitoring customer behavior through predictive analytics can signal shifts in demand before they fully materialize.
- Implement “What If” Drills. Regularly engage teams in “what if” exercises to imagine how the organization would respond to unlikely but impactful events. These drills can uncover vulnerabilities and inspire proactive solutions.
Normalcy bias is a subtle yet powerful force that can undermine even the most well-intentioned leaders. In a rapidly changing world, the assumption that “business as usual” will persist is a recipe for failure. The key to overcoming normalcy bias lies in cultivating a mindset that values adaptability, critical thinking, and resilience. Organizations that embrace these qualities will not only navigate disruptions more effectively but will also uncover opportunities hidden within the chaos — whether those disruptions are caused by another pandemic or any other crisis.