It is important to understand the multitude of business effects digital leaders might need to deal with, and numerous pitfalls the management should pay more attention to at the journey of digitalization.
Businesses today need nothing less than a paradigm shift in their thinking about the fundamentals of how organizations work to build an authentic culture and an engaging workforce, It is the transformation that is reshaping our thinking and recasting the way we view ourselves, the systems of which we are the part of the environments. It is important to understand the multitude of business effects digital leaders might need to deal with, as well as numerous pitfalls the management should pay more attention to, and take the logical steps for reaching the next stage of digital management fluency.
Ambiguity Effect: Ambiguity is the haziness of reality, the potential for misreads, the mixed meanings of conditions, or cause-and-effect confusion. Ambiguity Effect is a type of cognitive bias. It is the tendency to avoid options for which missing information makes the probability seem "unknown." In many cases, though, the information cannot be obtained. This will often lead them to seek out the missing information. Ambiguity can be understood as being similar to business ‘risk,’ a term used to describe a circumstance in which an investment is made, but the outcome is uncertain. Consequently, in times of organizational change or digital transformation, dealing with ambiguity is a leadership skill.
Anchoring effect: Anchoring effect or focalism is the type of cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the "anchor") when making decisions. We all learned at the younger age: “Don’t judge the book by its cover,” but unfortunately, we do live in an increasingly “profiled” world that does judge a book by its cover. Hence, some say the understanding gap is even enlarged because each individual evolves into the “VUCA” digital normal at the different pace. Anchoring occurs when individuals use an initial piece of information to make subsequent judgments. Once an anchor is set, other judgments are made by adjusting away from that anchor, and there is a bias toward interpreting other information around the anchor.
Halo effect: Halo effect is another form of cognitive bias in which the brain allows specific positive traits to positively influence the overall evaluation of the person, idea, or object in the halo. The halo effect can also be explained as the behavior (usually unconscious) of using evaluations based on things unrelated, to make judgments about something or someone. To overcome this type of cognitive bias, having contextual understanding is important to gain a clear discernment for making sound judgment and improving decision effectiveness.
Ripple effect: Ripples are small water movements produced by winds which transfer energy to the water as they blow over. Ripples expand across the water when an object is dropped into it. Ripple effect is often used colloquially to mean a multiplier. Organizations arise when the scale of the interrelations, interactions, or inter-relational interactions surpasses the individual’s capacity to be able to do whatever it does with smaller scales. It’s important to understand the psychology behind changes and make a shift at the mindset level in order to have a ripple effect for changes.
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