The dilemma
After a period of margin pressure, a global logistics company launched a cost-reduction program. Leadership focused on reducing overhead while protecting the core of the business. As part of the effort, the executive team reviewed a set of support functions, including internal training, process coordination roles, and a group responsible for standardizing workflows across regional hubs.
These activities did not generate revenue directly, and external benchmarks indicated the company carried higher-than-average overhead in these areas. In leadership discussions, the work performed by these teams was described as useful but not essential, particularly when compared with frontline operations. When the executive team asked for data to substantiate the value of these activities, the finance team acknowledged that these areas had not been systematically measured. Senior leaders, some of whom either interacted very little or never with these areas, were almost baffled by why the company hadn’t made these reductions long ago.
At one point in the discussion, a manager raised a note of caution. She had seen how the training team helped new supervisors become effective more quickly and how the coordination roles often resolved operational issues before they escalated. She suggested that some of this work might be more consequential than it appeared. The point was briefly acknowledged but failed to reshape the conversation. Instead, senior leadership’s interpretation quickly became the organizing logic for the group, which implemented the reductions.
Gradually, problems began arising and then cascading throughout the organization. Shipment delays increased and error rates rose. Onboarding times lengthened and managers spent more time troubleshooting and less time running their operations. In one region, repeated service failures led to losing a key account.
The company had unwittingly removed the connective tissue that enabled its complex systems to interact smoothly. Leaders had anchored on what they experienced directly, underestimating work outside their line of sight. This was not a particularly unusual oversight: Organizations often undervalue roles that clarify decision pathways and flag risks. In this case, egocentric anchoring, combined with a tendency to defer to top leaders’ decisions, allowed authority bias to reinforce an erroneous conclusion.
The research
Egocentric anchoring is closely related to what psychologists describe as the “false consensus effect,” the tendency for individuals to project their own experience and perspective onto others. In a 1977 study, Lee Ross, David Greene, and Pamela House showed that across multiple experiments, participants consistently overestimated how widely their own views were shared.1
In organizations, this tendency becomes particularly consequential when leaders evaluate activities they do not personally engage in. Even when they recognize that others operate under different conditions, their personal vantage point can shape how they interpret and weigh those differences.
Authority bias can amplify this dynamic. In one of the best-known social psychology experiments, psychologist Stanley Milgram demonstrated that individuals are highly likely to defer to authority figures, even when doing so conflicts with their own judgment.2 This effect can carry over into corporate settings, where people may register concerns or alternative perspectives but hesitate to press them. People lower down the chain of command learn that the safest move is often to infer what leadership wants rather than to push alternative evidence or perspectives.
In short, leaders often anchor on their own perspective, and others allow that perspective to stand. In the case of the logistics company, these reinforcing biases led the company to self-destructively cut roles that were crucial to success.
Bias Busters
The remedy
To counteract egocentric anchoring, leaders can begin by recognizing that their experience, while valuable, can also be a constraint. Their decision-making instincts are shaped by their own trajectories: what they have seen and what has worked for them. Over time, these perspectives can become so familiar that leaders assume they are universal, creating a bias that can pose an obstacle to effective change management.
To push back on egocentric assumptions, leaders can ask themselves: “Is this true for the organization, or is it true for me?” The question acknowledges that what feels reasonable may have different implications elsewhere in the organization. And when leaders are evaluating work or arbitrating, they can deliberately seek evidence from the people closest to that work and from those able to quantify the value of the work.
It is equally important to create guardrails against authority bias, which impedes collaborative leadership styles and discourages dissent. When leaders invite challenges to their perspectives, they create room for a more complete picture to emerge. In many cases, dissent is acknowledged but not explored. Teams can counter this by pausing on contrary views and asking what would need to be true for those concerns to be valid. Finally, leaders can address both egocentric anchoring and authority bias directly by asking, “Where might I be overweighting my own experience?”
When the logistics company revisited its cost program, senior leaders started by gathering insights and data from both the people closest to the work in question and from the finance function. They incorporated input from frontline teams, examined how the removed roles had affected cycle times, error rates, and escalation patterns, and gave greater weight to perspectives from those closest to the work. The CFO tasked the finance team with quantifying the impact of the previously overlooked activities, ensuring that contributions were translated into metrics leadership could evaluate. Leaders also made space for challenge in the discussion, explicitly revisiting earlier assumptions about what was “nonessential.” As a result, the company reinstated targeted training and coordination roles in areas where performance had deteriorated, improving operational consistency.
The objective is not to distrust experience, but to recognize its limits. Leaders make better decisions not by abandoning their instincts, but by ensuring those instincts are informed by perspectives beyond their own.
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