People can show remarkable dexterity (or self-deception) at deferring blame when a situation goes badly wrong, like a company collapse, or a foreign policy crisis. Or the FBI knocking on your door, asking for hard drives with top secret e-mails on them. How could someone have foreseen it? It was business-as-usual, everyone did it, it was tried and tested. The problem was impossible to see and therefore no-one is to blame. Or just bad luck.
Unfortunately, that's almost never true.
In every crisis we studied, the top managers received accurate warnings and diagnoses from some of their subordinates, but they paid no attention to them. Indeed, they sometimes laughed at them.
That’s the conclusion from one of the classic studies of organizational failures, Nystrom & Starbuck in 1984. Some people in a company generally always see problems coming (we’ve seen other research about “predictable surprises” here). But senior managers find it extremely difficult to “unlearn” parts of what they know.
Organizations succumb to crises largely because their top managers, bolstered by recollections of past successes, live in worlds circumscribed by their cognitive structures. Top managers misperceive events and rationalize their organizations’ failures. .. Because top managers adamantly cling to their beliefs and perceptions, few turnaround options exist. And because organizations first respond to crises with superficial remedies and delays, they later must take severe actions to escape demise.
Instead, the researchers say, managers try to “weather the storm” by tightening budgets, cutting wages, introducing new metrics or redoubling efforts on what has worked before. They typically waste time, and defer choices. In the meantime, the firm filters out contrary evidence, and often gets even more entrenched in its ways. This is normal corporate life.
… well-meaning colleagues and subordinates normally distort or silence warnings or dissents. .. Moreover, research shows that people (including top managers) tend to ignore warnings of trouble and interpret nearly all messages as confirming the rightness of their beliefs. They blame dissents in ignorance or bad intentions – the dissenting subordinates or outsiders lack a top managers perspective, or they’re just promoting their self-interests, or they’re the kind of people wo would bellyache about almost anything. Quite often, dissenters and bearers of ill tidings are forced to leave organizations or they quit in disgust, thus ending the dissonance.
And then one morning it turns out it’s too late, and there is no more time.
The only solution that reliably works, Nystrom and Starbuck say, is to fire the whole top management team if there are signs of a crisis. All of them.
But top managers show an understandable lack of enthusiasm for the idea that organizations have to replace their top managers en masse in order to escape from serious crises. This reluctance partially explains why so few organizations survive crises.
The only real hope is to adapt before you have to. But the much more likely outcome is senior decision-makers end up eliminated, and destroy their companies and their company towns and employees and stakeholders along the way.
Just think about what might fix this. It isn’t more information or big data , as it will probably be ignored or discounted. It isn’t forecasts or technical reports or new budgets or additional sales effort. It isn’t better or more rigorous theory, or forcing the troops to work harder.
It’s a matter of focusing on and looking for signs about how people change their minds. It’s about figuring out what might count as contrary evidence in advance, and sticking to it. If you’re a senior decision-maker, this might be the only thing that saves you, before some outside investor or opponent decides the only hope is to wipe the slate clean, including you. If you figure out you need it in time. Will you?