How do people miss the crucial factors that can destroy their companies, or projects, or policies? One important answer is bias, which includes problems like the availability heuristic or anchoring. Those are analyzed by the Judgment and Decision-Making (JDM) field in psychology, and its offshoot Behavioral Economics. Most often, these disciplines look at departures from normative rationality in lab experiments.
But if you look around your own company or organization, it takes you less than three seconds to realize that culture is just as important, and it does not fit into behavioral economics. Culture is the basic fabric of how organizations think and act. It is why mergers and acquisitions so often go wrong, or why companies fail to adapt to change.
In fact, there is a very different field of research into company culture and its many potential blindspots. The most important classic work is Edgar Schein’s Organizational Culture and Leadership.
Culture, says Schein, is the accumulated shared learning of a group. It is created as the group confronts and initially solves its basic problems of survival. As those courses of action
.. continue to be successful in solving the group’s internal and external problems, they come to be taken for granted and the assumptions underlying them cease to be questioned or debated. A group has a culture when it has had enough of a shared history to have formed such a set of shared assumptions.
Then it becomes so taken for granted that any attempt to change it can create high anxiety.
Rather than tolerating such anxiety levels we tend to want to perceive the events around us as congruent with our assumptions, even if it that means distorting, denying projecting or in other ways falsifying to ourselves what may be going on around us. It is in this psychological process that culture has its ultimate power. Culture as a set of basic assumptions defines for us what to pay attention to, what things mean, how to react emotionally to what is going on, and what actions to take in various kinds of situations.
Once we have developed an integrated set of such assumptions, what might be called a thought world or mental map, we will be maximally comfortable with others who share the same set of assumptions and very uncomfortable and vulnerable in situations where different assumptions operate either because we will not understand what is going on, or , worse, misperceive and misinterpret the actions of others.[my bold]
Just think about the potential for damage and error, and how often you have likely seen problems like this in your own experience.
The problem is major decisions most often go wrong not because you get the information or calculations wrong, but because you get the assumptions wrong. National intelligence is a prime example. The news is full of NSA success in gathering data. But it is making sense of the data which is the real challenge.
Culture is one of the most important reasons decision-makers frequently fail to ask the critical questions in the first place. Schein discusses which assumptions are usually most important, how new hires absorb culture, how leaders try to alter it, and how culture changes through the evolution of firms from start-ups to declining corporate monoliths.
You can’t escape shared assumptions and culture, he says, nor would you want to. Without shared assumptions there can be no group, just a collection of people. But almost by definition, it also means people are incapable of seeing many of the most critical problems from within a particular company culture. Organizations find it hard to learn.