Monday, August 07, 2020

Speed, Simplicity, and Bad Choices

Managers are no different from other people. They usually want simple, definite answers, even to complex questions, so they grab at anything that seems to offer a straightforward way of dealing with whatever problems they are facing. Black and white appeals to them more than multiple shades of gray, but reality is rarely so clear cut. Going too fast limits the possibility of exploring anything complex and forces you to work with rules of thumb and oversimplified formulae. As a result, many leaders make their decisions based on unrealistic assumptions of universal causes and equally universal effects drawn from only a few instances.

It is impossible to infer fundamental “truths” about any organization’s situation or prospects from its short-term performance. Nor can studying the actions of successful leaders yield universal principles of leadership for others to follow, unless you were able to study hundreds, maybe thousands, of such examples. Any particular instance of success or failure is more likely to be due to chance or context (beingin the right place at the right time, also by chance) than any specific action or policy choices. You can look like a business genius for no other reason than that your choices were lucky ones, even though the reasons for such good fortune had almost nothing to do with what you did or believed when you made them. It’s tempting always to attribute outcomes to something the people associated with them did or failed to do, but it makes little sense to do so.

Management theorists often base the proof of their ideas on the actions of one or two supposedly excellent leaders, ignoring the context in which those actions were taken and inflating specific instances of success into universal laws of leadership. This is history, not science. Considering how success and failure have been produced in the past is useful as a source of ideas, but a few instances of either cannot produce fundamental principles that are good for all time and circumstances. It’s this process of rapid over-generalization that produces most of today’s fads and fashions of management: an unthinking imitation of any action that seems to have been successful, without considering whether that success was truly due to the stated causes.

Chance plays a far greater role in determining results than we like to accept. Context is important too, sometimes to a degree that obliterates any other supposed causes. If you add the obsessive attention most organizations give to short-term outcomes, you have the pattern that underlies many—perhaps most—cases of seemingly incomprehensible corporate decisions: The willingness to base major decisions on erroneous assumptions about causes deduced from only one or two examples either of good or poor performance. Statistics is sometimes called the law of large numbers; management decisions are typically based on a corresponding “law” of numbers too small to be genuinely useful as a guide to reality. Leaders grasp at simple patterns where none exist, and hurry to fire those assumed to be responsible for failure, where the true causes lie in the organization itself.

It is vital to allow time to question all simplistic assumptions and wait for sufficient information before forming a definite conclusion. Slow Leaders focus on seeking out the true causes of performance, using qualitative as much or more than quantitative information. Before jumping into action, they take whatever time is needed to understand all the circumstances fully.

If the best, most accurate, and most complete information comes from Sid and Ruth in the warehouse—or Gerry, who’s been a loyal customer since 1988—that’s the information Slow Leaders use, even if high-powered number crunchers are on their staff. They also spend less time than conventional managers do asking how the business is performing in the short term, and more considering how it performs over as long a period as can be reasonably discovered. Traditional forecasting is often futile, but spending time envisioning possible futures can be useful in uncovering options and preparing people for the unexpected. Sometimes you need to realize what looks like a problem is the first sign of a wonderful but unplanned opportunity.

The search for basic principles of leadership is unlikely to cease. It speaks to something too fundamental in the human mind: the wish for patterns to make existence comprehensible. But collecting sufficient evidence to support even the most tentative attempts at laws of business is not the work of a few months, or even years; nor can the actions of one or two, or twenty, leaders be considered definitive. Until someone can collate the results of actions by hundreds of leaders in thousands of situations, carefully controlling for chance and circumstantial effects, leaders should rely on their own knowledge and reasoning, and avoid counting on any supposedly universal principles to guide them.

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