Why Organisations Make Bad Decisions

July 18, 2009
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I recommend reading the Psyblog entry discussing the value of dissent. It presents a well thought out argument as to why corporations make bad decisions. There are lessons here for those interested in better understanding the group context within which decisions are made in most large organisations.

Although it is not exhaustive, there are some tips on how to create constructive dissent. This is very difficult to do in practise – and doubly difficult if you are an analyst with the data already to hand that proves you are correct!

Here are Psyblog’s ways to achieve ‘good’ dissent:
  • Hire someone who genuinely disagrees with the group
  • Hire leaders that facilitate discussion. 
Doesn’t sound like rocket science, so why is it so difficult? Here’s why:
  • Organisations often recruit on the basis of who will ‘fit in’ and not ‘rock the boat’. The stereotypical yes-man often emerges, perhaps unconsciously, as perfect for the job.
  • Group cohesiveness is highly valued for productivity (‘are you a team-player?’): groups who are always bickering are perceived as getting less work done.
  • Disagreement and the expression of conflicting opinions makes people uncomfortable and they try to

I recommend reading the Psyblog entry discussing the value of dissent. It presents a well thought out argument as to why corporations make bad decisions. There are lessons here for those interested in better understanding the group context within which decisions are made in most large organisations.

Although it is not exhaustive, there are some tips on how to create constructive dissent. This is very difficult to do in practise – and doubly difficult if you are an analyst with the data already to hand that proves you are correct!

Here are Psyblog’s ways to achieve ‘good’ dissent:
  • Hire someone who genuinely disagrees with the group
  • Hire leaders that facilitate discussion. 
Doesn’t sound like rocket science, so why is it so difficult? Here’s why:
  • Organisations often recruit on the basis of who will ‘fit in’ and not ‘rock the boat’. The stereotypical yes-man often emerges, perhaps unconsciously, as perfect for the job.
  • Group cohesiveness is highly valued for productivity (‘are you a team-player?’): groups who are always bickering are perceived as getting less work done.
  • Disagreement and the expression of conflicting opinions makes people uncomfortable and they try to suppress it, partly because:
  • Dissent is easily misinterpreted as disrespect or even a personal attack.
  • Dissenters are often labelled as trouble-makers and targeted for either conversion to the consensus or outright expulsion from the group.

Thomas Davenport, author of Competing on Analytics: The New Science of Winning (Harvard Business School Press) makes a similar but much broader point. He advocates a new emphasis on people as the key ingredient in successful predictive analytics. An old, but still relevant discussion is available here.

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