Why do we make the mistakes we do make? What leads us to make Whoppers or truly big mistakes? Every organizational leader should read this book: Blunder: Why Smart People Make Bad Decisions by Zachary Shore. There are plenty of management and motivational books on getting things right or doing things well. What about the converse? How as leaders and managers can we prevent things from going wrong, terribly wrong? (Today's NY Times reports on the latest blunder in the financial sector: "Citigroup Saw No Red Flags Even as it Made Bolder Bets".)
An Associate Professor of National Security Affairs at the, Zachary Shore draws on literature, culture, history and politics to illustrate seven common "cognition traps". You will recognize many of these in your own organization:
- Exposure Anxiety: fear of being seen as weak
- Causefusion: confusing the causes of complex events
- Flat View: seeing the world in one dimension
- Cure-Allism: thinking that one-size solutions can solve all problems
- Infomania: an obsessive relationship to information
- Mirror Imaging: thinking the other side thinks like you do
- Static Cling: the refusal to accept that circumstances have changed
Reading Blunder I was drawn to re-reading George Orwell's classic essay "Shooting an Elephant". Exposure anxiety is a "perennial plague upon those in positions of power". Shore does a fine job of limning the underlying psychology of exposure anxiety by using Orwell's essay among his examples. Instead of pursuing a course of action commensurate with the the problem at hand or simply admitting that we don't know the solution, we fall prey to bravado. Orwell is led inexorably to shooting an elephant in front of hundreds of Burmese because he wants to avoid looking weak or a fool. This despite the fact that he does not want to shoot the elephant and knows exactly what he ought to do.
Dissecting Citigroup's fiasco in the coming months I am sure will reveal many of Shore's cognition traps. The most likely one to emerge in Citigroup's case is what Shore calls "Infomania", an example of which is information avoidance. Citigroup's risk managers failed miserably to follow-up and investigate the bank's vulnerabilities, relying instead solely on the word of a senior executive. According to NY Times reporters Eric Dash and Julie Cresswell, "Normally, a big bank would never allow the word of just one executive to carry so much weight. Instead, it would have its risk managers aggressively look over any shoulder and guard against trading or lending excesses. But many Citigroup insiders say the bank’s risk managers never investigated deeply enough."
I have two minor criticisms of the book. First, blunders are always obvious in retrospect and even more so to someone looking in from the outside. Shore does a good job of classifying blunders but only hints at how to avoid them. But this is not a shortcoming of Shore's fine book. Shore has given us a taxonomy to work with. It's up to us to investigate and to put in place both personal and organizational "checks and balances" to avoid catastrophic decisions. Second, it would be shame if readers avoided the book because of the cutesy category names ("Causefusion", "Cure-Allism"). Blunder is a well written book and its numerous case studies are worth studying.