Dr. Paul Nutt, an Ohio state professor, conducted a two-decades-long study of why companies fail. The Leader Snips blog post, “How Ego Leads to Failed Decisions,” describes his findings:
- More than one-third of all failed business decisions are driven by ego.
- Nearly two-thirds of executives never explore alternatives once they make up their minds.
- Eighty-one (81) percent of managers push their decisions through by persuasion or edict, not by the relevance of their ideas.
The unavoidable conclusion is that misleading perceptions—tainted by swollen egos—interfered with what should have been slam dunk decisions.
Though we may see and think in straight lines, reality is made up of circles. When problems arise, linear thinkers are always looking for the “person” or “thing” that is responsible. Systems thinkers take on greater responsibility for events because their perspective suggests that everyone shares responsibility for problems generated by a system.
Here are six misleading perceptions that arise when we view the world in linear—and not systematic—ways.
- I am my position. Most people confuse their jobs with their identities ("I'm an accountant"). While they understand their daily tasks, they may not understand the purpose of the enterprises they take part in. Instead, they see themselves in a system in which they have little power and no need to take responsibility for poor results.
- The enemy is out there. Some organizations and people find an external agent to blame when problems arise—a result of looking at the world in non-systematic ways. When we are focused on our positions, we can't see how our actions have an effect beyond their boundaries. Focusing on an external enemy is almost always a mistake; usually, "out there" and "in here" are part of the same system.
- Illusion of taking charge. Proactive managers are encouraged and admired when they tackle problems fast. But is taking action against an enemy on the "outside" really proactive? This brand of “proactive” is really just “reactive in disguise.” Being truly proactive means seeing how we contribute to our own problems and solving those first.
- Fixation on events. We're dominated by events: last month's sales, new budget cuts, who was fired, product introductions, and so on. The problem is that looking at “events” distract us from seeing long-term patterns of change that lie behind them. This lack of perspective, of course, inhibits us from understanding these patterns. Slow, gradual processes like environmental decay, the erosion of the education system, or a decline in product quality are more destructive than sudden events.
- Delusion of learning best from experience. We may learn best from experience, but people rarely experience the direct consequences of many of their most important decisions. It may take years, for instance, to see the consequences of R&D decisions.
- Myth of the management team. In most organizations, a valiant, experienced, and savvy management team stands ready to do battle with problems and dilemmas. Nevertheless, teams in the business world tend to fight for turf and avoid anything that will make them look bad. To keep up the appearance of a cohesive team, they may hide disagreement and settle on watered-down decisions that everyone can live with.
It's not easy to develop and abide by systematic thinking. Too often, leaders are afraid to confront change, even when it’s a sure thing that their companies are going to slide by the wayside. More importantly, when company leaders make major decisions, their egos are as equally invested in keeping the status quo as any significant company dollars are in the actual project. Indeed, you can be sure that these six misleading perceptions are responsible for countless corporate—and personal—failures.
