Why Predicting Organizational Disasters Doesn't Prevent Them
Organizations are frequently surprised by the organizational catastrophes that befall them, but recent events reminded me that these disasters are often preceded by advance warning. Why is it so difficult to act on these warnings--and how can we overcome this tendency?
For instance, a New York Times column by Frank Rich reminds us that the problems with Stanley McChrystal didn't really begin with the now-famous article in Rolling Stone. McChrystal was involved in the cover-up of the friendly fire shooting of former pro-footballer Pat Tillman several years ago and had taken a public snipe at Vice President Biden last October, even as the general sought media celebrity with a 60 Minutes interview. A book review by Paul Barrett of Bloomberg Businessweek reminds us that numerous people predicted the economic meltdown in the mortgage market, from economist Nuriel Roubini to a number of hedge fund managers and people involved in the banking and mortgage industries. Yale economist Robert Shiller pointed out that housing prices were unsustainable, and many pundits noted that neither governments nor consumers could go on living beyond their incomes forever. Problems invariably have visible precursors that are all too often ignored.
Although former Intel co-founder and CEO Andy Grove wrote a book entitled, "Only the Paranoid Survive," corporate paranoia is a lot less common than its opposite: hubris and overconfidence. People like good news, and harbingers of doom and gloom seldom get thanked for their information. In 2002 I co-authored an article about the problems with business school education, and the initial reaction was venomous, to put it mildly. Even though many schools have now instituted curriculum and other changes partly in response to the discussion that article provoked, I am still waiting for a "thank-you" for a wake-up call that may have helped avert a more serious crisis of legitimacy.
Of course, optimism and positivity, even when they're based more on hope than reality, can serve a useful function, as research by UCLA social psychologist Shelley Taylor reminds us. Taylor found that people facing dread diseases such as cancer tended to do better, not only physically but also psychologically, if they were optimistic about their prospects for overcoming their medical problems.
But there's a big difference between an individual facing medical problems optimistically and an organization ignoring warning signs of impending dangers. Note that Taylor's research does not suggest that people heal better if they're so optimistic that they believe nothing bad can ever happen to them and therefore ignore medical warning signs that might otherwise send them to the doctor-only that once individuals confront a problem, confidence and searching for the happiness and good in their lives helps them do better. In fact, research on disease is quite consistent with research on organizational and social catastrophes: it's better to pay attention to portents of impending trouble and head them off. In other words, better to be a little paranoid and cautious than a lot surprised.
The late political scientist Alexander George recognized the tendency to ignore bad news and engage in group think, so he advocated building in the role of a devil's advocate into deliberations. That permitted someone to point out problems and issues with some proposed policy without incurring the personal wrath that often accompanies such an activity, because it would be that person's role to be the naysayer. Unfortunately, devil's advocacy is not practiced very much or institutionalized in many corporate decision-making processes, which may be why so many poor decisions are made.
Of course we like to hear good news, uplifting stories, and believe in a wonderful future. But to ensure that wonderful future, it's better to not be surprised by staff that disappoint us or business meltdowns that could be foreseen. In that sense, building paranoia into the decision-making system is a good way to avoid even worse problems down the road.