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Stupidity Paradox
Stupidity Paradox
Many companies hire smart people who do dumb things. That phenomenon is “the
stupidity paradox.”
Stupid actions might work out temporarily, but they cause big trouble in the long
run.
Organizations often discourage clear, careful thinking by employees. They regard it
as subversive and believe that it leads to conflict and uncertainty.
Many organizations encourage employee stupidity. They rely on “stupidity
management” to limit employee thinking.
“Functional” or “selective” stupidity differs from plain old, garden-variety stupidity.
Functional stupidity actually offers numerous benefits, including elimination of
doubt, promotion of harmony, and reduction in internal tensions and friction.
Functional stupidity manifests in five different forms.
Look out for: “leadership-induced stupidity,” “structure-induced stupidity,”
“imitation-induced stupidity,” “branding-induced stupidity” and “culture-induced
stupidity.”
You can “destupidify” your organization with acute observation, intelligent
interpretation and smart questioning.
Use reflection and critical thinking to avoid doing dumb things in your organization.
Summary
Ford Pintos
These companies encourage stupidity and discourage reflection and analysis. They
consider such thinking subversive. “Stupidity managers” – the paladins of “stupidity
management” – purposely intervene to limit employees’ thinking. To illustrate how
“functional stupidity” works in corporate life, consider Dennis Gioia, who worked in
Ford Motor Company’s recall department in 1972. His job was to look for patterns
that revealed problems in Ford automobiles that might trigger manufacturer recalls.
“We are supposed to learn from our failures, but we rarely do. One of the big
reasons…is that when things go wrong, we look for ways of hiding it.”
Gioia did not push his fears concerning the Pinto inside Ford. He didn’t recommend
that Ford recall it. This was in 1973. In 1978, after many more people died in
exploding Pintos, Ford finally recalled the Pinto.
Gioia accepted the social norm at Ford, which was, “Don’t raise problems and don’t
tell people bad news they do not want to hear.” Disturbingly, what Gioia did – or
didn’t do – is standard operating procedure at many firms today. Company cultures
tell people not to think too much.
Functional Stupidity
“The financial crisis that began in 2008 is a testament to the stupidity lurking at the
heart of knowledge-based societies.”
Functional stupidity differs from plain old, garden-variety stupidity, but even
regular, standard-issue corporate stupidity can lead to catastrophic consequences.
“Telltale Aspects”
Curing Stupidity
Getting organizations to do smart things, and not to pursue stupidity, will always be
an uphill battle. “Culture, branding initiatives, referring to industry best practice,
organizational structures and systems and leadership” all conspire against operating
in a more intelligent way. Challenging these bolted-in-place verities is often a
tedious, unrewarding exercise. Many times, efforts to penetrate stupidity will result
in “conflict, confusion, endless debate and ultimately, indecision.”
“Smart people set about applying their impressive but narrowly focused skills. The
glamor of financial engineering created a sense of hope and excitement…investors
began to believe in the power of quants to work magic.”
Stupidity management keeps everything in happy balance, at least in the short term.
It results in “branding baloney, leadership nonsense…and fashionable pseudo-
solutions.”
You can take the right steps to destupidify your company. Start by eschewing
“relentless positivity” – the mindless homage to eternal optimism that leads to
dangerous delusion. Instead, adopt an attitude of “negative capability.” To launch
this change, be open to experience. Become willing to “tolerate anxiety and fear, to
stay in a place of uncertainty and to allow for the emergence of new thoughts or
perceptions.”
“They stopped asking tough questions and started to just believe. The upshot was a
financial system that no one fully understood and no one was willing to question.”
Negative capability means thinking carefully and critically. It has three main aspects:
2. “Interpret” – Once you understand the issues, figure out how other people
relate to them. As anthropologists say, “What do the natives think is
happening here?”
3. “Question” – Pose further revealing queries, such as: “What are the
assumptions we are making here?” “What are the reasons…we are doing this?”
“What are the wider outcomes or broader meaning?” Search for “deep
meanings,” and do not accept what appears on the surface.
“Critical Insights”
Operating intelligently calls for developing critical insights about the primary issues
your organization confronts. You must exercise “critical thinking and serious
reflection” to build these insights. Use these triggers to provoke further thought:
Transformation
Transforming your firm from stupid to smart won’t be easy. Organizations can be
complex and ambiguous. What may seem stupid could actually be smart and what
may seem smart can turn out to be stupid. Working against functional stupidity will
create a better, more productive, more efficient work environment. Your anti-
functional stupidity program should involve:
1. People don't ask for or give justifications of a course of action. They say things like
“screw it, let's do it”.
3. People don't think about the long term implications of their actions.
Alvesson: Narrow, technical thinking within a given box or framework (vision, job
description, success recipe) without broader reflection or questioning of purpose or
context. You competently do what you are told (or how others do things) without
thinking if this is meaningful or leads to good outcomes. For instance, in large banks
employees often focus on ticking the regulatory boxes and do not think about the
wider question of whether the financial products they are creating are any good.
InfoQ: What are the main causes that lead to functional stupidity?
Spicer: In the book we identify five common drivers of functional stupidity. The first is
a misplaced obsession with leadership. Many organisations encourage people to
think of themselves as inspirational leaders. But this often alienates their followers
and means they ignore the nuts and bolts of getting a task done. The second is an
attachment to branding. We witnessed military organisations which were more keen
on running rebranding exercises than running military exercises. The third driver of
functional stupidity is mindless imitation. Often large organisations copy others for no
better reason than they want to up with the latest fashion. This leads firms to
implement new initiatives which are inappropriate for them. The fourth is pointless
policies and procedures which are thoughtlessly followed. Many professionals spend
more time ticking off boxes than actually doing their job. Finally, some organisations
encourage a culture of up-beat positive cultures which encourages employees only
to look at the bright side and overlook any problems.
InfoQ: What are the possible negative outcomes from stupidity at work?
Alvesson: An enormous waste of time and energy in organizations spent on
window-dressing activities and meaningless meeting rituals or tick-box activities.
Many organizations make little or no contribution to society. As a result employees
feeling cynical and disappointed.
For instance, teachers spend increasing proportions of their time complying with
various auditing exercises. As a result, they spend more of their time doing
administrative duties than actually teaching their pupils. This has a knock on effect of
making teachers feel like they are not doing their job properly - they become
alienated and many are now leaving the profession. This also has a wider social
impact - leading to under educated kids.
Spicer: It is interesting to note that countries like Finland which tend to give their
teachers lots of professional autonomy and don’t overburden them with
administrative demands tend to have the best educational outcomes for kids.
InfoQ: What positive outcomes can it bring?
Alvesson: People are focused, they feel comfortable, they are not overburdened
with doubt and reflection. It can also create a positive work cultures without critique
or difficult questions being asked. But it’s a double edged sword. Each of these short
term benefits can become long term problems.
Spicer: For instance, in one consultancy firm we studied, we noticed that many of
the young employees were unusually upbeat about everything. These were smart
people who had spent years being trained how to think. But as soon as they entered
the firm, many stopped using these thinking skills. As a result, they could get on with
the task and do things which seemed irrational but made the client happy in the short
term. As a result, these people were promoted and there was also less conflict in the
organisation. But it often gave rise to longer term problems.
InfoQ: You investigated leadership in your book. What have you learned?
Alvesson: Much of the talk and many of the hopes we have about leadership is just
fantasy. Often, in knowledge intensive firms, leaders just get in the way. If
organisations actually wanted to be successful, what is needed is less leadership.
After-all, few managers have much leadership. 95% of their time is spent doing
boring administration. When they try to do leadership, they are often far from what
management bestsellers preach and promise. For instance, in one tech firm we
studied, we saw managers who were brought in to manage a group of engineers.
The engineers were pretty self directed. The manager had no idea about what they
were actually doing. So he had to resort to generic leadership tactics - trying to
inspire people, holding meetings, organising away days. The engineers quickly got
sick of all this because they saw it as getting in the way of their work.
InfoQ: Sometimes companies do things not because they produce the best
results, but because everyone else is doing it. What's your suggestion to avoid
this trap or get out?
Alvesson: Point this out. Ask for a good reason for a project, arrangement or
structure. The fact that others are doing this is not a good reason for us doing it. One
could put up signs saying ‘Beware of flock behaviour!’ or ‘Make sure there is a
reason for doing something!’
Spicer: If you look at the best organisations, they often avoid copying what others in
their industry are doing. Instead they slowly invent their own processes through a
gradual process of learning. They borrow or take things off the shelf when it makes
sense. Take the example of Handelsbanken in Sweden - this was one of the few
european banks that continued to grow following the financial crisis. The reason for
this was it had developed its own unique culture and model of localised banking
which was quite counter intuitive to what the rest of the industry was doing. Another
example is Spotify, which has developed its own model of software development
through a slow process of iteration and learning. There is a big danger when
companies just wholesale copy this model without considering what makes it
effective. This often involved taking something out of context.
InfoQ: How does culture induce stupidity? What can be done to limit the
damage?
Alvesson: Cultures are important to create shared meanings so that people
understand each other and can cooperate. But often people take a lot for granted
and just think, talk and act like everybody else, finding this self-evident and
unproblematic. But “cultural scrutiny” or appointment of Devil’s advocates (with a job
role to not agree, but argue from another stance than the conventional one) can offer
some antidotes.
Spicer: A great example of what can go wrong with culture can be found in Nokia.
When the IPhone launched in 2007, Nokia was the dominant mobile phone maker. It
had already developed a smart phone, but they knew they faced a challenge. They
were working on their own mobile phone platform - Symbian - but all the developers
knew there were serious problems. But senior managers only wanted to hear good
news. So as a result, middle managers only pushed positive news upwards. This
meant Nokia kept developing Symbian even when it wasn’t working. Apple and
Samsung overtook Nokia to claim the top spots in the industry. Nokia eventually sold
off its mobile division to Microsoft. If they had been better at harnessing critique from
lower down the organisation, they might have been able to cut their losses short and
develop a identify a decent operating system which would have allowed them to
maintain their place in the market.
InfoQ: What can be done to counter stupidity management or dispel stupidity?
Alvesson: Devil's advocates are helpful. You can create pre-mortems - which
encourage people to imagine everything that could lead to a disaster in a project
before you begin it. You can also play bullshit bingo or have sessions where people
are encouraged to raise issues, possibly anonymously. One can also have people
interview newcomers about their experiences of surprising/odd/problematic features.
Or have task forces on anti-stupidity management. The idea would be to identify
collective stupidities and root them out.
Actuaries are generally imagined to be clever, yet I doubt there are any amongst us who have
not done something stupid at work. Sending a confidential email to the wrong person; pouring
coffee over your keyboard; forgetting to drag your Excel formulae all the way to the bottom of the
table and so on. In their new book, however, Mats Alvesson and Andre Spicer suggest that
stupidity at work is more than just an occasional aberration.
The Stupidity Paradox describes how the most educated workers are often guilty of a kind of
“functional stupidity,” defined as “an inability or unwillingness to use reflective/cognitive
capacities in the workplace” or “thinking inside the box”. Alvesson and Spicer argue that the ways
in which businesses typically tackle this – leadership development programmes, cultural change
initiatives and the like – are in fact just new ways of encouraging people not to think. So
companies that pride themselves on intelligent management may be at the greatest risk of
behaving stupidly.
The authors are both professors at Cass Business School and specialists in organisational
behaviour. The genesis of this book was a conversation in which they compared instances of
stupidity they had seen in many supposedly “knowledge-intensive” organisations such as banks,
consultancies and universities. Much of the book is devoted to categorising and describing this
behaviour.
One potentially controversial example is what the authors call “leadership-induced stupidity.”
They say they have observed a “quasi-religious belief in leadership” in many organisations, with
bright employees avoiding independent thought in favour of blindly following authority. They are
suspicious of the leadership coaching industry, which they describe as a “crew of self-styled
experts [who] bombard confused, desperate and bored middle managers with… recipes for
success.” In support of this they quote a 2014 study by McKinsey that finds no correlation
between business success and money spent on leadership development training.
The book continues to mix anecdote, opinion and research, exploring other types of unthinking
management behaviour applicable across industries. Examples include over-reliance on
processes and procedures – “structure-induced stupidity” – or an insistence on shared beliefs in
the face of evidence – “culture-induced stupidity”. Attempts to encourage new ways of thinking,
argue the authors, rarely lead to actual change: they just allow managers to feel as though they
are doing something by commissioning expensive consultancy reports.
The main focus is on general management concerns, but the introduction considers functional
stupidity in analytical work.
The writers describe how, in the years leading up to the 2008 market crash, banks hired
increasing numbers of brilliant maths and science graduates to develop models that could guide
trading and investment decisions. At first this strategy yielded exceptional returns. However, as
confidence in the models grew – catastrophe: “the connection between the quants’ clean abstract
models and the messy realities of markets began to fray.” The authors quote as an example of
the failure to allow for tranches of sub-prime debt when risk-assessing mortgage-backed
securities.
Insufficient critical reflection meant that clever models built by clever people led to “stupid” and
dangerous decisions. The Stupidity Paradox is written for a general audience, so if your work
involves modelling you may find the treatment of financial engineering simplistic. Nonetheless, it
shines a light on the important question of how to use models intelligently, a problem that
actuaries have for some time been seeking to tackle.
In the final chapter of the book, Alvesson and Spicer offer some solutions to the problems they
have observed. Firstly, they sensibly acknowledge that there can be benefits to “functional
stupidity,” noting that when people choose group-think over individual reflection they feel a sense
of shared culture and direction which facilitates decision-making. In contrast, an environment with
unlimited open discussion, challenge and criticism runs the risk of creating “conflicts and
disorder”. The writers therefore suggest that companies introduce space for critical reflection and
challenge in a structured way. One proposal is the introduction of a “devil’s advocate” to
challenge and to question, a role which could be rotated amongst team members. Another
proposal is “pre-mortems”: dedicated sessions at the start of a project where the team identifies
likely opportunities for stupidity based on previous experience.
Overall, I enjoyed The Stupidity Paradox. An element of this was undoubtedly schadenfreude – a
certain guilty pleasure in reading about mistakes made by clever people. More importantly, the
book encouraged me to think about what it means to be intelligent at work.