Management decision making - perception and reality

I know he’s a good general, but is he lucky?
— Napoleon Bonaparte

As Henry Mintzberg said - we are all too frequently presented with aspects of the trivial new at the expense of the significant old.  There have been many clever minds and insightful articles written on strategic management but often they are forgotten, seen as out-of-date but many are just as insightful today as they were years/decades ago. We may think we live in a different world now but the basics haven't changed in decades or even centuries!

One such article was written in 1988 by William Starbuck and Frances Milliken (Starbuck, W. H., & Milliken, F. J. (1988). Executives' perceptual filters: What they notice and how they make sense) on the subject of Executive perceptions though it is just as applicable to managers and directors.  

It makes a number of interesting observations about how we employ information filters to make sense of the world and our strategic decision making. I intend to highlight one simple observation they made (those keen to digest the article will need to track it down) which I think effects the way we see the world in regards to decision making in general.

'People seem to see past events as much more rationally ordered than current or future events because retrospective sense-making erases many of the causal sequences that complicate and obscure the present and the future.'

You may need to read it twice, I did! This basically means when we look back in time, the events and happenstance occurrences that led us to the present seem somewhat obvious and 'relatively inevitable'. It seems that these events were always going to happen as they unfolded and, therefore, we should have been able to predict them much more accurately than we are likely to have done.

A simple example the authors used was the St Louis Cardinals when they won the World Series of baseball. People wrote that they were always basically on track yet six weeks previously they appeared to have little to no chance and were being written off.  Once we know what actually happens it becomes obvious but off course it wasn't. The emergence of Facebook and social media is blindingly obvious, now!

So in management when we review strategic decisions or projects we often do so with the outcome known and this equally colours our view of the merits of the strategy or project (and the people involved).

'Knowing that bad results occurred, observers search for the incorrect actions that produced the bad results [blame]. On the other hand, organisational success is often credited to executives accurate and insightful vision.'

Imagine you are part of a management team faced with a strategic decision that is risky but has a balancing element of high payoff. Without a crystal ball available, you decide to go for it.

  • If it fails it is likely to be seen as a poorly thought through and rash decision that did not take into account the risks sufficiently.
  • If it succeeds you will be seen as having made a courageous and far sighted decision in the face of adversity.

Success or failure contains a myriad of factors, many outside the control of the organisation so you need to execute well and have some good luck on the way.  

The key learning is that you need to review past decisions within the context they were made and not the obvious context of the present.  This will help avoid unnecessary witch hunts or, possibly worse, the promotion of individuals based on luck.......