Eight to Late

A stupidity-based theory of organisations – a paper review

with 8 comments

Introduction

The platitude “our people are  our most important asset”  reflects a belief that the survival and evolution of organisations depends  on the intellectual and cognitive capacities of the individuals who comprise them.   However,  in view of the many well documented examples of actions that demonstrate a lack of  foresight and/or general callousness about the fate of organisations or those who work in them,  one has to wonder if such a belief is justified, or even if it is really  believed by those who spout such platitudes.

Indeed,  cases such as Enron or Worldcom  (to mention just two) seem to suggest that stupidity may be fairly prevalent in present day organisations. This point is the subject of a brilliant paper by Andre Spicer and Mats Alvesson entitled, A stupidity based theory of organisations.  This post is an extensive summary and review of the paper.

Background

The notion that the success of an organization depends on the intellectual and rational capabilities of its people seems almost obvious. Moreover, there is a good deal of empirical research that seems to support this. In the opening section of their paper, Alvesson and Spicer cite many studies which appear to establish that developing the knowledge (of employees) or hiring smart people  is the key to success in an ever-changing, competitive environment.

These claims are mirrored in theoretical work on organizations. For example Nonaka and Takeuchi’s model of knowledge conversion acknowledges the importance of tacit knowledge held by employees. Although there is still much debate about tacit/explicit knowledge divide, models such as these serve to perpetuate the belief that knowledge (in one form or another) is central to organisational success.

There is also a broad consensus that decision making in organizations, though subject to bounded rationality and related cognitive biases,  is by and large a rational process. Even if a decision is not wholly rational, there is usually an attempt to depict it as being so. Such behaviour attests to the importance attached to rational thinking in organization-land.

At the other end of the spectrum there are decisions that can only be described as being, well… stupid. As Rick Chapman discusses in his entertaining book, In Search of Stupidity, organizations occasionally make decisions that are  plain dumb However, such behaviour seldom remains hidden because of its rather obvious negative consequences for the organisation.  Such stories thus end up being  immortalized in business school curricula as canonical examples of what not to do.

Functional stupidity

Notwithstanding the above remarks on  obvious stupidity, there is another category of foolishness that is perhaps more pervasive but remains unnoticed and unremarked. Alvesson and Spicer use the term functional stupidity to refer to such  “organizationally supported lack of reflexivity, substantive reasoning, and justitication.”

In their words, functional stupidity amounts to the “…refusal to use intellectual resources outside a narrow and ‘safe’ terrain.”   It is reflected in a blinkered approach to organisational problems, wherein people display  an unwillingness  to consider or think about solutions that lie outside an arbitrary boundary.  A common example of this is when certain topics are explicitly or tacitly deemed as being “out of bounds” for discussion. Many “business as usual” scenarios are riddled with functional stupidity, which is precisely why it’s often so hard to detect.

As per the definition offered above, there are three cognitive elements to functional stupidity:

  1. Lack of reflexivity: this refers to the inability or unwillingness to question claims and commonly accepted wisdom.
  2. Lack of substantive reasoning: This refers to  reasoning that is based on a small set of concerns that do not span the whole issue. A common example of this sort of myopia is when organisations focus their efforts on achieving certain objectives with little or no questioning of the objectives themselves.
  3. Lack of justification: This happens when  employees do not question managers or, on the other hand, do not provide explanations regarding their  own actions. Often this is a consequence of power relationships in organisations. This may, for example, dissuade employees from “sticking their necks out” by asking questions that managers might deem out of bounds.

It should be noted that functional stupidity has little to do with limitations of human cognitive capacities. Nor does it have anything to do with ignorance, carelessness or lack of thought. The former can be  rectified through education and/or the hiring of consultants with the requisite knowledge,  and the latter via the use of standardised procedures and checklists.

It is also important to  note that  functional stupidity is not necessarily a bad thing. For example, by placing certain topics out of bounds, organisations can avoid discussions about potentially controversial topics and can thus keep conflict and uncertainty at bay.  This maintains  harmony, no doubt, but it also strengthens the existing organisational order which  in turn serves to reinforce functional stupidity.

Of course, functional stupidity also has negative consequences, the chief one being that it prevents organisations from finding solutions to issues that involve topics that have been arbitrarily deemed as being out of bounds.

Examples of functional stupidity

There are many examples of functional stupidity in recent history, a couple being the irrational exuberance in the wake of the internet boom of the 1990s, and the lack of  critical examination of the complex mathematical models that lead to the financial crisis of last decade.

However, one does not have to look much beyond one’s own work environment to find examples of functional stupidity.  Many of these come under the category of  “business as usual”  or “that’s just the way things are done around here” – phrases that are used to label practices that are ritually applied without much thought or reflection.  Such practices often remain unremarked because it is not so easy to link them to negative outcomes.  Indeed, the authors point out that “most managerial practices are adopted on the basis of faulty reasoning, accepted wisdom and complete lack of evidence.”

The authors cite the example of companies adopting HR practices that are actually detrimental to employee and organisational wellbeing.  Another common example  is when organisations place a high value on gathering information which is then not used in a meaningful way.    I have discussed this “information perversity” at length in my post on entitled, The unspoken life of information in organisations, so I won’t  rehash it here.  Alvesson and Spicer point out that information perversity is a consequence of the high cultural value placed on information: it is seen as a prerequisite to “proper” decision making. However,  in reality it is often used to justify questionable decisions or simply “hide behind the facts.”

These examples suggest that functional stupidity may be the norm rather than the exception. This is a scary thought…but I suspect it may not be surprising to many readers.

The dynamics of stupidity

Alvesson and Spicer claim that functional stupidity is a common feature in organisations. To understand why it is so pervasive, one has to look into the dynamics of stupidity – how it is established and the factors that influence it.  They suggest that the root cause lies in the fact that organisations attempt to short-circuit critical thinking through what they call economies of persuasion, which are activities such as corporate culture initiatives, leadership training or team / identity building, relabelling positions with pretentious titles – and many other such activities that are aimed at influencing employees  through the use of symbols and images rather than substance. Such symbolic manipulation, as the authors calls it, is aimed at increasing employees’ sense of commitment to the organisation.

As they put it:

Organizational contexts dominated by widespread attempts at symbolic manipulation typically involve managers seeking to shape and mould the ‘mind-sets’ of employees . A core aspect of this involves seeking to create some degree of good faith and conformity and to limit critical thinking

Although such efforts are not always successful, many employees do buy in to them and thereby identify with the organisation. This makes employees uncritical of the organisation’s  goals and the means by which these will be achieved. In other words, it sets the scene for functional stupidity to take root and flourish.

Stupidity management and stupidity self-management

The authors use the term stupidity management to describe managerial actions that prevent or discourage organisational actors (employees and other stakeholders) from thinking for themselves.   Some of the ways in which this is done include the reinforcement of positive images of the organisation, getting employees to identify with the organisation’s vision and myriad other organisational culture initiatives aimed at burnishing the image of the corporation. These initiatives are often backed by organisational structures (such as hierarchies and reward systems) that discourage employees from raising and exploring potentially disruptive issues.

The monitoring and sanctioning of activities that might disrupt the positive image of the organisation can be overt (in the form of warnings, say). More often, though, it is subtle. For example, in many meetings, participants participants know that certain issues cannot be raised. At other times, discussion and debate may be short circuited by exhortations to “stop thinking and start doing.”  Such occurrences serve to create an environment in which stupidity flourishes.

The net effect of  managerial actions that encourage stupidity is that employees start to cast aside their own doubts and questions and behave in corporately acceptable ways – in other words, they start to perform their jobs in an unreflective and unquestioning way. Some people may actually internalise the values espoused by management; others may psychologically  distance themselves from the values but still act in ways that they are required to. The net effect of such stupidity self-management (as the authors call it) is that employees stop questioning what they are asked to do and just do it. After a while, doubts fade and this becomes the accepted way of working. The end result is the familiar situation that many of us know as “business as usual” or  “that’s just the way things are done around here.”

The paradoxes and consequences of stupidity

Functional stupidity can cause both feelings of certainty and dissonance in members of an organisation. Suppressing  critical thinking  can result in an easy acceptance of  the way things are.  The feelings of certainty that come from suppressing difficult questions can be comforting. Moreover, those who toe the organisational line are more likely to be offered material rewards and promotions than those who don’t. This can act to reinforce functional stupidity because others who see stupidity rewarded may also be tempted to behave in a similar fashion.

That said,  certain functionally stupid actions, such as ignoring obvious ethical lapses, can result in serious negative outcomes for an organisation. This has been amply illustrated in the recent past. Such events can prompt formal inquiries  at the level of the organisation, no doubt accompanied by  informal soul-searching at the individual level. However, as has also been amply illustrated, there is no guarantee that inquiries or self-reflection lead to any major changes in behaviour. Once the crisis passes, people seem all too happy to revert to business as usual.

In the end , though, when stark differences between the rhetoric and reality of the organisation emerge  – as they eventually will– employees will  see the contradictions between the real organisation and the one they have been asked to believe in. This can result in alienation from and cynicism about the organisation and its objectives. So, although stupidity management may have beneficial outcomes in the short run, there is a price to be paid  in the longer term.

Nothing comes for free, not even stupidity…

Conclusion

The authors main message is that despite the general belief that organisations enlist the cognitive and intellectual capacities of their members in positive ways, the truth is that organisational behaviour often exhibits a wilful ignorance of facts and/or a lack of logic. The authors term this behaviour functional stupidity.

Functional stupidiy has the advantage of maintaining harmony at least in the short term, but its longer term consequences can be negative.   Members of an organisation “learn” such behaviour  by becoming aware that certain topics are out of bounds and that they broach these at their own risk. Conformance is rewarded by advancement or material gain whereas dissent is met with overt or less obvious disciplinary action. Functional stupidity thus acts as a barrier that can stop members of an organisation from developing potentially interesting perspectives on the problems the organisations face.

The paper makes an interesting and very valid point about the pervasiveness of wilfully irrational behaviour in organisations. That said, I  can’t help but think that the authors  have written it with tongue firmly planted in cheek.

8 Responses

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  1. Kailash
    Your blog reminds me of my early days as an IR manager. We proudly invited a group staff representing their colleagues, on to a panel to conduct a job evaluation exercise. All the staff jobs of an engineering business were to be graded with seniority and pay determined in this way. Graduates in their first jobs make excellent organisational stupidity detectors. One of them responded to my ‘sell’ by describing the process as ‘consensus by intimidation’.

    I thought that was a pretty good summary but it frightened the life out of my boss the personnel director!

    What you describe is endemic and the death nell to many organisations that should have reached beyond their sell-by date. These practices are preserved by peoplefrightened to be exposed by the rigour of close engagement and argumentation. They are probably the principal constraint to many organisation’s enterpise opportunities.

    Martin

    Martin Price

    May 8, 2013 at 1:53 am

    • Hi Martin,

      Thanks for reading and for your comment. What a terrific story. I burst out laughing when I read the phrase “consensus by intimidation” – it is a brilliant description of what happens in such situations.

      Regards,

      Kailash.

      K

      May 8, 2013 at 8:07 pm

  2. [...] The notion that the success of an organization depends on the intellectual and rational capabilities of its people seems almost obvious. Moreover, there is a good deal of empirical research that seems to support this.  [...]

  3. Reblogged this on Things I grab, motley collection and commented:
    consensus by intimidation

    plerudulier

    June 2, 2013 at 7:47 pm

  4. One alternate way to consider the alleged stupidity is from an ethical perspective. I think I wrote you in private line of this.
    Traditional management requires a bunch of assumptions you need to buy in order to survive. For instance, you need to believe the declared ethical system is valid and shared, that the company values are to be preserved from the CEO to the last clerk. You are bound to do your best and to honestly report to your manager, all for the best of the organization and ultimately, the world (for it’s clear that every company strives for a better world).
    Now, it’s fact that few people do his/her best and report honestly. However we don’t see punishment systems being widely used: we all play the stupid on purpose.
    Remember Imannuel Kant; he was about universally valid ethical statements. His Ethics is great and resulted in a great success in the industrial, saxon culture: we do the right thing independently of the results and the context, for the right thing is always and everywhere-valid.
    Now, the manager declared his devotion to company’s Ethics because he had no choice, as so did the company and the managee. Yet the manager has more or less different objectives than the company, so does the managee and the company itself, BUT no one voices that, at least not without some glasses of scotch in the belly. (I recently applied for a job in a tobacco company, they made public they care about people and environment. If they give me the job, I will deliver results: do the right thing everywhere!).
    I don’t want to sound moralist, but we are too accustomed to those light hypocritical levels. We more or less can live with that. We need to bring bread to our homes. And thus we pay with our pound of flesh to the manager and the company (as they do, too), for they are also not denouncing our deviant ethics. Please allow me state with no proof that we have no choice but to break the ethical rules in such a system. Everyone will agree, but no one will say it aloud.
    Thus the decision, when related to wicked problems, will often be biased in such a way a)the declared ethical rules are not broken in an obvious fashion and b)the decision does not end our careers. AND if possible, the decision brings about with a fairly acceptable result (“… and there was bread for Columbus, and peace for Charles the 5th”).
    In sum, I think stupidity is a way to break Ethical rules while not being liable (because of the stupidity) for that. An Ethics of transparency and honest feedback is not workable in a typical managed organization.
    IMHO
    Regards,
    Ricardo

    riglav

    December 3, 2013 at 3:03 am

    • Hi Ricardo,

      Thanks for reading and for raising an interesting point. I agree entirely that stupidity (in the sense of this post) is a means for people to rationalise what they do. As you suggest, many actions in organisations are a result of compromises between ethics (doing the right thing) and expediency (doing the convenient thing). There is a gap between what we do and what we ought to do simply because we a) want to do the right thing, but b) we have to get results because our future depends on it.

      As I have discussed in this post, decisions on difficult matters have to be made on ethical rather than logical grounds. It is through the choices that we make in such situations that we choose to be who we are. Stupidity, as discussed in the above post is a device by which people try to avoid making such decisions and the consequent responsibility that comes with it.

      Thanks again for making this important point.

      Regards,

      Kailash.

      K

      December 3, 2013 at 9:45 pm

  5. […] The authors main message is that despite the general belief that organisations enlist the cognitive and intellectual capacities of their members in positive ways, the truth is that organisational behaviour often exhibits a wilful ignorance of facts and/or a lack of logic. The authors term this behaviour functional stupidity.Functional stupidiy has the advantage of maintaining harmony at least in the short term, but its longer term consequences can be negative. Members of an organisation “learn” such behaviour by becoming aware that certain topics are out of bounds and that they broach these at their own risk. Conformance is rewarded by advancement or material gain whereas dissent is met with overt or less obvious disciplinary action. Functional stupidity thus acts as a barrier that can stop members of an organisation from developing potentially interesting perspectives on the problems the organisations face.The paper makes an interesting and very valid point about the pervasiveness of wilfully irrational behaviour in organisations. That said, I can’t help but think that the authors have written it with tongue firmly planted in cheek.  […]

  6. […] The platitude “our people are our most important asset” reflects a belief that the survival and evolution of organisations depends on the intellectual and cognitive capacities of the individuals who comprise them.  […]


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