Tag: James March

Hares, Tortoises, and the Trouble with Genius

“Geniuses are dangerous.”
— James March

The Trouble with Genius

How many organizations would deny that they want more creativity, more genius, and more divergent thinking among their constituents? The great genius leaders of the world are fawned over breathlessly and a great amount of lip service is given to innovation; given the choice between “mediocrity” and “innovation,” we all choose innovation hands-down.

So why do we act the opposite way?

Stanford’s James March might have some insight. His book On Leadership (see our earlier notes here) is a collection of insights derived mostly from the study of great literature, from Don Quixote to Saint Joan to War & Peace. In March’s estimation, we can learn more about human nature (of which leadership is merely a subset) from studying literature than we can from studying leadership literature.

March discusses the nature of divergent thinking and “genius” in a way that seems to reflect true reality. We don’t seek to cultivate genius, especially in a mature organization, because we’re more afraid of the risks than appreciative of the benefits. A classic case of loss aversion. Tolerating genius means tolerating a certain amount of disruption; the upside of genius sounds pretty good until we start understanding its dark side:

Most original ideas are bad ones. Those that are good, moreover, are only seen as such after a long learning period; they rarely are impressive when first tried out. As a result, an organization is likely to discourage both experimentation with deviant ideas and the people who come up with them, thereby depriving itself, in the name of efficient operation, of its main source of innovation.

[…]

Geniuses are dangerous. Othello’s instinctive action makes him commit an appalling crime, the fine sentiments of Pierre Bezukhov bring little comfort to the Russian peasants, and Don Quixote treats innocent people badly over and over again. A genius combines the characteristics that produce resounding failures (stubbornness, lack of discipline, ignorance), a few ingredients of success (elements of intelligence, a capacity to put mistakes behind him or her, unquenchable motivation), and exceptional good luck. Genius therefore only appears as a sub-product of a great tolerance for heresy and apparent craziness, which is often the result of particular circumstances (over-abundant resources, managerial ideology, promotional systems) rather than deliberate intention. “Intelligent” organizations will therefore try to create an environment that allows genius to flourish by accepting the risks of inefficiency or crushing failures…within the limits of the risks that they can afford to take.

We’ve bolded an important component: Exceptional good luck. The kind of genius that rarely surfaces but we desperately pursue needs great luck to make an impact. Truthfully, genius is always recognized in hindsight, with the benefit of positive results in mind. We “cherrypick” the good results of divergent thinkers, but forget that we use the results to decide who’s a genius and who isn’t. Thus, tolerating divergent, genius-level thinking requires an ability to tolerate failure, loss, and change if it’s to be applied prospectively.

Sounds easy enough, in theory. But as Daniel Kahneman and Charlie Munger have so brilliantly pointed out, we become very risk averse when we possess anything, including success; we feel loss more acutely than gain, and we seek to keep the status quo intact. (And it’s probably good that we do, on average.)

Compounding the problem, when we do recognize and promote genius, some of our exalting is likely to be based on false confidence, almost by definition:

Individuals who are frequently promoted because they have been successful will have confidence in their own abilities to beat the odds. Since in a selective, and therefore increasingly homogenous, management group the differences in performance that are observed are likely to be more often due to chance events than to any particular individual capacity, the confidence is likely to be misplaced. Thus, the process of selecting on performance results in exaggerated self-confidence and exaggerated risk-taking.

Let’s use a current example: Elon Musk. Elon is (justifiably) recognized as a modern genius, leaping tall buildings in a single bound. Yet as Ashlee Vance makes clear in his biography, Musk teetered on the brink several times. It’s a near miracle that his businesses have survived (and thrived) to where they’re at today. The press would read much differently if SpaceX or Tesla had gone under — he might be considered a brilliant but fatally flawed eccentric rather than a genius. Luck played a fair part in that outcome (which is not to take away from Musk’s incredible work).

***

Getting back to organizations, the failure to appropriately tolerate genius is also a problem of homeostasis: The tendency of systems to “stay in place” and avoid disruption of strongly formed past habits. Would an Elon Musk be able to rise in a homeostatic organization? It generally does not happen.

James March has a solution, though, and it’s one we’ve heard echoed by other thinkers like Nassim Taleb and seems to be used fairly well in some modern technology organizations. As with most organizational solutions, it requires realigning incentives, which is the job of a strong and selfless leader.

An analogy of the hare and the tortoise illustrates the solution:

Although one particular hare (who runs fast but sleeps too long) has every chance or being beaten by one particular tortoise, an army of hares in competition with an army of tortoises will almost certainly result in one of the hares crossing the finish line first. The choices of an organization therefore depend on the respective importance that it attaches to its mean performance (in which case it should recruit tortoises) and the achievement of a few dazzling successes (an army of hares, which is inefficient as a whole, but contains some outstanding individuals.)

[…]

In a simple model, a tortoise advances with a constant speed of 1 mile/hour while a hare runs at 5 miles/hour, but in each given 5-minute period a hare has a 90 percent chance of sleeping rather than running. A tortoise will cover the mile of the test in one hour exactly and a hare will have only about an 11 percent chance of arriving faster (the probability that he will be awake for at least three of the 5-minute periods.) If there is a race between the tortoise and one hare, the probability that the hare will win is only 0.11. However, if there are 100 tortoises and 100 hares in the race, the probability that at least one hare will arrive before any tortoise (and thus the race will be won by a hare) is 1– ((0.89)^100), or greater than 0.9999.

The analogy holds up well in the business world. Any one young, aggressive “hare” is unlikely to beat the lumbering “tortoise” that reigns king, but put 100 hares out against 100 tortoises and the result is much different.

This means that any organization must conduct itself in such a way that hares have a chance to succeed internally. It means becoming open to divergence and allowing erratic genius to rise, while keeping the costs of failure manageable. It means having the courage to create an “army of hares” inside of your own organization rather than letting tortoises have their way, as they will if given the opportunity.

For a small young organization, the cost of failure isn’t all that high, comparatively speaking — you can’t fall far off a pancake. So hares tend to get a lot more leash. But for a large organization, the cost of failure tends to increase to such a pain point that it stops becoming tolerated! At this point, real innovation ceases.

But, if we have the will and ability to create small teams and projects with “hare-like” qualities, in ways that allow the “talent + luck” equation to surface truly better and different work, necessarily tolerating (and encouraging) failure and disruption, then we might have a shot at overcoming homeostasis in the same way that a specific combination of engineering and fuel allow rockets to overcome the equally strong force of gravity.

***

Still Interested? Check out our notes on James March’s books On Leadership and The Ambiguities of Experience, and an interview March did on the topic of leadership.

Why Bad Things Happen to Good Decisions

Does this excerpt from Dinosaur Brains: Dealing with All Those Impossible People at Work seem familiar?

When a decision goes awry, we tend to focus on the people who made it, rather than on the decision itself. Our assumption, which is really unwarranted, is that good people make good decisions, and vice versa.

Good decisions don’t always have a good outcome, just as bad decisions don’t always have bad outcomes. 

For example, if you are sitting at a blackjack table and happen to receive an 18 on the first two cards, should you hit when the dealer asks as a courtesy? Let’s suppose you take that hit and the next card is a 3. You made a horrible decision but you lucked out. Worse, you might never know that you made a poor decision.

We can look at this in a simple two-by-two matrix.

Two by two decision matrix with good and bad processes

In talking about this matrix, Paul DeDodesta, the Harvard stats wiz featured in Moneyball, writes:

We all want to be in the upper left box – deserved success resulting from a good process. … The box in the upper right, however, is the tough reality we all face in industries that are dominated by uncertainty. A good process can lead to a bad outcome in the real world. In fact, it happens all the time.

… As tough as a good process/bad outcome combination is, nothing compares to the bottom left: bad process/good outcome. This is the wolf in sheep’s clothing that allows for one-time success but almost always cripples any chance of sustained success.

This is where it gets interesting.

If you can’t recognize when you’ve had ‘dumb luck,’ you’ll never be in a position to correct the way you’re making decisions. Eventually, your luck runs out.

James March calls this the False Record Effect and it has implications on how organizations should promote people:

A group of managers of identical (moderate) ability will show considerable variation in their performance records in the short run. Some will be found at one end of the distribution and will be viewed as outstanding; others will be at the other end and will be viewed as ineffective. The longer a manager stays in a job, the less the probable difference between the observed record of performance and actual ability. Time on the job increased the expected sample of observations, reduced expected sampling error, and thus reduced the chance that the manager (of moderate ability) will either be promoted or exit.

Luckily we can improve our ability to make better decisions:

Maybe executives in responsible positions should be required to keep logs, as sea captains do. After each decision, a manager would list his or her reasons for having made it and record how it turned out.

… Usually the only information we have about how and why decisions were made is in the self-serving memoirs of great managers, which leave us feeling that some people just have it and other don’t. But what is “it?” We have very little vocabulary for talking about internal thought processes. Decisions feel as if they jump fully grown from one’s head.

Daniel Kahneman advocates for recording your decisions in a dedicated decision journal.

A good decision is known before the outcome. It involves a mental representation of the facts known at the time as well as applied judgment. Good decisions are valuable but they are more valuable if they are part of a good decision process because a good process allows for feedback about where you can improve. This feedback, in turn, allows you to constantly get better at making decisions.

An Interview on Leadership with James March

James March
Joel Podolny, who was at the time the vice president of HR at Apple, sat down with James March for an interview published in Academy of Management Learning and Education.

As always, March offers counter-intuitive thinking and fascinating insight.

On the importance of leadership:

I think, however, that the importance (or unimportance) of leadership for the unfolding of history is hard to establish conclusively from the historical record. Most claims of leadership importance to history rest on counterfactuals: What would the course of history have been without X? Counterfactuals are inventions. They are essential to the art of historical storytelling, but they have only modest standing as evidence.

On exaggerating the role of the leader:

I think it is prudent to suspect that history as it is told and believed almost certainly exaggerates the causal significance of leadership.

On extinguishing joy, passion, and beauty:

My experience with business school students is that those who possess an instinct for joy, passion, and beauty often learn to suppress their expression by virtue of a sense that such instincts are unwelcome both in business schools and in business, thereby making the sense self-confirming.

This doesn’t just happen in business schools. Any organization (including governments), with strong norms, containing people in close physical proximity, and having a lot of contact with one another, is at risk.

What can business schools do better?

(1) They could become better models themselves of organizations that put joy, passion, and beauty at the center of their self-conceptions. One obvious route is to bring fundamental research closer to the educational core. (2) They could consciously combat the notion that all that business is about is maximizing shareholder value (or any similar thing).

Great literature:

that even if a student fails to see the relevance of great literature for business, reading such literature will be more valuable than any other activity in which he or she engages during the term.

Why is it that great literature encourages students to talk about the various leadership dilemmas more intelligently?

Two reasons … One reason is that the writings we recognize as great literature have been winnowed from the universe of writings by a long process that has left only extraordinary pieces. … The second reason is … [g]reat literature generally illuminates human dilemmas without resolving them. It stimulates thought, rather than replaces it.

Source: A Conversation With James G. March on Learning About Leadership

Related posts on March:
Promoting People In Organizations
On Leadership
The Ambiguities of Experience

Promoting People In Organizations

In their 1978 paper Performance Sampling in Social Matches, researchers March and March discussed the implications of performance sampling for understanding careers in organizations. They came to some interesting conclusions with implications for those of us working in organizations.

Considerable evidence exists documenting that individuals confronted with problems requiring the estimation of proportions act as though sample size were substantially irrelevant to the reliability of their estimates. We do this in hiring all the time. Yet we know that sample size matters.

On how this cognitive bias affects hiring, March and March offer some good insights including the false record effect, the hero effect, the disappointment affect.

False Record Effect

A group of managers of identical (moderate) ability will show considerable variation in their performance records in the short run. Some will be found at one end of the distribution and will be viewed as outstanding; others will be at the other end and will be viewed as ineffective. The longer a manager stays in a job, the less the probable difference between the observed record of performance and actual ability. Time on the job increased the expected sample of observations, reduced expected sampling error, and thus reduced the chance that the manager (of moderate ability) will either be promoted or exit.

Hero Effect

Within a group of managers of varying abilities, the faster the rate of promotion, the less likely it is to be justified. Performance records are produced by a combination of underlying ability and sampling variation. Managers who have good records are more likely to have high ability than managers who have poor records, but the reliability of the differentiation is small when records are short.

Disappointment Effect

On the average, new managers will be a disappointment. The performance records by which managers are evaluated are subject to sampling error. Since a manager is promoted to a new job on the basis of a good previous record, the proportion of promoted managers whose past records are better than their abilities will be greater than the proportion whose past records are poorer. As a result, on the average, managers will do less well in their new jobs than they did in their old ones, and observers will come to believe that higher level jobs are more difficult than lower level ones, even if they are not.

…The present results reinforce the idea that indistinguishability among managers is a joint property of the individuals being evaluated and the process by which they are evaluated. Performance sampling models show how careers may be the consequences of erroneous interpretations of variations in performance produced by equivalent managers. But they also indicate that the same pattern of careers could be the consequence of unreliable evaluation of managers who do, in fact, differ, or of managers who do, in fact, learn over the course of their experience.

But hold on a second before you stop promoting new managers (who, by definition, have a limited sample size).

I’m not sure that sample size alone is the right way to think about this.

Consider two people: Manager A and Manager B who are up for promotion. Manager A has 10 years of experience and is an “all-star” (that is great performance with little variation in observations). Manager B, on the other hand, has only 5 years of experience but has shown a lot of variance in performance.

If you had to hire someone you’d likely pick A. But it’s important not to misinterpret the results of March and March and dig a little deeper.

What if we add one more variable to our two managers.

Manager A’s job has been “easy” whereas Manager B took a very “tough” assignment.

With this in mind, it seems reasonable to conclude that Manager B’s variance in performance could be explained by the difficulty of their task. This could also explain the lack of variance in Manager A’s performance.

Some jobs are tougher than others.

If you don’t factor in degree-of-difficulty you’re missing something big and sending a message to your workforce that discourages people from taking difficult assignments.

The importance of measuring performance over a meaningful sample size is the key to distinguishing between luck and skill. When in doubt go with the person that’s excelled with more variance in difficulty.

James March: On Leadership

After reading The Ambiguities of Experience, I set out to read another book by James March: On Leadership.

The genius of March takes a while to appreciate. I assure you, however, this thought-provoking book is packed full of wisdom you won’t find in the business best seller section.

Leadership

On Leadership offers a stunning demonstration of stubborn nonconformity, through the lens of some great works of literature. The questions March poses are simple; the answers are not.

The book, based on March’s lectures in a leadership course he taught at Stanford University from 1980 to 1994 is one of the best resources on the subject I’ve come across. The lectures were based on three primary convictions.

The first was that the major issues of leadership were indistinguishable from issues of life. A proper discussion involved reflecting on grand dilemmas of human existence as they presented themselves in a leadership context. The second conviction was that great literature was a primordial source of learning about such issues for educated people. An inquiring, skeptical, and tolerant gaze was cast on leadership, primarily through a lens provided by four great works of literature – Othello by William Shakespeare, Saint Joan by George Bernard Shaw, War and Peace by Leo Tolstoy, and Don Quixote by Miguel Cervantes. The third conviction was that education, including education in business schools, should not attempt to furnish students with recipes or prescriptions for success.

Here are some of my notes from the book:

If we are to believe the current thinking, the issue of leadership has been resolved.

What is certain is that the industry recycles, sometimes with blatant opportunism, materials and techniques whose link to leadership is not readily apparent: 360 degrees, group dynamics, etc.

The fundamental issues of leadership — the complications involved in becoming, being, and confronting, and evaluating leaders—are not unique to leadership. They are echoes of critical issues of life more generally. As a result, they are characteristically illuminated more by great literature than by modern essays or research on leadership.

Future leaders are taught to remove inconsistencies, ambiguities, and complexities through precise objectives and well-conceived plans. … However, inconsistency and ambiguity have a role in change and adaptation, and the compulsion toward coherence could be an incomplete basis for understanding or improving leadership and life.

In general, effective leadership implies an ability to live in two worlds: the incoherent world of imagination, fantasy, and dreams and the orderly world of plans, rules, and pragmatic action.

There is often ambiguity about outcomes and their attractiveness. There is ambiguity about who is responsible for the outcomes. As a result, reputations are social constructs negotiated among observers, accountants, journalists, academics, leaders, competitors, friends, and enemies. Reputations diffuse through a population of observers and often change over time.

History is pictured as being the result of intention and actions of leaders. Biographies of leaders are a steady element of lists of best selling books. These writings develop notions of the role of leaders in society, on the attributes of leaders, and on the relation between being a leader and being a proper person. they create a language of leadership, a language filled with ideas, vision, power, and virtue.

To an overwhelming extent, contemporary ideologies of action within theories of choice see action as instrumental, coherent, and justified subjectively. Action is instrumental in the sense that it is taken intentionally and is based on expectations of future consequences for the objectives of the actor. Actors are intendedly rational. Action is coherent in the sense that goals and alternatives are well-defined and the decision rule is clear. Actors choose from among alternatives by calculating and comparing their expected returns. And the justification for action is subjective. It is assumed that the value an individual associates with a particular outcome cannot be compared meaningfully with the value another individual associates with a particular outcome. There is no interpersonal comparison of utilities. Values, thus, are assumed to be irrefutable.

Human behavior has often been described as stemming less from calculations of consequences than from the fulfilment of an identity, a logic of appropriateness than a logic of consequence. Moreover, such a bias for action has been praised as resulting in more deeply human, even more effective, actions.

Nothing significant about leadership is likely to be said by people who have been leaders. People who have been leaders are no more capable of an intelligent appreciation of leadership than Americans are of appreciating the American experience, men are of appreciating masculinity, artists are of appreciating art, or the elderly are of appreciating old age. Comment.

In the contemporary western world relationships based on contracts (economic relations) have increased in importance relative to relationships based on senses of belonging (family, group, nation).

Our understanding of the actions of individuals is often influenced by various myths and interpretations of the world that determine what we think of as true, beautiful, and just.

Do we expect a good leader to be clever or innocent? Being clever involves a worldview in which every player pursues individual interest, a virtuous action is one that is effective, and the end justifies the means, with God rewarding the toughest by allowing them to survive—unless he simply bestows the gift of cleverness on those he loves. In this scheme, we admire the wily politician who achieves personal end at the expense of gullible fools, the crafty negotiator, and manipulator.

Being innocent involves a worldview in which people are naturally good, virtue is based on a clear knowledge of good and evil or, at the very least, on simple actions, God rewards virtue, history is marked by human progress.

We only tolerate cleverness when it is crowned with success, while the failure of innocence is attributed to the perversity of the world.

We condemn the military commander whose troops have committed atrocities, because he is morally culpable if he know about them and unworthy of his command if he did not know (because he should have).

What happens in a world populated by a mixture of clever and innocent people? In one standard morality/evolutionary tale, at first, the clever ones dominate and exclude the innocents from all positions of power. the distinctions between the powerful very quickly become tenuous, however, as only the clever have survived and cleverness no longer represents a decisive advantage in a competitive situation. The deviants who remain worthy of confidence now become rare and much sought-after allies and find themselves associated with victorious coalitions. This does not lead to a stable equilibrium, however, as when a society of trust is established once again, opportunistic behavior can become worthwhile.

The person responsible for a decision will tend to interpret its consequences in a favorable light, whereas a changeover of power can lead to accusations that past strategies were failures.

It is therefore very difficult to maintain a balance between efficiency and the capacity to adapt, as there is a tendency, in the case of success, to specialize and refine the procedures that have been successful; and, in the case of failure, to be impatient for positive results and novel innovations.

The stories of successful change recounted after the event by leaders, consultants, or researchers are deceptively simple, as they depict the leader as a hero guided by a vision that goes against the prevailing ideas and is brought to fruition through heroic efforts.

Most original ideas are bad ones. Those that are good, moreover, are only seen as such after a long learning period; they rarely are impressive when first tried out. As a result, an organization is likely to discourage both experimentation with deviant ideas and the people who come up with them, thereby depriving itself, in the name of efficient operation, of its main source of innovation.

The choices of an organization therefore depend on the respective importance that it attaches to its mean performance and the achievement of a few dazzling successes.

As a general rule, politically weak, peripheral, or subordinated groups will advocate diversity and decentralization, while dominant groups will sing the praises of unity and centralization.

The genius therefore makes it possible to explore unknown and sometimes profitable paths in a situation in which the exploitation of the run-of-the-mill skills mastered by the institution does not serve in a crisis. When exploration becomes too costly or creates too much uncertainty and threatens established positions, the institution abandons the genius.

Organizational leadership is a contradiction in terms. The essence of organization is routine, conventional behavior, bound by the standards of knowledge, morality, and legality of the time. The essence of leadership, on the other hand, is escaping the routine, the standard, and the contemporary to implement a new morality, knowledge and legality quite different from that seen by others. Leadership is pre-eminently anti-organizational. Leaders confront organizations rather than build or serve them. Comment.

Modern leaders are, in a similar way, deluded into heroic commitments by the St. Catherines of modern life — journalists, pundits, and professors. The promises are the same—that heroic action will be rewarded by honor and respect—and those promises are as false today as the ones made to Joan by her voices.

War and Peace develops Tolstoy’s theory that history does not follow any defined structure, but arises from the complex interaction of countless insignificant events.

Power gives rise to desire, envy, and celebration, but also to revulsion, fear, and jealousy.

The taste for power can be considered an individual characteristic that varies from one person to the next, from one culture to another, from one sex to the other. Like the thirst for vengeance, ambition, or love, it is potentially insatiable.

If there is to be change, we need to reconsider our ideas about order founded on the domination of leaders and an endless tug-of-war among contending interests.

War and Peace proclaims that most people cannot escape from the corruptions of society, but that it is possible to attain some degree of wisdom, based on a lack of faith both in accepted truths and in great expectations along with a capacity to lead a simple life and perform everyday tasks effectively.

Widely diffused competence and initiative, allied with coordination via mutual adjustments, allows for efficient reactions and avoids the need for costly specialists or hierarchical controls. Heroic leadership is neither required nor helpful.

It is unfortunate that studies of visionary leadership focus too much on the lone leader and not enough on the way that he or she can maintain a climate propitious to the blossoming of original visions.

The logic of reality entails two aspects of relevance to a leader. On one hand, reality is complex and our knowledge of it is limited, so we are not sure whether a particular action will achieve our desired goal. This awareness can lead to paralysis (what is the point of doing anything if the results depend on chance?) or cynicism (what is the the point of fighting for a better world if we are not certain of the effect of our actions?). On the other hand, reality can be created by action. It need not necessarily be taken as given.

Heroic leadership demands great action and great commitment. Such commitment is usually justified by expectations of great consequences.

For Quixote, intention is primary in judging virtue; consequences are secondary.

It is often, therefore, easier to understand certain aspects of leaders’ behavior by focusing on the pleasures that they can gain from their actions rather than on the consequences they achieve.

“Do you not see, senor, that what is gained by restoring Don Quixote’s sanity can never equal the enjoyment his delusions give?”

There are two essential dimensions of leadership: “plumbing,” i.e., the capacity to apply known techniques effectively, and “poetry,” which draws on a leader’s great actions and identity and pushes him or her to explore unexpected avenues, discover interesting meanings, and approach life with enthusiasm.

The plumbing of leadership involves keeping watch over an organization’s efficiency in everyday tasks, such as making sure the toilets work and there is someone to answer the telephone. This requires competence, not only at the top but also throughout all parts of the organization; a capacity to master the context (which supposes that the individuals demonstrating their competence are thoroughly familiar with the ins and outs of the organization); a capacity to take initiatives based on delegation and follow-up; a sense of community shared by all the members of the organization, who feel they are “all in the same boat” and trust and help each other; and, finally, an unobtrusive method for coordination, with each person understanding his or her role sufficiently well to be able to integrate into overall process and make constant adjustments to it. These aspects are essential for the smooth operation of organizations, but they do not appear in most treatises on leadership, no doubt because they are too mundane or too closely linked to a precise context and specific techniques.

Leadership also requires, however, the gifts of a poet, in order to find meaning in action and render life attractive.

A leader must know how to appreciate life and be aware of reality, without falling into the cynicism and bitterness that can arise from the knowledge that our efforts are probably in vain.

If variations are almost always less efficient than tried and tested methods, particularly in the beginning, how can we encourage exploration?

There is a sizable industry devoted to producing books about leadership and optimal leadership styles. For the most part, such books, portray relatively heroic attributes of leadership as producing relatively heroic consequences.

In our contemporary sophistication about the limits of elementary efficiency, we sometimes forget the simple fact that organizations cannot work well unless ordinary tasks are performed routinely and well.

Organizing so that problems are handled quickly and more or less automatically by whoever is there requires certain general attributes within the culture, certain kinds of individual feelings within the organization, a distribution of individual competences, and some organizational arrangements.

If you are going to encourage initiative, you need to be tolerant of small deviations from what you would do yourself in the same situation. Delegation implies the right to be wrong.

These four things—competence, initiative, identification, and unobtrusive coordination—are very conventional. They are found in any standard book on administration. Because they are so conventional and so standard, many of us who think we are sophisticated sometimes act as through they are unimportant.

As managers rise through an organization, managerial power is celebrated; the trappings of managerial importance are increased; but it becomes less clear that a leader’s actions have major effects on organizational performance.

The procedures and drama of decision are organized to emphasize the importance of management and managers, to reassure us of the significance of leaders.

As a result of these rituals and ceremonies, it seems very likely that most organizational leaders exaggerate their control over their success.

The managers we see in an organization are typically people who have risen to their present positions by being evaluated as success in previous positions. Such success encourages them to see their own histories as the consequences of their own actions and competences.

Organizations work because they have mutual trust without personal favoritism.

***

Still curious? Read the book and check out my notes from The Ambiguities of Experience.

James March: The Ambiguities of Experience

In his book, The Ambiguities of Experience, James March explores the role of experience in creating intelligence.

Folk wisdom both trumpets the significance of experience and warns of its inadequacies.

On one hand, experience is thought to be the best teacher. On the other hand, experience is described as the teacher of fools, of those unable or unwilling to learn from accumulated knowledge. There is no need to learn everything yourself.

The disagreement between those aphorisms reflects profound questions about the human pursuit of intelligence through learning from experience.

“Since experience in organizations often suffers from weak signals, substantial noise, and small samples, it is quite likely that realized history will deviate considerably from underlying reality.”

— James March

March convincingly argues that although individuals and organizations are eager to derive intelligence from experience, the inferences stemming from that eagerness are often misguided.

The problems lie partly in errors in how people think, but even more so in properties of experience that confound learning from it. ‘Experience,’ March concludes, ‘may possibly be the best teacher, but it is not a particularly good teacher.’

Here are some of my notes from the book:

  • Intelligence normally entails two interrelated but somewhat different components. The first involves effective adaptation to an environment. The second: the elegance of interpretations of the experiences of life.
  • Since experience in organizations often suffers from weak signals, substantial noise, and small samples, it is quite likely that realized history will deviate considerably from the underlying reality.
  • Agencies write standards because experience is a poor teacher.
  • Constant exposure to danger without its realization leaves human beings less concerned about what once terrified them, and therefore experience can have the paradoxical effect of having people learn to feel more immune than they should to the unlikely dangers that surround them.
  • Generating an explanation of history involves transforming the ambiguities and complexities of experience into a form that is elaborate enough to elicit interest, simple enough to be understood, and credible enough to be accepted. The art of storytelling involves a delicate balancing of those three criteria
  • Humans have limited capabilities to store and recall history. They are sensitive to reconstructed memories that serve current beliefs and desires. They conserve belief by being less critical of evidence that seems to confirm prior beliefs than of evidence that seems to disconfirm them. They destroy both observations and beliefs in order to make them consistent. They prefer simple causalities, ideas that place causes and effects close to one another and that match big effects with big causes. 
  • The key effort is to link experience with a pre-existent accepted storyline so as to achieve a subjective sense of the understanding.
  • Experience is rooted in a complicated causal system that can be described adequately only by a description that is too complex for the human mind. The more accurately reality is reflected, the less comprehensible the story, and the more comprehensible the story, the less realistic it is.
  • Storytellers have their individual sources and biases, but they have to gain acceptance of their stories by catering to their audiences.
  • Despite the complications in extracting reality from experience, or perhaps because of them, there is a tendency for the themes of stories of management to converge over time.
  • Organizational stories and models are built particularly around four main mythic themes: rationality (the idea that the human spirit finds definitive expression through taking and justifying action in terms of its future consequences for prior values); hierarchy (the ideas that problems and actions can be decomposed into nested sets of subproblems and sub-actions such that interactions among them can be organized within a hierarchy); individual leader significance (the idea that any story of history must be related to a human project in order to be meaningful and that organizational human history is produced by the intentions of specific human leaders); and historical efficiency (the idea that history follows a path leading to a unique equilibrium defined by antecedent conditions and produced by competition.
  • Underlying many of these myths is a grand myth of human significance: the idea that humans can, through their individual and collective intelligence actions, influence the course of history to their advantage.
  • The myth of human significance produces the cruelties and generosities stemming from the human inclination to assign credit and blame for events to human intention.
  • There is an overwhelming tendency in American life to lionize or pillory the people who stand at the helms of our large institutions -to offer praise or level blame for outcomes over which they may have little control.
  • An experienced scholar is less inclined to claim originality than is a beginner.
  • …processes of adaptation can eliminate sources of error but are inefficient in doing so.
  • Knowledge is lost through turnover, forgetting, and misfiling, which assure that at any point there is considerable ignorance. Something that was once known is no longer known. In addition, knowledge is lost through its incomplete accessibility.
  • A history of success leads managers to a systematic overestimation of the prospects for success in novel endeavors. If managers attribute their success to talent when they are, in fact, a joint consequence of talent and good fortune, successful managers will come to believe that they have capabilities for beating the odds in the future as they apparently have had in the past.
  • In a competitive world of promises, winning projects are systematically projects in which hopes exceed reality
  • The history of organizations cycling between centralization and decentralization is a tribute, in part, to the engineering difficulty of finding an enduring balance between the short-run and local costs and the long-run and more global benefits of boundaries.
  • The vividness of direct experience leads learners to exaggerate the information content of personal experience relative to other information.
  • The ambiguities of experience take many forms but can be summarized in terms of five attributes: 1) the causal structure of experience is complex; 2) experience is noisy; 3) history includes numerous examples of endogeneity, causes in which the properties of the world are affected by actions adapting to it; 4) history as it is known is constructed by participants and observers; 5) history is miserly in providing experience. It offers only small samples and thus large sampling error in the inferences formed.
  • Experience often appears to increase significantly the confidence of successful managers in their capabilities without greatly expanding their understanding.

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