Ian Davis, previously worldwide MD of McKinsey, once said, “Long-gone is the day of the gut-instinct management style. Today’s business leaders are adopting algorithmic decision-making techniques and using highly sophisticated software to run their organisations.”
An astounding example of the control illusion. Nothing sits better in a crisis than intense rationality. Trouble is, we’re deluding ourselves.
For one thing – as neuroscientist Antonion Damasio proved by studying people with damage to the part of the brain where emotions are generated – decisions are driven by emotions. With our rational brain alone, we’ll just weigh pros and cons until the cows come home.
Although our subconscious is in charge, we insist on living an illusion of conscious choice – simply because it feels so comfortable and alluring. The more chaotic and bewildering the world around us, the more that neat illusion beckons. We duck down, distrust (our people and ourselves), flick the switches to ‘tight control’ mode and abort anything risky, like experimentation.
Now I’m all in favour of data and analytics – in fact metrics are key to agility – but only when the numbers aid creative, whole-brain decision-making. Certainly not at the expensive of good judgement and gut feel.
The world is rife with easy lies that satisfy our control-illusion-fueled thirst for order: putting more people in prison reduces crime; financially incentivising staff improves performance; increasing the price of alcohol reduces drinking; markets are driven by rationality…
It’s yet another lie that gut-instinct management style is replaceable by algorithmic decision-making software.
The truth? The extreme usefulness of technology and data is being massively compromised by misuse. Spending money on software won’t solve our problems, unless we overcome the control illusion and exercise some solid emotional judgement. Half-assed attempts to retrench when the going gets tough hasn’t rendered our leaders any wiser nor more effective.
After all, the average life expectancy of a company in the S&P 500 has dropped from 75 years in 1937, to 15 years today. What’s more, the 3/2 law of employee productivity demonstrates that tripling your number of employees causes productivity to drop by half. The reality is that corporate performance has worsened as digital technology has penetrated the economy.
It’s about time we recognised that cultural and structural changes in business are fundamental to making our technology useful. Blindly pumping out numbers is a wasteful business for gutless wonders. Muscle-bound chart-wielders are unable to move.
Instead we need to arm intuitive people with data that aids emotional decision-making, set them free within loose structures and replace ‘if you can’t measure it, don’t do it’ with ‘if you can’t make a decision on it, don’t measure it’.
Then focus on fine-tuning your organisation to enable rapid, decentralised decision-making.
Purposeful experimentation = innovative leaps.