Management Information (MI): The lifeblood of organisational survival – disregarded by executive leaders?

Where MI has been disregarded

Despite all the progress made with world class MI solutions there are a myriad of examples where leaders and managers disregard MI with sometimes disastrous consequences. Some recent examples include a hurricane disaster in the USA, as well as recent major airline disasters, and corporate collapses in south Africa in the financial services and retail related industries.
There are obvious many reasons for the occurrence of this “disregarded phenomena’ but the common denominator was that sufficient information was available for management and leaders to react to at least soften the blow and or to prevent the occurrence thereof:

• MI with warning signals was available;
• It was formally / informally tabled;
• The evidence was available but rejected with counter arguments;
• The facts were discussed in formal /informal reviews but never act upon; and/or
• Messengers were discredited as prophets of doom.

Leadership mind-sets can disable the inherent value of MI.

The fundamental question is why leaders and managers chose to disregard MI? Some of the reasons for this are related to what is called “cognitive” and “social biases”. Some of these are highlighted below.

Cognitive Biases

There are many well-documented biases, but these are among the most dangerous in the strategy room1.

• Overconfidence: Experts become more confident as they gather more data—even though the additional data might not make their projections any more accurate. Overconfidence is self-reinforcing, too. It leads people to ignore contradictory information, which makes them more confident, which makes them more likely to ignore contradictory information. We convince ourselves that we have a winning strategy this year even though we continue doing pretty much what we’ve always done.
• Confirmation bias: When you bring together a bunch of people with shared experiences and goals, they typically wind up telling themselves stories, generally favourable ones. One study found, for instance, that 80% of executives believe that their product stands out against the competition—but only 8% of customers agree.
• Survival bias: This is one to which the strategy processes is particularly prone, because we only see what happened, not what didn’t happen. We can precisely measure the behaviour of the customers we have, but what about the silent voices of the customers we don’t have?
• Attribution bias: This one often kicks in when a target is missed, with blame piled on the most convenient cause available, usually some one-off event—unseasonable weather, an IT outage, etc.—even though such one-off occurrences seem to happen every year. With failure dismissed as an externality, the management team closes ranks and decides to double down and re-establish the goal. “We lost a year, but we’re going to get back on track.”
• Pattern recognition: The process which integrates information from as many as 30 parts of the brain leading us to make assumptions based on previous experiences and judgements

Social Biases

• Emotional tagging: The process by which emotional information attaches itself to the thoughts and experiences stored in our memories.
• Sandbagging: “I’m only going to agree to a plan that I know for sure I can deliver. My reputation is on the line, and I can’t risk being the one division that misses budget.” Individuals will often have a different attitude to risk than their overall enterprise does.
• The short game: “Someone else will be running this division in three years, anyway. I just need to milk performance for the next couple of years, get a good bonus and the next promotion— or maybe get poached by our competitor.” The motivations of the executive are not automatically aligned with those of the owners.
• My way or your problem: “I know this business and industry better than the CEO and better than the board. They’ll just have to believe what I tell them. If I don’t get the resources I ask for, then there’s my excuse for not delivering.” The line executive has inside knowledge, and often the CEO and board have little choice but to accept their version of the truth. Market share can be defined favourably by excluding geographies or segments where the presenter’s business unit is weak.
• I am my numbers: “I get judged by my numbers, not by how I spend my time. I’m just going to work hard enough to hit my targets, but not a lot more.” One’s supervisor can’t directly observe the quality of effort, and results can be noisy signals. Were those poor results a noble failure? Were those great results dumb luck?

Shifting biases working against MI

Some practical ways in which the avoidance of MY can be addressed include:

• Injecting fresh experience or analysis;
• Introducing further debate and challenge;
• Imposing stronger governance;
• Laying out the range of options;
• Listing the main decision makers:
• Choose one decision maker to focus on;
• Repeat the analysis with the next most influential person;
• Do on-purpose debriefings and learn from post-mortems;
• Apply scenario development to stress-test potential outcomes; and o Review the list of identified thresholds – red flags you have identified,

A global company tackled bias head on. They started a cultural-change program early in their strategy journey, to address the need for a different management mind-set in light of an increasingly uncertain future. A big component of that was mindfulness—becoming aware of not only individual cognitive patterns, but also the likely ones of the people you work with. It was equally important to start to create an atmosphere in which people are comfortable with a certain degree of conflict, where there is an obligation to dissent. This had to be pushed forward and safeguarded, because as soon as hierarchy prevails, it can be easily discouraged.

Management Information is not about technology only

It is very easy for business leaders to be swept up in the excitement and opportunities created by some quite incredible advances in technologies. Through our own work with client systems it has however become quite evident that for technology to deliver on its promise, a much wider systemic perspective needs to be taken on enterprise evolution. To this end, the thinking framework adopted is the Business Value ModelÔ as shown in the following diagram.