Why do smart people do stupid stuff when they are in a corporate organization?

Even the smartest individuals can be compromised by corporate dynamics. The system often dictates behavior more than individual intelligence does. It continues to amaze me that when you put smart people together in a group and organize them in some form of corporate system, they do so much stupid stuff, make so many bad decisions. When I start to think about why that is, there are so many aspects that come into play. There is a whole mix of psychological, social, and structural factors that determine if a group of people become smarter than an individual or dumber.

Group think

One of the first concepts about working together as humans I was taught was groupthink.

Groupthink is a psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome. Cohesiveness, or the desire for cohesiveness, in a group may produce a tendency among its members to agree at all costs. This causes the group to minimize conflict and reach a consensus decision without critical evaluation. — Wikipedia

When I went to study at the Technical University of Delft, they showed us a room they had built with computers in it that allowed people to give input without knowing what the other people in the room thought. Companies could rent the room if they wanted to come to better decisions. They told us it was designed to prevent groupthink. Social pressure unconsciously makes people want to agree, even if the decision is bad. We lose the ability to be critical because it takes courage to speak up and humans have a natural tendency to want to agree. So if the discussion flows in a certain direction, it’s hard to bend it and the group can end up jumping off a cliff like lemmings and there is no one that can stop it. Group pressure is a bitch.

Wrong use of tools

Tools can help to prevent groupthink by hiding ideas from other people until everyone has given input. When I got really into co-creation, I learned this is one of the fundamental principles in the Design Sprint method. You want to give everyone equal space to express their thoughts. You want to make sure the loudest person doesn’t get the biggest say because the most silent person might have the best idea. You want to limit the weight of the opinion of the highest paid professional because they might necessarily be the smartest person in the room. The Design Sprint method excels in that.

But tools all have their biases and using a tool can also influence the decision making process in a negative manner. What might seem logical within the exercise you are doing might be ridiculous in reality. I have seen seemingly simple tools like Five Why’s and Fishbone Diagrams end up with silly root causes that seem perfectly fine while doing the exercise. When using tools, people tend to offload the critical thinking capacity to the tool too much and depend on the tool too much. And if you are not careful you will also suffer from groupthink on top of that.

Peterprinciple

Then we have the system of promoting people to have more power when it comes to decisions. If you are good at one job, does not mean they will be good at the next, higher one. This is called the Peterprinciple.

The Peter principle is a concept in management developed by Laurence J. Peter which observes that people in a hierarchy tend to rise to “a level of respective incompetence”: employees are promoted based on their success in previous jobs until they reach a level at which they are no longer competent, as skills in one job do not necessarily translate to another. — Wikipedia

So basically you run the risk as an organization to have people with decision making power that have risen to their level of incompetency and stay there. If these people weigh in on decisions, you run the risk of ending up with a bunch of bad decisions. It’s not because the people making the decisions are not smart but just not suited for the role they got promoted into.

Silos

Any form of organization will have teams, departments, groups, etc. That is necessary to focus, to attribute budgets, measure progress. But of course any form of separation can limit collaboration. There is always the risk of people staying in their silos and not communicating across silos. If you are really unlucky, departments or teams might even be competing against each other, working against each other.

People doing what they are told

This might sound weird but people doing what they are told can result in stupid behavior and decisions. Blindly obeying the rules can cause people to stop thinking. And if someone from another department asks you anything, they do not have the knowledge you have so their question, their demand might not be a good idea. This is very typical for IT departments. In my experience IT have a tendency to do what they are asked. What they should do is what is needed, not what is asked. What is asked runs the risk of being a stupid ask because the person asking doesn’t have enough knowledge to ask a good question.

Fixing the wrong things

That brings us to another source of stupidity: answering the wrong questions. The right answer to the wrong question is useless. If you focus too much on coming up with answers and not and not enough on coming up with the right questions, you end up with stupid solutions.

Being too attached to your own opinion

It’s good to have strong opinions, but it’s best to hold on to them loosely. If your ego gets in the way and you think your opinion is best because it’s yours, you run the risk of not being open to a better solution.

Working towards KPI’s

KPI’s can be useful to measure progress and incentivize people but I think everyone knows by now that focussing on raising the numbers on a KPI can lead to doing the wrong things.

And there are probably many more. The system seems to be rigged against smart decisions. There are also many examples of people working together rising above themselves but I think it is good to be aware of all the mechanisms in organizations that make smart people do stupid stuff. There is so much creative potential in co-creation but there is also so much working against it.

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