Thursday, April 30, 2015

Are You Dancing Like a Pigeon?

You know the story:
  • eBay enters China, declaring its intention to dominate the market there the same way it dominated other markets. It fails within four years.
  • Following spectacular success at the strategy, Microsoft decides to pursue "windows everywhere" in the mobile space - only to be rendered irrelevant by the rise of native mobile platforms iOS and Android.
  • Faced with competition from Netflix, Blockbuster decides to double down on their brick-and-mortar stores, building them out.  Quickly they would go from a multi-billion dollar market leader to bankruptcy.
You're probably tired of such lists - failed once-great companies. But notice this: In these cases and so many more, the failure happened because leaders kept doing what had just worked well for them.

Bottom line: We like to keep doing what worked the last time around.

And in this way, we are similar to the dancing pigeons in Skinner's famous experiments. Years ago, Professor Skinner used his "Skinner box" to demonstrate a powerful point: Even the simplest of animals, a pigeon, will see a pattern in randomness. The box featured a mechanism that would randomly feed the pigeon. The bird, thinking that whatever it was doing prior to the feeding was "causing" the food, soon found itself doing a herky-jerky dance.

And so it is that you and I dance like a pigeon, too. We repeat what seemed to work last time, hoping to get the same result. When asked to defend our decisions, we say "this is what worked last time." And at the world's leading business schools, we sit in rapt attention listening to executives tell us what they did that "caused" them to be hugely successful.

"But," you object, "people have big brains and can reason. Of course the pigeon just dances to the tune of a random machine; it is stupid." Well, listen carefully next time you hear a successful leader speak. If they point to "experience," seriously ask yourself how large a sample they have to draw on. If it is a sample of one, as is often the case, then we may be looking at a dancing pigeon. Alternatively, listen for logic. If the leader gives you the logic behind his actions, then we're making progress. But very often executives simply let the "facts speak for themselves." Look what that did for the pigeon.

Doing whatever seemed to work that last time? You may be dancing like a pigeon.

The leading scholar on this problem is Jerker Denrell.