Defensive Decision-Making - Joe Abittan

Defensive Decision-Making

One of the downfalls of a negative error cultures is that people become defensive over any mistake they make. Errors and mistakes are shamed and people who commit errors do their best to hide them or deflect responsibility. Within negative error cultures you are more likely to see people taking steps to distance themselves from responsibility before a decision is made, practicing what is called defensive decision-making.

 

Gerd Gigerenzer expands on this idea is his book Risk Savvy by writing, “defensive decision making [is] practiced by individuals who waste time and money to protect themselves at the cost of others, including their companies. Fear of personal responsibility creates a market for worthless products delivered by high-paid experts.”

 

Specifically, Gigerenzer writes about companies that hire expensive outside experts and consultants to make market predictions and help improve company decision-making. The idea is that individual banks, corporations, and sales managers can’t accurately know the state of a market as well as an outside expert whose job it is to study trends, talk to market actors, and understand how the market relates to internal and external pressures. The problem, as Gigerenzer explains, is that even experts are not very good at predicting the future of a market. There is simply too much uncertainty for anyone to be able to say that market trends will continue, that a shock is coming, or that a certain product or service is about to take off. Experts make these types of predictions all the time, but evidence suggests that their predictions are not much better than just throwing dice.

 

So why do companies pay huge fees, sit through lengthy meetings, and spend time trying to understand and adapt to the predictions of experts? Gigerenzer suggests that it is because individuals within the company are practicing defensive decision-making. If you are a sales manager and you make a decision to sell to a particular market with a new approach after analyzing performance and trends of your own team, then you are responsible for the outcome of the new approach and strategy. If it works, you will look great, but if it fails, then you will be blamed for not understanding the market, for failing to see the signs that indicated your plan wasn’t going to succeed, and for misinterpreting past trends. However, if a consultant suggested a course of action, presented your team with a great visual presentation, and was certain that they understood the market, then you escape blame when the plan doesn’t work out. If even the expert couldn’t see what was going to happen, then how could you be blamed for a plan not working out?

 

Defensive decision-making is good for the individual, but bad for the larger organization that the individual is a part of. Companies would be better off if they made decisions quicker, accepted risk, and could openly evaluate success and failure without having to place too much blame on individuals. Companies could learn more about their errors and could do a better job identifying and promoting talent. Defensive decision-making is expensive, time consuming, and outsources blame, preventing companies and organizations from actually learning and improving their decision-making over the long run.