“A large eye does not mean keen vision,” goes a Rwandan proverb.
Is the idea of the rational manager a myth? Do we see the business problem not as it is, but as we are? Just as the menu item is not the meal, how does one assess a system’s behaviour? How does applying the ancient idea of yin and yang help managers to become more effective?
“We are not only irrational, but predictably irrational ... that our irrationality happens the same way, again and again. Whether we are acting as consumers, businesspeople, or policymakers, understanding how we are predictably irrational provides a starting point for improving our decision making and changing the way we live for the better,” writes behavioural scientist Dan Ariely.
“This leads me to the real “rub” (as Shakespeare might have called it) between conventional economics and behavioural economics.
In conventional economics, the assumption that we are all rational implies that, in everyday life, we compute the value of all the options we face and then follow the best possible path of action.
What if we make a mistake and do something irrational? Here, too, traditional economics has an answer: ‘market forces’ will sweep down on us and swiftly set us back on the path of righteousness and rationality.
On the basis of these assumptions, in fact, generations of economists since Adam Smith (a Scottish economist who was a pioneer in the thinking of political economy) have developed far reaching conclusions about everything from taxation and health care policies to the pricing of goods and services, observes the professor of behavioural economics.
To ‘be rational’ means to act, think, or make decisions based on reason, logic, and evidence, rather than on fickle emotions or sudden impulses.
Rational implies a clear, objective approach to situations, considering facts and consequences, before making a judgment or choice. Yet managers are influenced by a volcanic hot lava flow of emotions and feelings.
Watch what really happens
In systems that power the world of business, we see visible, physical tangible parts. What we miss is the information based relationships, and functions or purposes are even harder to see.
“A systems function or purpose is not necessarily spoken, written, or expressed explicitly, except through the operation of the system. The best way to deduce the systems purpose is to watch for a while to see how the system behaves,” wrote systems thinker Donella Meadows.
Diagnosis, doing some [hypothesis-driven] analysis, crunching the numbers, melded with observing what is really happening is a basic step in business problem solving.
It’s not uncommon to find that a firm’s most profitable products are not what one thought. Or, that in donor funded NGO programmes, some well-intentioned interventions may be eroding away any value created [perhaps even destroying value] as opposed to creating value in, for instance, increasing household incomes of small holder farmers. Due to the [unrecognised] complexity of the value chain, farmers’ real incomes may be going down, not up.
Both systems and managers are what they do, not what they say they do. Universities exist as centres of research and learning, instilling a love of wisdom, hopefully teaching students ‘how to learn how to learn’, seeing the world through the eyes of their chosen discipline. But perhaps universities, are really marriage bureaus, where many first meet their spouse at the institution of higher learning.
It’s a mistake to confuse an organisation's glorious vision, mission and values statements with what it really does. Organisational culture that Peter Drucker said ‘eats strategy for breakfast” is what happens when no one is looking.
Perception, awareness in business is everything. Managers behave based on how they see the world, how they perceive the problem they are facing. In drawing up the plans for a house, the imaginative visual architect sees an opportunity to express their creativity, blending in the dwelling’s design with its environment. In contrast, the doctrinaire accountant - lost in their journal entries - may see only a cost to be incurred, and the payback arithmetic.
Yin and yang
In Chinese philosophy, yin and yang represent opposing, but complementary forces that exist in a state of constant interaction and dynamic balance. Quite simply, you can’t have one without the other. If you are not feeling stupid at times, chances are something may be missing in the process of aiming for intelligent decision making.
Rational and irrational may be two sides of the same coin. When looking at a problem, and a decision on how to deal with it helps to put on a rational hat, and then an irrational cap, eyeing the situation from both angles, to come up with a more creative solution.
Keen-eyed experiments
Taking a leaf out of the book of behavioural scientists, it’s always helpful to be experimenting. No experiments, no learning. Running low risk, little cost trials, that test the markets and customers responses is judicious standard operating procedure.
“Life is complex, with multiple forces simultaneously exerting their influences on us, and this complexity makes it difficult to figure out exactly how each of these forces shapes our behaviour,” advises experimentalist Dan Ariely.
"If we had a keen vision and feeling of all ordinary human life, it would be like hearing the grass grow and the squirrel's heart beat, and we should die of that roar which lies on the other side of silence," wrote the novelist George Eliot.
