Weak Signals to Retrospective Coherence

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Since I’ve been talking about the difficulties of learning from experience–our own as well as others–and because I’ve used examples that could just as easily be seen as using hindsight, I found a recent blog entry by Jeffrey Pfeffer that fits the subject.

With the benefit of hindsight, the examples I used look obvious. But were they obvious at the time? No. Now it may be that there were people who thought that they wouldn’t work. They may have even said something. But how do we tell the difference between weak signals and random comments?

Pfeffer’s blog entry is Why Predicting Organizational Disasters Doesn’t Prevent Them and he’s making the point that we can go back and see evidence, even published evidence, that people “predicted” recent problems. One of them being the housing crisis and mortgage meltdown. That one I’ll believe. I have a good friend who made the point some years ago that loans were being made to people who couldn’t afford them, house prices were unsustainable, and combined with variable rates loans we were headed for a meltdown. I know that he did his homework so I see this as a case where experts really did predict the problem. There was an increasing chorus of increasingly less weak signals…but they still were essentially unheeded.

All too often I believe that we can go back and find comments or articles that seem prescient in hindsight. The question, of course, is were they prescient or were they lucky? It’s difficult to say. Or, we could say that lucky or prescience is immaterial since in either case they were weak signals.

In his book, The Ambiguities of Experience, James March talks about change, especially novel change in which we choose to go away from the status quo. The simple fact is that there are so many ways to fail that the rational choice would seem to be to avoid change. Given that it makes it doubly difficult to make decisions from weak signals. First, we may not detect them and, second, we may not act on them.

One thing that is clear is that leaders of organizations today constantly face a dilemma–when do they promote change and when do they resist it? In a sense it is the way to manage a complex system–reinforce positive patterns, dampen negative patterns. Successful organizations will develop skills that allow them to recognize emergent behavior as either positive or negative patterns so that they can act accordingly. I see this ability as one that people and organizations can learn to get better at. It’s not an easy skill to develop but I’d vastly prefer that an organization’s decisions be made from a position of skill than trusting in luck.