Are you heading for trouble?

“Major intelligence failures are usually caused by failures of analysis, not failures of collection. Relevant information is discounted, misinterpreted, ignored, rejected or overlooked because it fails to fit a prevailing mental model or mind-set”. This is the conclusion in R. J. Heuer’s book “Psychology of Intelligence Analysis”, published by the Central Intelligence Agency (CIA), where he reviews major cases of intelligence failures, including the attack on Pearl Harbourin 1941.

While faulty judgments can lead to disastrous results, intelligence failures do not only apply in the intelligence and military domains, but also in business. Warren Buffett wrote in his 2001 annual letter to the shareholders of Berkshire Hathaway Inc. the following statement in relation to having actually predicted a Sept. 11 type catastrophe, but failing to convert thought into action: “I violated the Noah rule: Predicting rain doesn’t count; building arks does. I consequently let Berkshire operate with a dangerous level of risk…”

Whether caused by inaction or relevant information being discounted, misinterpreted, ignored, rejected or overlooked, the impact on the organisation will be the same. In my two previous posts, I explained the effects of biases and wicked problems in larger organisations, and ways of handling these. The mind-set failures mentioned by Heuer and Buffett supplement these, and add new dimensions to where leaders and organisations can go wrong.

A common answer to avoiding major failures and limiting exposures are the disciplines of corporate governance and risk management. However, also these measures will fail if they conflict with the prevailing mental model or mind-set of the company executives and board, in which case even the best analyses will be rejected, ignored or even ridiculed. The basic governance and risk disciplines are thus inadequate and should be enhanced, evolving into a broader and more profound Business Governanceof the entire business model that includes a shift of mind-set.

So, what about your organisation – are you heading for trouble? Are you keeping an eye on the market, customers, competitors and mega trends? If you are, how are you then managing your mental models, minimising your blind spots, and converting thought into action? Are you building the ark?

Read the full article here: Are you heading for trouble?