Strategy, Distorted Thinking and the Sense of Shame

Why do executives who are attached to their firms and organization, who know the texture of their marketplace deeply, often fail to detect signs of their of the firm's impending failure, fail to recognize that their strategies for sustaining the business are increasingly mismatched to the current reality. If we insist on a rational view of decision making we might say that such executives simply make errors, or that they reasonably give credence to the past over the future, or that they are sensible, to prefer to run the risks of not changing strategy rather than changing strategy when they should notThe reader will no doubt agree that such a rational explanation is inadequate. When executives make such decisions they are not simply calculating costs and benefits but are managing a complex of feelings. They desire success, they wish to avoid shame, they are aware of their obligations to their employees and shareholders, they measure the limits of their own capacity to work, develop and innovate. It is surely sensible to assume that these emotional processes play a critical role in how executives reformulate strategies when markets change When tose strategies fall short, it is not simply because executives are making rational errors of judgment. Yet having wrestled the argument away from the rationalists, it may then seem that we no longer face a very interesting or difficult question . Executives fail to spot changes because it is unpleasant or anxiety producing to see them. We can of course make this explanation a bit more elaborate. We can add for example, people in successful organizations are prone to 'group think' so that when some one raises questions about the organization's present course, the group defends itself against hearing those questions by questioning the critic's commitment to the team. But at bottom all such explanations still rest on the straightforward idea that people wish to avoid unpleasantness, and thend to do so until it is too late.This supposition ignores the simple fact that executives spend a great deal of time and money tracking and analyzing their marketplace. They do market research studies seek out intelligence on their competition and talk to stock analysts and industry experts. The explanation that failure is simply rooted in the avoidance o unpleasantness , would lead one to expect that executives would operate under the rule that 'no news is good news' and would stop paying attention to the marketplace. . But in fact, they pay an inordinate amount of attention and they still miss important turning points. We have here, I suggest, a question about how executives' interpret reality. Facts are not truths they must always be placed in context. By situating them in this way we interpret them, we say 'this fact means X.' But as we know from the psychoanalytic process, we use thoughts and feelings to interpret a fact. The feeling helps us give value to the fact- is it a 'dangerous,' 'exciting' 'worrisome' or 'familiar' fact, while the fact in turn provokes our feelingful response to it, e.g. 'if I understand the facts, our low sales means this is not a typical downturn.' If our thinking is disordered, or our feelings are suppressed the likelihood that we will misinterpret a fact, that we will fail to understand its salience grows.Indeed, the process of interpretation has never been more important. Today we describe the marketplace with words that can describe the unconscious itself. 'It contains 'mystery,' we can't take its appearances for granted, it points to contradictory process, it is 'complex,' or as we would say psychoanalytically 'over-determined,' as we probe it, we can change it. There is thus a growing likelihood that executives, failing to integrate thought and feeling so that each supports the other will seriously misinterpret their organization's situation and prospects.In the following paper we seek to build a model of how and why misinterpretation takes place. The paper is divided into five sections. In the first we examine the role of symbols in thinking and show how a bundle of thoughts and feelings can lead us to misappropriate symbols. In the second, we introduce the case of Apple computer and suggest that the Mac, in taking on iconic status ceased to function as a symbol of the customer's situation but was experienced instead as the customer's situation. It was we suggest fetishized. This section closes with a provisional model of how in fetishizing a product, executives misinterpret reality. In the third section, we first critique and then revise our model by showing how the sense of shame provokes misinterpretation by linking personal discomfort and anxiety to group processes. It is this group process we suggest that amplifies individual errors so that they become instead group myths. In the fourth section we apply our revised model to a brief case study of an information services company and in our summary we point to new challenges for consulting.