THE RISK OF USING COMMON SENSE
How Dangerous Is Common Sense to leaders?
Prof. James L. Heskett, Baker Foundation Professor, Emeritus at Harvard Business School, elaborates on one of the biggest dangers to strategy makers and managers – their very own experience, intuition, and even common sense. Is there a saner option for the men-on-top?
Steven Philip Warner
Issue Date - 15/12/2011
Some of the more interesting writing that is relevant to management these days is found in out-of-the-way places in my local bookstore. In addition to the management and economics sections, you should check out neuroscience, psychology, and sociology – the research being reported there on how the mind and body work, is thought provoking.
For example, in Everything is Obvious, Once You Know the Answer: How Common Sense Fails Us, sociologist Duncan Watts’ thesis is that, in predicting outcomes and acting accordingly, we give far too much credence to such things as our own experiences, our ability to determine what is important, and history itself – mainly because complex phenomena are based on events that never repeat themselves and can’t be examined scientifically. Once we know the outcome of a situation, we rationalise the reasons why it occurred and convince ourselves that we’ve learned something from it that we can use in making future decisions. As a result, we give unwarranted credit to such things as experience, intuition, and even common sense.
Watts challenges our ability to assess the validity of experiences on which common sense is based, thereby raising the question of whether common sense based on accumulated experience can be of any help to decision-makers forced to predict the future in complex situations. Watts questions much of the recent work that purports to identify causes and effects in complex, unique situations involving such things as tipping points and many of the phenomena examined by the Freakonomists. In fact, nearly all writing about management and behavioral economics that seeks to credit performance to one cause or another is suspect. Anything based on this faux knowledge, including our common sense, is challenged.
If this research were valid, Watts argues, why wouldn’t we be able to predict the success of a strategy, a new disruptive technology, a product, or an advertisement? The reasons he gives are that these phenomena are too complex, involving so many variables that they can’t be repeated or even tested effectively. (The Vanguard Group’s founder, John Bogle, has been arguing this for years, concluding that mutual funds are more successful when they are not managed.)
What are we to do? According to Watts, it may mean confining our use of common sense to everyday routine decisions for which recent experience can truly be helpful, such as the best route to take to work to avoid traffic. Newer technologies such as the Internet, social networks, and specialised hardware may come to the rescue by providing easy ways of surveying customers, testing product features, and conducting business experiments. Rapid-response systems may, in some cases, eliminate the need to predict the future by allowing managers to respond only to events that have just occurred. A variation on this was proposed years ago by Henry Mintzberg in his critique of strategic planning when he suggested that instead of long-term planning, managers should practice “emergent” strategy formulation in which long-term predictions are replaced by efforts to better understand what is going on at present.
According to Watts, leaders run the risk of injecting too much common sense into decisions, uninformed by experimentation that could be designed to identify cause and effect. Does Watts have something here? Are too few strategies based on testing before investing? Do we make too much use of our common sense under the wrong circumstances? Do we use it unreliably to emphasize some and ignore other information? Do we give common sense too much credit for success? What do you think?
Common sense is the decision-maker’s friend when the decision has to be made rapidly, with a minimum of research or formal theory, with no more than moderate risk or consequences, and by individuals who have accumulated experience and wisdom. If those conditions don’t prevail, watch out. At risk of oversimplification, that sums up author Duncan Watts’ description of how common sense fails us.
First things first. Several offered definitions of common sense. Tomy Tharian, for example, said “common sense is quite often related to … wisdom (from accumulated experience vs. the knowledge that the younger generation acquires so rapidly through social networks).” Noting that Webster’s Dictionary defines common sense as “sound and prudent judgment based on the simple perception of the situation or facts,” JR adds that “Common sense is not in the knowledge but in the application of the knowledge.” Others placed emphasis on the word “common.” S. A. Visotsky, for example, said that “Common sense is defined as beliefs or propositions that most people consider prudent …” Duncan Watts himself found it “surprisingly hard to pin down. Roughly speaking, it is the loosely organised set of facts, observations, experiences, insights, and pieces of received wisdom that each of us accumulates over a lifetime...”
Common sense had its defenders. C. J. Cullinane commented that “Common sense and experience for all their faults are fast.” Phil Clark added that “how man reacts to a situation is driven by habit and choices gained through experience.” Atul Guglani cited the quotation, “In simplicity lies the ultimate sophistication.”
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