When Good Companies Make Bad Decisions

Nearly every engineer has a story or two about mind-bogglingly stupid management decisions. The universality of this experience is one reason why Scott Adams' Dilbert cartoons have enjoyed more than 25 years of popularity. Engineers who are honest with themselves will admit that managers aren't the only ones who make stupid decisions: sometimes, we do it, too. Even the best companies occasionally make decisions that seemingly defy common sense and reality. Average companies -- that is, the ones that most of us actually work for -- make such decisions even more frequently. Why does this happen? How do highly technical organizations with highly trained personnel sometimes manage to screw things up so badly?

As a materials engineer, my specialty is failure analysis and prevention: figuring out why things break, and how to keep them from breaking in the future. This discipline requires a good understanding of engineering mechanics, materials science, and manufacturing processes, among other things. The longer I work in this field, however, the more I become convinced that the engineering aspects of failure are only one piece of a larger puzzle. Sometimes, they're not even the most important piece.

All failures have a human aspect. More often than not, the root cause of a failure can be traced to a poor decision, or series of poor decisions. Understanding the decision-making processes of individuals and groups, therefore, is essential to understanding and preventing failures.

One reason organizations make bad decisions is what I call "the telephone game." You might remember this game from your youth. A group of children sit in a circle. One child whispers a message into the ear of the child sitting next to her, who whispers it to the next child, and so on. Almost inevitably, the message becomes hilariously garbled as it makes its way around the circle. Usually, the final version of the message has nothing in common with the original.

This phenomenon is not just child's play. It occurs in all organizations, especially those with a hierarchical structure. Communication between human beings is never 100% efficient. If you tell another person something of moderate complexity, and they manage to understand and retain 90% of it, then either you're an unusually good communicator, or they're an extremely good listener, or both.

Now let's see how this works in a hierarchical organization. Let's suppose a technician reports an important piece of information to a designer, who reports to an engineer, who reports to an engineering manager, who reports to a vice president, who reports to the CEO. Let's assume that everybody in the chain is capable of communicating at 90% efficiency. By the time the message reaches the CEO, only 59% of the original message is left. The CEO has to make a decision with just over half of the actual facts. (If there had been just two more layers in the hierarchy, the CEO would have less than half of the actual facts.) Then the decision must be propagated back down the chain. By the time it reaches the technician again, it will be extremely fortunate if the decision even remotely appears to make sense.

This is actually an extremely optimistic scenario. It assumes that everyone involved has good communication skills, a decent memory, and enough technical knowledge to comprehend the basics. It also assumes that everyone is acting in good faith: no one is withholding information, intentionally misrepresenting the facts, or telling their superiors what they think they want to hear. Unfortunately, these assumptions are rarely true.

Given these problems, many business experts have given up on hierarchical organizations, and now extoll the virtues of "flat organizations" (with no middle managers) or "adaptive organizations" (where decentralized teams enjoy a great deal of autonomy). However, with a few notable exceptions, these are mostly buzzwords. When it comes down to it, very few companies are really willing to try a new organizational form. Maybe the CEO will read a few articles about "flat organizations" and decide to eat lunch in the employee break room. That's actually a great thing to do -- but it doesn't really change the underlying nature of the organization.

However, there is another solution: speak up. When you see decisions being made within your area of technical expertise that don't appear to make sense, you have a responsibility to say something. If you fail to do so, you are doing a disservice to yourself, your organization, your organization's customers, and the engineering profession. It may be easier said than done, but it's an ethical obligation.

When you do speak up, remember: organizations don't actually want to make bad decisions. They do so because they're made up of human beings, who have the same defects and limitations you do. Ultimately, in order to be a good engineer, it's not enough to have a solid technical understanding. You need to understand human beings, too.

Design engineers and professionals, the West Coast's most important design, innovation, and manufacturing event, Pacific Design & Manufacturing, is taking place in Anaheim, Feb. 10-12, 2015. A Design News event, Pacific Design & Manufacturing is your chance to meet qualified suppliers, get hands-on access to the latest technologies, be informed from a world-class conference program, and expand your network. (You might even meet a Design News editor.) Learn more about Pacific Design & Manufacturing here.

Related posts: