Failing To Learn From History - How Perspective Is Relative

The Contrast Principle explains how our perception is often relative. As a physical example, if we are standing in the dark and a flashlight is pointed in our face, we will estimate the brightness of the light to be significantly higher than had the room had been well-lit. As a psychological example, if we are conversing with a very attractive person who walks away and an unattractive person approaches and begins a conversation, the second person will seem far less attractive than they actually are.

If you're curious, try this experiment.

Place a bucket of hot water on your left, a bucket of cold water on your right, and a bucket of room temperature water in the middle. Place your left hand into the hot water, and your right hand in the cold water. Now, remove your hands and place both in the room temperature water. The hand that was in the hot water will now feel like it is in cold water, and the hand that was in the cold water bucket will now feel like it is in hot water.

This automatic behaviour is one of many heuristic shortcuts that we apply to the world on a daily basis, and it can be both a benefit and a curse.

If, for instance, your budget for a new car is $35,000, yet you decide to first test drive an $90,000 sports car, the contrast principle will make subsequent test drives feel disappointing and inadequate. On the other hand, if you were to first drive a clunker, subsequent test drives of $35,000 vehicles, will make you feel much better about your budget and eventual car purchase. There are certainly other mitigating factors in being a satisfied car buyer, but all (other) things being equal, the contrast principle can have a profound effect on your perception and therefore your satisfaction.

In other words, there are few, if any absolutes; leaving our perception of the world relative to our experience and expectations. Like many behavioural patterns, this can be powerful 'mojo' to harness, particularly when attempting to persuade the decisions of others. Successful salespeople know this, often intuitively, and (rightly or wrongly) apply the principle in an effort to influence the decisions of customers. And the contrast principle is so powerful, that even when we realize it's being applied to us, it's hard to resist.

Equally, when you have bad news to share, it's not a good idea to diminish the news in hopes of revealing or unleashing a little more over a period of time. Organizations know this when dismissing employees. Rather than spreading the anxious process over a period of days or weeks, efforts are made to have all of the dismissals occur at the same time.

Among the many blunders made by BP subsequent to the Deepwater Explorer explosion in the Gulf Of Mexico, was the attempt to downplay the amount of oil leaking from the damaged well. On April 20, BP claimed that 1,000 barrels of oil (42,000 gallons) was leaking into the Gulf. On May 14, the U.S. government upped the estimate to 5,000 barrels a day. May 27, scientists increased the estimate to between 12,000 and 19,000 barrels a day. June 10, that doubled to 25,000 to 30,000 barrels a day. Yesterday, the new estimate was 60,000 barrels a day - more than 2 and a half million gallons!

Added to BP's many errors of judgment (an understatement), these horrendous 'miscalculations' have augmented, if not cemented public mistrust of virtually any claims made by the company. A taint to its reputation from which BP may never recover.

Could BP have reacted differently? Most certainly.

September 12, 1983, 12-year old Mary Kellerman died after taking extra strength Tylenol. In the next few days, a total of 7 deaths were attributed to tainted Tylenol. The parent company of Tylenol, Johnson & Johnson, acted swiftly and decisively, distributing warnings to hospitals and distributors, and halting Tylenol production and advertising. This was followed by a nation-wide recall of Tylenol - $100 million in product.

The press praised the company for "effectively demonstrating how a major business ought to handle a disaster." A Washington Post article added "This is no Three Mile Island accident in which the company's response did more damage than the original incident."

While Tylenol 's market share initially plummeted from a high of 35% down to 8%, the company's handling of the crisis and subsequent industry-leading security measures (the tainted pills were the result of tampering at the retail level), led Tylenol to become the #1 selling over-the counter analgesic in the U.S.

"Any man can make mistakes, but only an idiot persists in his error."

-Marcus Tullius Cicero

Don't Rock The 'Upside Down' Boat

In 1961, Genevieve Habert, a Wall Street stockbroker, was walking through the Museum of Modern Art in New York City, when she noticed that Henri Matisse's Le Bateau ("The Boat") was hanging upside down. Habert attempted to report the error to several museum staff, including a guard, whose response was "You don't know what's up and you don't know what's down and neither do we."

Frustrated that no one at the museum would take her seriously, Habert contacted The New York Times, which gained the immediate attention of the museum director. The next day, the work was correctly hung, having been displayed upside down for a total of 47 days.

At the risk of minimizing the current Gulf Of Mexico oil disaster, I can't help but think of the upside down Matisse as a metaphor, as we reach day 47 of this catastrophe.

The more we learn about events leading up to the explosion of the Deepwater Horizon, the more apparent it becomes that multiple opportunities were missed that might well have averted the explosion, loss of human life, and subsequent environmental nightmare. The common thread throughout this series of poor decisions was an emphasis on time and cost-savings, which in the BP world, are synonymous.

And while many media pundits apply the usual black & white filter to the scenario, attempting to identify the BP (& Halliburton & Transocean) disaster as either an accident or the result of pure corporate greed, the truth lies at the much murkier depths of groupthink corporate culture.

When an organization is so focused on achieving its bottom-line that it ignores virtually anything that stands in its way, it's an inevitable recipe for disaster. Groupthink is a powerful behavioural phenomena that makes it tremendously difficult for anyone within the organization to step forward and offer a differing point of view, much less sound an alarm that the proverbial boat may be hung upside down.

Groupthink is evidenced throughout history, from one organizational disaster to another. January 28, 1986, the Space Shuttle Challenger exploded 73 seconds after liftoff. The cause of the problem was an O-ring seal, which failed under cold weather conditions. But NASA engineers were aware of the problem and had warned of the problem - specifically cautioning against launch on January 28, because of the cold weather forecast. But the NASA Flight Director wasn't aware of the engineers concern, because a group of NASA executives, to whom the engineers' report was filed, decided not to act on the warning, as they were collectively frustrated by recent launch delays and emboldened by the overall success of the space shuttle program.

Ultimately, groupthink - a culture of don't rock the boat, if you know what's good for you, is a conditioned state of thinking and can only survive if the individuals within the group remain controlled. And these are powerful controls that take many forms; fear, greed, security, even simple peer pressure.

And while it may seem somewhat counter-intuitive, groupthink can come from either top-down or bottom-up within an organization, as powerful forming forces don't always come from the corner office. Either way, the phenomenon can only occur when allowed to gestate, because groupthink doesn't occur overnight, or the moment an organization is formed. The conditioning required takes time and the right (or perhaps more accurately - wrong) environment in which to flourish.

So when the time comes to postscript the Gulf oil disaster and attest responsibility and consequences, we'll no doubt hear a lot about regulations, oversight (the Minerals Management Service appears to be its own case study in dysfunction), and no end of technical excuses from failed blow-out preventers to methane bubbles, but will anyone address the fundamental issue of dysfunctional corporate culture?