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Strategic ignorance - when smart people choose to play stupid, even if it brings the company down

Strategic ignorance - when smart people choose to play stupid, even if it brings the company down
"Shall I do something based on this information, or should I better choose to ignore it?"

This is a subject that is little debated in the boards, and yet strategic ignorance is one of the major causes of bankruptcies, industrial delays or ill-informed decisions by our leaders.

 

Strategic ignorance verifies Upton Sinclair's infamous adage: "It's hard to get a man to understand something when his salary is precisely dependent on not understanding it."

 

In short, each company has its taboos and blind spots. A quick test, ask any executive "What is the information your company most deliberately chooses to ignore?" In 4 out of 5 cases, he will have an answer immediately. Everybody knows it, yet nobody talks about it - the perfect example of a company taboo.

An essential “non-knowledge”

According to sociologist Lindsey McGoey, who has studied the problem of "Strategic Ignorance" in some companies marred by high-profile scandals: "Knowing what not to know was essential knowledge."

 

She explains after dissecting 27 corporate scandals that in certain ultra-political, highly hierarchical cultures with strong market stakes such as pharmacy, banking or the media, the culture of ignorance was much more advantageous than the culture of knowledge.

 

The researcher explains that contrary to popular belief, ignorance can be a real asset for companies and administrations: “it helps individuals and institutions to control resources, to deny their responsibility in the aftermath of crises and to assert expertise in the face of unpredictable results.”

Productive Ignorance

How do we arrive at such paradoxes? The causes are multiple and stem from group thinking, the arrogance of the leader, the overconfidence of the experts and often, the desire not to offend the monarch ...

 

In the tale, the only one who has the courage to say that the king is naked is a child. But, in business, or in large bureaucracies, children like courage are not very common. As Nicolas Taleb, a fierce observer of the 2008 financial crisis, put it bluntly, “Bureaucracy is a construction whereby a person is comfortably separated from the consequences of their actions.”

The ostrich directive

Sometimes, some lawyers will advise, the best way not to have proof of your mistake and not to keep it and therefore to organize the ignorance. We therefore switch from strategic ignorance to plausible deniability. In Anglo-Saxon countries the practice of willful ignorance is actively known and fought under the name of the “Ostrich Directive” (Ostrich Instruction).

An elephant where?

Yet in view of resounding bankruptcies like that of Enron, Theranos or more recently Wirecard. It is sometimes useful to understand why information that is often as visible as an elephant (Amazon will produce its own white-label products, Amazon enters health care, Amazon enters insurance) does not circulate in companies or even are cleverly ignored, swept away with the back of the hand (“they're going to crash,” “that will never work”) or put under the rug.

 

 

 

The triumph of ignorance is sadly trivial: information that does not fit into normal thinking is often dismissed or belittled. Researchers Moore and Tumin have established the advantage of organized ignorance in the preservation of privilege. It also explains why whistleblowers without exception become outcasts in the company.

 

They know (and ignorant strategists with them) that the famous 'everyone knew' is often retrospective, and that knowledge is often tyrannical: it cannot be ignored...

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