- Leandro Herrero - https://leandroherrero.com -

Dogmatism breeds stronger dogma

Paul Krugman, winner of the Nobel Prize for Economics, in his column in the New York Times, [1] has made the observation that economic doctrines that prove to be wrong, sometimes tend to lead not to a ‘concession of being wrong’ but to an even more extreme position in their proponents. He uses the case of inflation-phobia. In 2009, the American Federal Reserve took action to deal with the financial crisis and many politicians and economists predicted that inflation would soar as a consequence. When it did not happen, instead of acknowledging it and ‘moving on’, many of those prophets said that high inflation was in fact happening but that the government was concealing it. A great conspiracy theory amongst many.

He draws a parallel with climate change, which, despite all the evidence in favour of global warming, has become for many in the Republican Party in the USA – Krugman says –an extreme position. In fact, he says, professing that global warming is a hoax, and subscribing to a global conspiracy theory amongst scientists and politicians, is now almost mandatory for the party.

Perhaps in different ways, we, in organizations present some parallels. Despite the overwhelming data showing the phenomenal failures of big Mergers and Acquisitions (M&A) we keep pursuing them as a ‘solution’, often to desperate situations. History has plenty of examples of M&A catastrophes: Kmart and Sears, eBay and Skype, AOL and Time Warner, Daimler-Benz and Chrysler, HP and Compaq, just to quote some of significant publicity. For each of these ‘big public fiascos’, there are hundreds of less visible ones where ‘integration’ failed to deliver. ‘Culture’ (differences, incompatibilities etc.) is reason number one.

We also have the case of organizations where rational strategies of effectiveness share a very fine line with dogmatic views on ‘what is right”. For example, centralization of shared services, regionalization, consolidation of functions, downsizing to the bare minimum, dismantling of structures on behalf of cost efficiency and so on. For every good move in a legitimate direction, there will be a dogma waiting to take over. In some instances, for example, ‘economies of scale’ have delivered ‘fiascos of great scale’. As in Krugman’s examples, once some of these strategies have proven meaningless, we see more, as opposed to less of them. Interestingly, some of those companies, and some of those leadership teams, will profess to being ‘a learning organization’. Peculiar use of language, that is.