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These are us, you and me. OK, apologies for calling you ordinary . But it’s not disrespectful. Believe me. It’s like mortal, like me. Peter Drucker called the company a group of ordinary people doing extraordinary things together.

One of the characteristics of us, the Ordinary Irrationals is that we think we are Extraordinarily Rational People.  But we make irrational decisions all the time.  The whole world moves on irrationality principles that traditional, neoclassical economics don’t understand. In fact traditional economics is almost a branch of Newtonian physics. Somebody put it like this (apologies I can’t remember the source of my clip):

‘(We are) believers in a largely discredited set of assumptions, who have invented a parallel universe with well-defined mechanical relationships between different moving parts, connected by metaphorical pipes, cogs and levers: interest rates go down, bank lending goes up; taxes go down, investment goes up.’

This input-output machine model is so engrained that it is hard to see any alternative, more organic and messy thinking models. We apply ‘metaphorical pipes, cogs and levers’ everywhere in the organization: employee engagement/happiness up, productivity up. This type of thing.

New management sciences need to embrace the irrational world, the one that may defeat logic, the one that has another kind of logic, harder to capture in spreadsheets.

In this world, for example, some HR competence systems are a straitjacket at best, and a kidding-yourself-world-of pipes-cogs-and-lever’ at worse. Do we really need these pseudo-quantic-physics systems that specify competencies for grade 5 people, in terms of a delta increase by a word from 4 grade people: ‘grade 4 manages change; grade 5 leads change’. Seriously, extraordinary rational consultants in talent development?

When can we pay attention to irrationality?

Behavioural Economics has.

When can HR/OD/L&T/Communications and any other corporate functional tribe jump in?

The human capital corporate functions becoming the Ordinary Irrationals support system. How about that?

 

 

 

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Comments

  1. Scott Fahlman

    You make an interesting point. The late Herbert A. Simon, one of the founding fathers of my field of Artificial Intelligence, actually gained his initial fame for reminding the economics profession that humans and organizations are not the purely rational beings of their models, always maximizing their economic advantage in an efficient way. Instead, they exhibit “bounded rationality” — a term he coined to indicate that they do try to be rational much of the time, but this is limited by their power (or the time available) to really consider all aspects of a problem, plus limited information, plus built-in biases, plus sometimes conflicting (maybe unconscious) goals.

    And in complex domains, humans and organizations seek “satisficing” solutions (another Herb Simon word). It means that you don’t insist on ideal solutions, but ones that are “good enough”.

    Herb won the Nobel prize in Economics for this work, and spent the rest of his career trying to understand how that imperfect human intelligence actually works. His work has been very influential among some economists and students of organizational behavior, but there is constant back-sliding into models that are clean, mathematically elegant, and assume rational behavior.

    It seems that academics and organizational theorists are irrational in their preference for unrealistic models that assume pure rationality, even though they know better if they stop and think about what really goes on. Rationality is not even a good approximation to what really happens in many real-world situations with mostly-sane people, which clinical psychologists (like Leandro in his previous life) know all too well.

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