In our new white paper, Embracing Legal Department Transformation with Technology, we investigate the new legal department landscape and how a legal service request solution is a key player in the makeover. But this blog focuses on one section in this paper, “The Case of Consensual Neglect,” which we feel deserves a bit more airtime.
Successful transformation with technology usually comes with a price tag attached. Those who are willing to put in the time, effort, research and money likely stand a better chance of success than those who skimp on any or all of these four factors. Which brings us to another point on the spectrum where we find people who insist on being committed to an irrational or failing strategy. In some cases, the strategy in question was once successful, which can add salt to the wound by means of the “sentiment” factor. In the Harvard Business Review Professors Freek Vermeulen and Niro Sivanathan detail a number of biases that explain why leaders stay committed to failing strategies. Dubbed “consensual neglect” by Karl Weick of the University of Michigan this is a very real phenomenon that hurts businesses in the near and long term:
In combination, these biases lead a company’s decision makers to ignore signals that their strategy is no longer working. It is what Karl Weick, of the University of Michigan, calls consensual neglect: the tendency of organizational decision makers to tacitly ignore events that undermine their current strategy and double down on the initial decision in order to justify their prior actions. 1
Here are six of the most common biases as described by Vermeulen and Sivanathan: 2
- The sunk cost fallacy, in which people focus on the investment already made in a particular course of action and hope that, if the approach is continued, invested costs will be recouped and the prior investment decision vindicated
- Loss aversion, in which people prefer to gamble on the future success of a previous commitment to a currently questionable strategy – even if it means the investment of additional resources – rather than to incur an immediate loss by changing direction
- The illusion of control, in which people regularly overestimate their ability to control future events, thus reinforcing the first two biases described above
- Preference for completion, the inherent bias of people toward completion of tasks, such as seeing a particular course of action through
- Pluralistic ignorance, in which people who might disagree with a particular course of action remain silent because they think they are the only dissenters and that everyone else is on board
- Personal identification, in which people perceive that their identities and social status are tied to their commitments and that withdrawing their support for a course of action they previously approved would risk loss of reputation or status
According to research, this phenomenon of consensual neglect is fixed deeply in our brains, making us more apt to stay the course with a particular strategy – even when it is clearly not the best, or even failing. Worse yet, some companies will double down on their old strategy instead of trying something new, sending them further into a downward spiral. This can easily apply to every facet of a company, but we’re focusing on driving technology transformations. Again, the right technology is readily available to those who genuinely want to avoid falling prey to consensual neglect.
1, 2 Freek Vermeulen and Niro Sivanathan, “Stop Doubling Down on Your Failing Strategy – How to Spot (and Escape) One before It’s Too Late,” Harvard Business Review, Nov.-Dec. 2017, at 110-17.