Organizations aspire to immortality. Few achieve it, but the mindset persists. I was thinking about this in the context of the various organizations I’ve worked for over the years. Many of them no longer exist; names changed, organizations shut down, organizations absorbed into other organizations. The life cycle of modern organizations is shortening.
One of the driving forces that took me out of the workforce and back to school for the third time was seeking to reconcile the rationality of technology and the irrationality of behavior in organizations. I needed to step away from the noise to see if there were patterns I could discern.
Midway through the process, I recall a conversation with my advisor. Had I revised my opinions about the irrationality of organizations?Â
Herb Simon was a Nobel-prize winning economist who had explored this very question and had come up with perspectives that helped. Here’s what Simon argued. Organizations and the decision makers within them want to be rational but there are limits on their capabilities. Rationality is bounded by various limits on our capacity to process and make sense out of information.Â
The mythology of business and economics is that decision makers seek optimal solutions. Business language is littered with superlatives; “best”, “fastest”, “cheapest”, “newest”. Mostly harmless in advertising and marketing circles where we presume a certain amount of puffery. Not so harmless in other settings. Simon’s argument was that decision makers “satisfice”; they make a good enough decision with the time and data available. You don’t give up on the goal of optimal choices. You do accept that they are a theoretical ideal, not, generally, an achievable goal.
This matters for knowledge workers because the mythology remains pervasive. Knowledge work feeds into decisions. Those doing the work recognize the limitations of their analyses that leave us short of ideal answers. Those making the decisions are too often predisposed to ignore those limits. It can take courage to be vocal about what you don’t and can’t know.Â