Business Exposed8
were, four reasonably sensible people who, of our own volition,
had just taken a 106-mile trip across a godforsaken desert in a
furnace-like temperature through a cloud-like dust storm to eat
unpalatable food at a hole-in-the-wall cafeteria in Abilene, when
none of us had really wanted to go!”
Of course, this phenomenon is not restricted to people in Texas.
It happens in the world of business too. Professor Jim Westphal,
from the University of Michigan, uncovered evidence of the
Abilene paradox among boards of directors. He collected data on
228 boards of medium-sized American public companies using
a variety of databases and questionnaires. He found out that
outside directors often did not speak up against their company’s
extant strategy, even though they had serious concerns about
it. At the same time, they greatly underestimated the extent to
which their fellow directors shared these concerns! As a conse-
quence, underperforming companies undertook fewer initiatives
to change their strategy, and they persisted with their failing
course of action.
That’s the Abilene paradox. Nobody may think we’re sailing a
good course, but if nobody is willing to rock the boat – thinking
we’ll be the only one – we may end up continuing as is, until we
all go under.
Same same but different
But that is not to say that we do not like being different, and
doing something different. It is just a bit risky.
Normal people – you and I (well . . . at least you) – have an incli-
nation to conform to certain peer groups, in the way we dress,
speak, which music we like, how often
we brush our teeth, buy a car, or go on
a holiday. Yet, as normal people, on
the other hand, we also like to stand
out from the crowd (if just a little bit).
It’s known as “optimal distinctiveness
theory”.
‘‘
We also like to
stand out from the
crowd. It’s known as
‘optimal distinctiveness
theory’.
’’
91
n
Management happens
And sometimes CEOs are just like normal people.
Some years ago, I was working with an executive (who will remain
blissfully anonymous) in charge of expanding his company into
foreign markets, mainly through acquisitions. We analyzed his
strategy and various market characteristics, through which it
became obvious that the Scandinavian market, in his line of
business, appeared to be particularly attractive. Yet, he clearly
did not even want to think about entering this area. When I
persisted in probing why, his answer was frank: “Look, none of
my major competitors are active in that market, so there must be
something wrong with it.”
I was slightly stunned, but that was the end of it. Until, a few
months later, I ran into him again. Having asked what he had
been up to, he answered, “I’ve just entered the Scandinavian
market”. Upbeat, I asked him whether my advice had nally
convinced him. His reply was, “Not exactly . . . it is just that [my
biggest competitor] has just entered the Scandinavian market, so
it must be a good place after all.”
I am not making this up, or even exaggerating (for a change).
Was he unusual in this behavior? I think he was unusual in terms
of the frankness of his admission, but not so much in terms of
his behavior. As I said, one of the biggest inuences on strategic
decision-making – if not the biggest inuence – is imitation. We
do what others do around us. Academic research has indicated
over and over again the prevalent nature of imitation among
a wide array of management decisions, such as the adoption of
conglomerates, choice of location when entering foreign markets,
implementation of performance management programs (such as
ISO 9000 or Six Sigma), product market entry, matrix organiza-
tions, and so on. Yet, like individuals in everyday life, CEOs
don’t like just doing what everybody else is doing; sometimes
they just want to do something a bit different. For example, I
recently analyzed a large database of about 800 companies in
the pharmaceutical industry, focusing on the breadth of their
product portfolio, and the statistical results clearly indicated
that companies sometimes also choose to do the exact opposite
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