Business Exposed126
to their movies, such as budget, promotion efforts, number of
screens on opening day, favorable timing in the year (e.g., around
Christmas many more people go to the cinema). What they
found was striking: the reason why those movies that the execu-
tives had high hopes for beforehand indeed did become successes
could 100 percent be explained by the fact that the distributors,
in their subsequent allocation of resources, signicantly favored
them.
When Sorenson and Waguespack, in their statistical analysis,
corrected for the fact that distributors assigned so much of their
scarce resources to those movies, it turned out that the execu-
tives’ assessments were completely wrong; those movies usually
did comparatively worse at the box ofce! The only reason why
the movies that they had rst thought would become successes
indeed did reap “prots” is because they assigned more resources
to them. Yet, they would have been better off assigning the scarce
resources to the other movies. The executives’ prior beliefs were
false; they just seemed correct afterwards due to their own, self-
conrming actions.
Do such self-fullling prophecies only exist in
Hollywood? My guess is not. Self-conrming
dynamics abound everywhere. Human beings
develop prior beliefs about what will work and
what won’t, and subsequently (unconsciously)
work hard to make sure they’re right. And,
after all, top managers are only human too.
Your expectations manage you
Self-fullling prophecies can be found in various forms in
the religious tales and texts in many cultures (e.g., Greek,
Indian, Arabic). They also often feature in fairy tales (Enron
comes to mind) and psychology studies. For example, when
teachers are led to believe that a particular student has great
potential, the student often will begin to outperform his
peers. This is simply because extra attention from the teacher,
‘‘
Human beings
develop prior beliefs
about what will
work and what
won’t
’’
1276
n
Myths in management
the student’s subsequent surge in self-condence, positive
feedback from the initial results, and so forth, actually make
the (in reality ordinary) student perform better. The famous
sociologist Robert Merton rst labeled this effect a “self-
fullling prophecy”.
And the world of business – and the economy in general – is
rife with them. Let me give you another example. It concerns a
study that was conducted in the 1970s by Professor Albert King,
at the time a professor of management and industrial relations at
Kansas State University (also summarized aptly in The Production
of Knowledge by Bill Starbuck).
Albert conducted an experiment in four different plants owned
by the same company. The managers of plants 1 and 2 were
told, by the company’s director of manufacturing, to experi-
ment with “job enlargement” practices, in which machine
crews had to both set up their machines and inspect their own
nished work. The other two plants, 3 and 4, were asked to
implement “job rotation” practices, in which workers switched
tasks at scheduled intervals. Thus, Albert’s experiment appeared
to be comparing the results of job enlargement with those of
job rotation.
Then Albert did a cunning thing: he lied. Because he introduced
one other crucial difference between the plants. The managers of
plants 1 and 3 were told that past research implied that the job
changes would raise productivity, while the managers of plants
2 and 4 were led to believe that past research implied that the
job changes would improve “industrial relations” (which should
result in lower absenteeism).
Subsequently, for a period of 12 months, Albert measured both
productivity and absenteeism levels at the four plants. Analyzing
the data, it turned out that where the plant managers had been
told to expect higher productivity, productivity became 6 percent
higher; where the plant managers had been told to expect better
industrial relations, absenteeism was 12 percent lower, regardless
of whether they implemented job-enlargement or job-rotation
practices!
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