How Noisy Is Your Company? A lot and It’s Costing You

To me, a leader’s biggest nightmare is being completely wrong about how people throughout the organization are making all of the decisions they make every day, with the company’s resources, in the name of the company, affecting the company’s today and tomorrow.  How right or wrong are you about what people in your organization are deciding?

Are people in your organization, your community, making the decisions you think they are?  Are all of the decisions they make for your organization aligned with the same purpose, values, attention, and actions that you think you all agree on?  How much variance is there in judgments they make, even in the same exact situation, every day?  How much is this variance in judgment costing your company?  Ever-brilliant Daniel Kahneman, Olivier Sibony, and Cass R. Sunstein show, in their new book Noise, that you are very probably way off in your estimate.

Fathers of behavioral economics, they show how a straightforward audit can give you a good sense of how “noisy” your organizational decision making is, where noise is simply unwanted variability.   The audit is straight out of the decision sciences.  What’s new, once again from these serial clarifiers, is the simplicity of the term “noise,” in what it is, what causes it, and its impacts.

The audit is straightforward, as is the solution.  Ask, listen, measure, adjust.  From an ecosynomic perspective, this is pretty obvious.  And, these Nobel-prize, White House Office authors show that most organizations are not doing this, and they could.  The costs are huge, the benefits are huger, and it’s a choice you can make now.

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