In this latest issue of Harvard Business Review, October 2009, the first article that I find interesting is one written by Michael J. Mauboussin, entitled "When Individuals Do not Matter" and here I review.
The article begins with a quote from Deborah Gordon, a biologist at Stanford, "If you look at an ant trying to do something, you might be surprised at being inept ". This is an idea that there is nothing revolutionary, almost everyone knows that an ant colony, as a company or corporation is more capable than any of its members . Under the systems approach we can say that a system is more than the sum of its parts sentence I remember in college we used to repeat to fatigue.
executives today often make some common mistakes that originate in an erroneous understanding of how systems work (not just the computer). One can not understand how a complex system by watching a few individuals or elements.
The first mistake is to extend the behavior of individuals to explain collective behavior. Mauboussin has once heard that the earnings per share were the key to determining the price of the shares in the future. Then he saw studies by financial economists concluded that cash flow was more important in determining the stock price. The first focused on the components, the other in the aggregate result was finally proved that the second approach was correct, especially because the market is capable of generating very good prices, even though each participant has little information. It is risky that an executive is guided by the behavior of individuals who tend to favor short-term gains, which may end up harming the value contributed by the shareholders at the company. A survey by Duke University showed that 80% of the CFO (Chief Financial Officers) would reduce spending to create value in the future as to meet a goal of earnings in the short term.
The second error is usually not recognized that changes in one component of a complex system may have consequences for the system as a whole. For example, the U.S. government's decision to let Lehman Brothers colapsse in September 2008. Many thought the market would understand the situation in which Lehman was, then the market itself would absorb the impact, however the losses were much higher than initially thought and this eventually affected parts of the market that they thought were safe, such as personal loans, money market and economies worldwide.
Finally an error that is usually incurred many companies, equipment, and entertainment businesses hire a star when they want to improve the performance of the organization quickly. However, many times, the stars do not meet expectations, mainly because they are separated from people, structures and rules that helped him become a star in the first place! A study of school harvard business found that when a company hires its performance falls a star also leads to a fall in the functioning of the working group and finally the value of the company falls.
All these errors have the same root, they mistakenly assume many things about the relevance of individual agents within a complex system. When you are thinking of achieving goals, must think very good change at the level of individuals, it is likely that these changes have an adverse outcome if we are guided by general beliefs generated from the experience of individuals.
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Based on the article by Michael J. Mauboussin - When Individuals Do not Matter - Harvard Business Review in October 2009.
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