Attribution Error and Management Fads

7 August 2006 at 2:00 pm Peter G. Klein Leave a comment

| Peter Klein |

James Surowiecki on the changing fortunes of Airbus and Boeing:

What much of the talk about the inherent weakness of Airbus ignores is that, just a few years ago, it was Boeing that looked fundamentally flawed, while Airbus was seen as the future of the industry. . . . The problem with such prognostications is that they infer basic truths about a company’s prospects from its short-term performance. In fact, present success is often determined as much by context and chance as by fundamental viability. . . .

People are generally bad at accepting the importance of context and chance. We fall prey to what the social psychologist Lee Ross called “the fundamental attribution error” — the tendency to ascribe success or failure to innate characteristics, even when context is overwhelmingly important. . . .

Because we underestimate how much variation can be caused simply by luck, we see patterns where none exist. It’s no wonder that management theory is dominated by fads: every few years, new companies succeed, and they are scrutinized for the underlying truths that they might reveal. But often there is no underlying truth; the companies just happened to be in the right place at the right time.

Via Daniel Drezner. N.B.: While I can’t top Nicolai’s restaurant story, I’ll note that I was a college classmate and friend of Surowiecki at UNC-Chapel Hill. I didn’t anticipate Jim would become a brilliant business writer — but then again, who knew I’d turn out to be a brilliant organizational economist? (Insert your own punch line here.)