Cognitive dissonance – An ally of innovation? - Jose Baldaia

“Companies cannot achieve superior and lasting business performance simply by following a specific set of steps.

Over the past decade, some of the most popular business books have claimed to reveal the blueprint for lasting success, the way to go from good to great, or how to craft a fail-safe strategy or to make the competition irrelevant.

At first glance, many of the pronouncements in such works look entirely credible. They are based on extensive data and appear to be the result of rigorous analysis. Millions of managers read them, eager to apply these keys to success to their own companies. Unfortunately, many of the studies are deeply flawed and based on…” - Phil Rosenzweig mckinseyquarterly.com

The thought of our business is made up of illusions, logic errors and the trials failed to distort our understanding of the real reasons why is that the performance of an organization.

When, for example sales of a company and profits are high, people conclude that this organization has a strategy overwhelming, a leader with extraordinary vision, employees full of talent and a great culture that prevail even innovation.

But when the results are not as good under a lesser performance, then the leader after all was not as good, people do not cooperate and the culture was fictional.

What often happens is that little has changed, but the image created earlier creates a halo effect, which is but an illusion.

The truth is that there is a concern with the quality of decision-making confirmed with research indicating that cognitive biases affect the most important strategic decisions taken by the managers of the best companies.

Consider two cognitive biases that are common and relevant in an economic context, where innovation is the word of the day:

- Overconfidence and cognitive dissonance. One and the other can bring discomfort, or maybe not.

An individual who has overconfidence overestimates the precision of their private information.

Cognitive dissonance occurs when we perceive a mismatch of information elements and create the propensity to acquire and understand information in accordance with a set of things we want.

If a consultant or an analyst issues a forecast in favor of private high profits their tendency is to interpret subsequent information in order to create lift to information previously provided.

There is however a flip side of cognitive dissonance that Javier Santiso , a professor at ESADE, and brings with much graciousness , and relevance. (Or maybe I’m with cognitive dissonance!)

“Yet perhaps the key to this successful repositioning lies precisely in the IMF’s ability to regenerate and subvert itself, i.e. to exhibit cognitive dissonance and innovation, not only by tolerating this internal dissonance, but rather by promoting it (Blanchard’s hire alone evidences this audacity).

This is a feat of great merit, since whether public or private, national or international, none of our institutions tend to favor dissonance. Very much on the contrary, they tend to limit disruptive, innovative potential.”

And he said something that I fell a good point of discusiion:

“Cognitive dissonance is as rare and precious as a white pearl. It is key to promoting innovation and to reinventing oneself.

Since antiquity, we have seen that cognitive dissonance is a difficult path to tread. Alejandro Aménabar’s recent film, “Agora,” reminds us of this, telling the story of the female astronomer, Hypatia of Alexandria, who was carved up and burnt over 1,600 years ago for being a thinker considered to be (too) independent and dissonant.”

The global crisis should inspire our sense of humility. We need more humility to look at the world , particularly in the emerging world . “- Javier Santiso

What do you think?