With the Astros run to their World Series victory in late October, I was not able to finish my series on the classic Universal monster movies featuring The Mummy. So today, I want to round out the original Universal Picture series by focusing on 1944’s second offering of The Mummy, in The Curse of the Mummy. In this film, Lon Chaney, Jr. makes his final appearance as Kharis, The Mummy. He is in search of his long lost love over the ages, the Princess Ananka. For reasons unexplained, Kharis is now in Louisiana. Princess Ananka, who in present life is awakened and found lying unconscious on a road. Although apparently suffering from amnesia, she has incredible knowledge of ancient Egypt. Kharis tracks her down and in the final scene he pins a traitorous priest of the cult in a room with him and literally brings the roof down on the both of them. It certainly was the continuation of a failing strategy to regain his princess.
Perhaps Kharis was always doomed to destruction. He certainly did not appear again in a Universal picture until the pathetic Tom Cruise effort from the summer of 2017. It was so poorly received that the movie single handedly managed to kill off the projected new Universal monster movie series. All I can say is thanks, it would have been horrible. However one thing Universal Pictures did recognize was to stop on its failing strategy. Unfortunately this is something usually not well done in the corporate world. When it comes to the compliance function, it is better to recognize such a situation sooner, rather than later.
In a recent Harvard Business Review (HBR) article, Freek Vermeullen and Niro Sivanathan explored this phenomenon in their piece “Stop Doubling Down on Your Failing Strategy”. There are numerous reasons why failing strategies continue, which the authors dub the “escalation of commitment.” They include some of the following:
The sunk cost fallacy – where when making investment decisions, people often factor in costs they have already incurred. The hope is that if the project continues, the costs can be recouped, while the rational decision maker will look only at future costs, not at past ones.
Loss aversion – in this scenario, withdrawal from a course of action implies certain and immediate losses, decision makers often prefer to allocate more resources to continue with it—despite low expected returns—if they see any chance of turning the situation around.
The illusion of control – here senior managers notoriously overestimate their ability to control the future. Unfortunately, a prior success (or two) tends to amplify the illusion; people are quick to take credit for the outcomes of decisions and confuse having correctly predicted the future with having made it happen.
Preference for completion – people have an inherent bias toward completing tasks—whether that means finishing a plate of food or seeing a project through.
Pluralistic ignorance – people often remain silent because they believe they are the only dissenters and of course, everyone else interprets their silence as agreement. This can lead to all persons’ agreeing to a decision that no one believes in.
Personal identification – often employee’s identities and social status are tied to their commitments and withdrawal from a commitment may result in a perceived loss of status or a threat to one’s identity. Conversely, no executive likes to admit that a decision was wrong, because the ability to make smart decisions is part of what defines a good executive.
The best way to overcome these biases is through a robust procedure in your decision-making process. Always begin with a set of rules. Start with an objective criteria and if that cannot be used because there is not sufficient data, agree upon the non-numerical rules. Next is to pay attention to the voting rules, whether you vote conjunctively or disjunctively. This means you consider looking at the criteria separately rather than simply tallying people’s overall judgments. You must also provide protection for dissenters by making it safe for them to raise their concerns. This can be done by allowing anonymous feedback, increasing the diversity of those giving opinions and senior management modeling doubt to demonstrate it is an acceptable practice.
Another method is to expressly consider other options to frame the decision as more than one of simply binary alternatives. Consider bringing in a new team to implement a decision, separate and apart from the team which developed the solution, as this second team will not have the emotional investment in the initial decision and can more easily see if it is not working. Finally the authors suggest, “reinforcing the anticipation of regret” by two different methods. The first is to take a “temporal perspective” of considering what might go wrong with the decision or strategy. Another way to view this is “prospective hindsight” where you ask employees how something might fail. Another approach is to ask employees to take emotion out of the equation and step outside of themselves by putting themselves in different roles.
The authors conclude by stating “By its nature, an escalation of commitment is difficult to detect.” Kharis would seem to be the perfect example of doomed love over the ages, never realizing he cannot be reunited with Princess Ananka, rather like “overcommitted executives are prone to ignore signs of their company’s imminent collapse. That is precisely why companies need to establish organizational processes and practices of the kind we’ve laid out—to encourage managers at all levels to make decisions more objectively and explicitly consider alternative strategies and perspectives.”
By putting a process in place to test, check and then recheck the findings as a project progresses; you can place your organization in a better position to change things that are not working. The Department of Justice’s (DOJ’s) Evaluation of Corporate Compliance Programs would seem to echo that approach. It is more than simply what is the data and what does it show. It is how are you using the data? Have you incorporated it back into your compliance program to not simply test effectiveness but more critically improve effectiveness. This may be the final lesson from this year’s classic Mummy monster movie series.
The DOJ Evaluation suggests not just using data to determine effectiveness but also to increase effectiveness.Click to tweet
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© Thomas R. Fox, 2017