Bill Knight - March 29
11:48 am
Wed March 28, 2012

The Cure for Corporate Stupidity

The mere title of Larry Bloom’s decent trade paperback – The Cure for Corporate Stupidity: Avoid the Mind-Bugs that Cause Smart People to Make Bad Decisions – might attract anti-corporate types tempted to accumulate more ammunition to bolster existing attitudes against the powerful business structure. But its contents would most benefit business managers who want to prevail and do good work while avoiding mine fields. Or, “mind” fields, with a “D.”

Corporations are a natural breeding ground of “Mind-Bugs,” according to Bloom, and the responsibility of leading a corporation too often is confined to maximizing short-term profits without considering long-term consequences. Corporations aren’t moral nor immoral. They are artificial legal structures set up to serve and protect stockholders. But their practices – led by management – have consequences, for workers, executives, vendors, customers and the communities where they operate. And the operations don’t occur in a vacuum.

The corporate environment encourages flaws in managers’ thinking, flaws that Bloom calls “Mind-Bugs.” Just like software has bugs, there are bugs in how corporate leaders think and make decisions, and they cause “corporate stupidity,” harmful decisions that are made when people simply could have known better.

Bloom, who calls himself a “recovering CEO,” realized this after decades helping grow Bio-Lab, Inc. to more than $700 million in revenue and a 20+ percent return on investment. Educated as chemical engineer, Bloom spent his career achieving business success but also making mistakes and learning from them before retiring in 2006 at age 57. Since then, he’s researched corporate management and applied his experience to come up with business-friendly tools and practices to avoid the pitfalls in the corporate world.

He says, “Whether it’s a small business or multi-national conglomerate, employees are constantly faced with the problem of making the best possible business decisions in a rapidly changing, highly competitive, capacity constrained environment. Today’s stressful business environments are not conducive to making good decisions. This book helps people detect Mind-Bugs as part of their daily routines to reduce risk, improve results and avoid faulty decisions.”

Presented in four sections, The Cure for Corporate Stupidity includes more than 160 references and citations across 12 fields and proposes topics that can help create an organization that’s in command of its thinking. Most important are his concepts of Mind-Bugs: dimensions of Sufficiency, Accuracy, Beliefs and Social aspects. Bloom sees them as driving or derailing reasoning, and he describes them thusly:

Sufficiency: The requirement to make decisions based on both relevant and significant information of adequate breadth and depth; Accuracy: The requirement to make decisions based on clearly defined, reliable, factual, precise and fair information; Beliefs: The requirement to consider the influence of one’s own point of view; and Social: The requirement to consider the influence of the group’s definition of reality.

Bloom adds, “I am quite passionate about the responsibility of leadership to create an organization that has a quality control process for its thinking.”

Researchers from the INSEAD Business School wrote “The Spirits of Corporate Social Responsibility: Senior Executive Perceptions of the Role of the Firm in Society in Germany, Hong Kong, Japan, South Korea and the USA” based on a survey senior executives who were asked to articulate thoughts about corporate responsibility in general, and in particular to distinguish between two types of corporate charity: implicit (“our goods benefit society”) and explicit (“we contribute to charitable causes.”)

Hong Kong executives embrace explicit standards of corporate responsibility, with 60% mentioning “charity” as an obligation of successful corporations. Just 14% of U.S. executives mentioned “charity” and positioned society as a “constraint” to be overcome, and they were “unusually clear in assessing societal concerns as secondary, with primacy accorded to shareholder interests.” Further, only 40% of financial-sector executives in the United States alluded to the importance of society or community.

Researchers said, “At the root of the financial crisis may not only have been insufficient regulatory oversight, but also a proliferation of financial executives with possibly deviant value systems.”

Acknowledging and addressing such American deviance – surely another Mind-Bug that leads to bad business, bad employee or community relations, or all of the above – is necessary, too.

Maybe that would result in a cure for much more than stupidity.

Bill Knight is a freelance writer who teaches at Western Illinois University. The opinions expressed are not necessarily those of WIU or Tri States Public Radio