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Why relying on experience could actually harm your business

20 February 2015

The article at a glance

by Dr Kishore Sengupta, Reader in Operations Management at Cambridge Judge Business School In my dealings with leading organisations across many sectors, …

Businessman trying to stop falling graph

by Dr Kishore Sengupta, Reader in Operations Management at Cambridge Judge Business School

Dr Kishore Sengupta
Dr Kishore Sengupta

In my dealings with leading organisations across many sectors, I often see great stress laid on experience, as even the most casual search of advertisements for executives reveals. It is the touchstone for performance, and there is an abiding belief in the value of experience for learning.

However, our research reveals that managerial experience may not necessarily be such a powerful surrogate for learning – and in turn, performance. My work with hundreds of experienced executives managing complex projects, process improvement initiatives, performance evaluation and other organisational activities, shows that flawed mechanisms of experiential learning adversely affect not only the decisions that managers make but also their overall performance.

What affects performance?

This is principally because organisational environments are both complex and causally ambiguous, and there are two main factors that affect experiential learning.

The first factor is the time lag between a manager’s action, that action’s outcome and then the feedback on its outcome. Managers may understand there is inevitably a time lag but find it difficult to incorporate that delay into their mental models of how things work, which is too-often based on a simple environment in which there is no delay between a decision and result. So because we don’t take this into account, we find it difficult to link this cause and effect, let alone specify and understand it.

The subsequent, second factor, is that there is only partial visibility of the relationships that drive events, and managers must work with incomplete information. The result is that they frequently misinterpret relationships among factors that affect – and are affected by – their decisions.

It is useful to contrast such difficult learning environments with examples of where we learn from experience well. Consider, for example, our experience as a child learning to ride a bike. Because the feedback is immediate and unambiguous – we fall off and get a few bruises – we learn the lessons that enable us to improve pretty quickly.

Why does this matter?

So we learn well when the link between actions and outcomes is clear, when the feedback is complete and immediate, and when similar actions produce similar outcomes. None of these can be expected in a managerial decision-making environment. The overall result, therefore, is that the loop of experience is disrupted, and the danger is that we become causally ambiguous.

This matters not only because managers frequently end up learning the wrong lessons from a complex set of events, but also because these lessons are appropriated into practices that are used repeatedly. This causal ambiguity prevents managers from realising that the lessons – and therefore the practices – may be flawed. So as managers rise through the ranks or move across organisations, many of these flawed practices become embedded into the fabric of those organisations, and become difficult to change.

What can be done?

There are several actions that managers can take. First is an awareness of the fallibility of experience and its implications, followed by an acceptance of the importance of structured reflections before undertaking an important activity or initiative (such as organisational change or process improvement for example). In the process, managers should question their – and their colleagues’ – assumptions about the external environment, and collaboratively develop a better understanding of the complex environment in which they are operating.

The same approach can be used for after-action reflections in an attribution-free setting, a third action point for managers to consider. In the medical community for example, hospitals regularly use mortality and morbidity sessions where physicians come together, reflect on difficult situations such as a surgery gone wrong, and learn lessons – all in a setting deliberately designed for learning in a setting that is blame-free and free of implications for medical liability.

Finally, many organisations would also enjoy much more effective outcomes if they put people through “flight simulators” of business situations. Ineffective management is not just about learning the wrong lessons, but learning within the wrong context. If an airline has an excellent 737 pilot, it doesn’t rely solely on that experience and put him in a 777 without any training. But businesses assume you can do that. Just because someone succeeds on a small scale, the experience alone will not enable him/her to succeed with a different and more complicated brief unless they can change their mental model. Few organisations offer “flight simulation” – yet thinking about what could and will go wrong, and having the systems in place to recognise such patterns and deal with them when they occur, is clearly much more constructive than failing to offer it and then having disaster strike, followed by an attributional inquest.

Managers must improve their mental models and use guidelines and rules of working based on evidence – heuristic techniques based on rule of thumb or simple common sense. Too many projects or other commercial activity fail because managers wrongly believe experience is everything. Successful management is deterministic and execution driven. It’s about planning in activities, not scenarios.

Businessman on the ropeOn 3 March Kishore will be discussing practical steps that organisations and managers can take to avoid the pitfalls and improve experiential learning at our Cambridge Judge Business Briefing in London.