Stupidity Paradox

About the book

Book author: Mats Alvesson & André Spicer

The book is about dysfunctional processes in organizations. Why and how smart people are working stupid.

Reflection and takeaways

I thought this book was pretty boring to be honest. The academic authors look at mostly private organizations and think “Hey!! They’re acting stupid!!”. But they can’t tell you why. They just look at a bunch of cases and say, “look how stupid this is. This manager is doing this stupid thing, he doesn’t realise his underlings aren’t approving of his methods!” or “This airline wanted to rebrand, but it was a bad rebrand, so they had to repaint all their airplanes back to the old color! So stupid!”.

They miss the forest for the trees: I can tell you precisely why this happens.

In almost every organization, employees have no skin in the game. Input is completely completely decoupled from outcome, and usually there is very little accountability. You actually think it’s shocking someone works for 40 hours with an internal PowerPoint? Well, then they don’t have to do something else for 40 hours.

https://www.youtube.com/watch?v=DYvhC_RdIwQ

They coin a term, “functional stupidity”, which is their name for “the lack of critical reflection of what the f*** you are doing”. They claim “functional stupidity” caused the financial crisis of 2008 and are surprised “how could we let this happen”. I think it’s more human in nature. Most bank people, and probably most quants, knew CDO’s were dogshit. However, they made several $100K to $millions every month, and knew they had no downside exposure. So they didn’t exactly jump out of bed to fix the problem, and abandoned “civic accountability”. You’re living in a palace and someone else is footing the bill – do you point out all the problems and want it to stop?

I think Nassim Taleb’s book “Skin in the game” is a much better take on this entire domain, because it explains everything in this book with a much better framework. All of this book is just a consequence of no skin in the game. That’s how you should understand it. I like how our ancients did it: if you built a bridge, you had to live under it for a week after it was completed. How many workers do you think did a sloppy job?

What I did like about the book was this word: planfetischist. There are people that like plans in most organizations, and believe reality adapts to the plans. Just because you have a plan, it doesn’t mean reality will follow it. And it rarely does. My take on this is: would you want to go into the wilderness and trust a map that you know is somewhat wrong, or would it be better to just prepare and pack and assume things will go wrong, but you will be prepared? I’m the latter type.

Another bit was about: back in the day, you only used to care about the material of your chair or table, it’s robustness, comfort, that it was moderately priced and if it did it’s job. The last thing you cared about was who made it. But today, because there is so much more production than consumption, we have luxury and designer brands. It’s more important that a chair costs a lot, rather than that it is comfortable. It’s a huge industry. I think about this a lot since I was in Vietnam. You pay $20 for a leather handbag there, but you pay $3000 for the same leather handbag here. But here it’s from a “good brand” (which consequently has their factories in Vietnam, so it’s really the same bag) and that is justice for the price tag. There is just too much money floating around. It’s really insane. I vow to never buy designer furniture.

Anyway, it’s a shame they write a full book on organizations and how they’re weird and have nonsensical processes in them, and not talk about incentives one single time.

Why did I pick it

A Christmas gift from my dad.

Verdict

2.0 /5. I wish I had read Skin in the game again.