Top 10 IT Strategy Failures
1. Overconfidence.
This includes excessive confidence in the ability to make accurate estimates. A common manifestation is that most people are reluctant to estimate a wide ranges of possible outcomes and prefer to be “precisely wrong rather than vaguely right.” Findings include the observation that most tend to be overconfident of their own abilities. For organizational strategies based on accurate assessments of core capabilities, this can be particularly troublesome.
2. Optimism.
People tend to be optimistic in their forecasts. A combination of overconfidence and overoptimism can have a disastrous impact on strategies based on estimates of what may happen. Typically, these estimates are unrealistically precise and overly optimistic.
3. Anchoring.
Research shows that once a number has been presented to someone, a subsequent estimate of even a totally unrelated subject involving numbers will “anchor” on the first number. Though potentially useful for marketing purposes, anchoring can have serious consequences in developing strategies when future outcomes are anchored in past experiences. Status quo bias. There is a strong tendency to stick with familiar approaches even when they are demonstrably inadequate or ineffective. “The devil you know is better than the one you don’t” illustrates this penchant. Research also indicates that concern with loss is stronger than excitement about possible gain.
4. Endowment effect.
This is a similar bias for people to keep what they own and that simply owning something makes it more valuable to the owner.
5. Mental accounting.
Defined as the inclination to categorize and treat money differently depending on where it comes from, where it is kept, and how it is spent. Mental accounting is common even in the boardrooms of conservative and otherwise rational corporations. Some examples of this include being less concerned with expenses against a restructuring charge than those against the profit and loss; imposing cost caps on a core business while spending freely on a start-up; and creating new categories of spending, such as “revenue-investment” or “strategic investment,” as if the name impacted the amounts or justification.
6. Herding instinct.
It is a fundamental human trait to conform and seek validation by the actions of others. This can be observed by the “faddism” in security as evidenced by the sudden adoption and deployment across industries of identity management or intrusion detection. It is based in the fear of being left out and missing the boat. Executives often make decisions based on what everybody else is doing. It is aptly demonstrated by one pundit who quipped, “For senior managers the only thing worse than making a huge strategic mistake is being the only person in the industry to make it.” The implications for strategy development are clear.
7. False consensus.
The tendency for people to overestimate the extent that others share their views, beliefs, and experiences. Confirmation bias. Seeking only those opinions and facts that support one’s own beliefs.
8. Selective recall.
Remembering the facts and experiences that reinforce current assumptions.
9. Biased evaluation.
Acceptance of evidence supporting the preferred hypotheses while challenging and rejecting contradictory evidence; often accompanied by charging critics with hostile motives and impugning their competence,
10. Group Think.
The pressure for agreement in a team-based or consensus-oriented culture. False consensus can lead to ignoring or minimizing important threats or weaknesses in plans and persisting with doomed strategies.
