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From Illusion of Control to Realistic Assessment:
Three Steps to a Healthier Organization

We recently came across some interesting and relevant research. A team of
researchers found that investment bankers who were prone to a high illusion of
control had significantly worse performance on analysis, risk management and
contribution to desk profits. They also earned significantly less.

Why? The researchers noted that the illusion of control may cause insensitivity to
feedback, impede learning and predispose toward greater objective risk taking
(since subjective risk will be reduced by illusion of control).
Fenton-O’Creevy, M., Nicholson, N. and Soane, E., Willman, P. (2003) Trading
on illusions: Unrealistic perceptions of control and trading performance. Journal
of Occupational and Organisational Psychology 76, 53-68.

Even though the study focused on one industry, one glance at today’s headlines
demonstrates the tenacity and costs of false illusions.

So, as leaders, what do we do to build a healthy sense of reality in our

You will not be surprised when we say the answer is staring you in the face: the
Baldrige Criteria for Performance Excellence. The Criteria have been essentially
idiot-proofed through two decades of field testing and implementation and will
guide any organization beyond illusion to reality. The heavy lifting has been done,
but there are three keys to achieving the full benefits of this open source
management technology.

Key 1: Eliminate fear from your organization

A culture of illusion builds up slowly over time, deception by deception. Fear feeds
this process. Fear in organizations takes many forms, but the common thread is
that conditions exist that inhibit the direct, honest, and open exchange of
information. Books have been written on this topic and we will not continue here
except to say that the essential first step for any organization committed to the truth
is to step up and begin the liberating process of eliminating fear in all of its
manifestations. Hint: have an external facilitator run a quick 360-degree feedback
loop on your management cadre to smoke out some early opportunities.

Key 2: Make the time to understand the why

Drive-by management fosters an illusion of control. Insist on knowing why and how
things are happening in your organization. This requires true engagement with the
people and systems getting things done. How many people are on the extended
team you work with every day: colleagues, customers, suppliers, partners, and
stakeholders of all kinds? What is the extent of your engagement with this team?
Yes, everyone is busy. Yes, it is hard to “find the time” to understand the why. But
this is one of the essential elements of reality-based excellence. Hint: this
engagement requires more than emails.

Key 3: Conduct an objective self-assessment

As fear and misunderstandings begin to subside in your organization, a wonderful
thing happens: you begin to learn more and more about the real underlying
complexities and challenges of your organization and the environment you are
operating in. It is like an ice dam breaking up: information from customers,
suppliers, and employees that was previously hidden starts becoming openly
available and discussable. Strategic planning gets smarter. Waste gets exposed
and processes get leaner. At this point you want to sustain the momentum by
conducting an organizational self-assessment. Why? Because every organization
that we know of that ended up “great” began the process when they were not
“great” in any sense. But they knew HOW to improve… this is the key. Annual self-
assessments will serve as a checkup for your organizational health. Find your out
of the box thinkers, give them some criteria to work with, and show the flag of
support at all times. Take the results, analyze, act on the most important findings,
rinse, repeat.

Congratulations! You are on your way to being the reality-based organization you
must be to have a prayer of surviving in the rough and tumble environment of a
capital-starved, resource-constrained, globally competitive 21st century. False
illusions will not cut it.

Nobody can predict the future. But everyone can prepare for it.