Innovating Leadership:
Co-Creating Our Future

Resources:

Mats’ book, The Stupidity Paradox, is available in paperback at https://amzn.to/3SaNWzU.

The other book he mentioned, The Art of Less: How to Focus on What Really Matters at Work, is available in hardback at https://amzn.to/4a7yOt9 and on Kindle at https://amzn.to/4eANySA.

Our host Maureen Metcalf posts a newsletter every week on LinkedIn. You can subscribe here. 

Maureen’s latest book is Innovative Leadership & Followership in the Age of AI. You’ll find details about it at https://bit.ly/LeaderInAI, or check out the Kindle version at https://amzn.to/44buVz8. The audiobook version is now available at  https://amzn.to/4dTCleZ.

Her other 10 books are available on Amazon here.

Other episodes you’ll enjoy:

• How Inner Work Transforms Your Leadership: Tools for Growth with Jonathan Reams
• How to Avoid the Bad Leader Trap with Barbara Kellerman
• Navigating the Global Storm: Rethinking Leadership for the Future with Cynthia Cherrey

Guest(s):

Guest(s) Bio:

Professor Mats Alvesson is a Swedish management scholar and Professor of Organizational Studies at Lund University. Widely regarded as one of the most influential thinkers in organization and management studies, his work focuses on leadership, organizational culture, identity, power, critical management studies, and organizational irrationality. He is best known for developing the concept of functional stupidity: the tendency of organizations to suppress critical thinking and reflection despite employing highly intelligent people. Alvesson has authored more than 30 books and hundreds of scholarly publications, including The Stupidity Paradox, The Art of Less, Changing Organizational Culture, and Constructing Research Questions. He was elected an International Fellow of the British Academy in recognition of his contributions to management and organization studies.

Transcript
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Maureen: [00:00:00] Hi, welcome to Innovating Leadership: Co-creating Our Future. I’m your host, Maureen Metcalf. I’m joined by Dr. Christopher Washington, who is our co-host, and Professor Mats Alvesson. So every senior leader believes their organization makes good decisions. Most are wrong, not because they lack intelligence, but rather because something in the system has quietly made intelligent people stop using it consistently. 

Today, we’re gonna name exactly how this is happening and what it costs. 

So welcome to both of you.  

Christopher: Thank you, Maureen. Mats, I wondered if you could just start us off by describing your idea of functional stupidity. What is this, and why should we be concerned about it? 

Mats: Yeah. Functional stupidity means that people often tend to constrain their thinking. We think within boxes. in the ideal world, we are [00:01:00] reflective, we are very thoughtful, we think about different issues, we are good at critical thinking, we listen to various viewpoints, et cetera, and then we make well-thought-through decisions. 

But in real life, we tend not to be like that. So in many ways, then we, um, tend to follow the horde. We follow conventions. we imitate others. We go with the flow in different ways. We follow fashions. We are seduced by, uh, impressive language into wishful thinking, et cetera. 

Which means that, uh, we are not as smart, clever, perceptive, or thoughtful as we may imagine that we are. And this is, of course, part of human nature. We are social animals. We look at others, what are they doing. We imitate them. 

We like to make friends with people. We like to have simple solutions on issues. We don’t like to make things too complicated, and that means that sometimes we just tend to be a bit stupid.  

Christopher: Mats, in your research, are there some common ways that functional [00:02:00] stupidity shows up in organizations today?  

Mats: Most organizations, they tend to incorporate quite a lot of systems, structures, procedures, arrangements. Some of this is being imposed by legislation. 

There are a lot of people that propose solutions for everything, so that means that a lot of organizations, they tend to overdoing quite a lot. They are over-managed. They are over-structured. They have too many policies too many ambitions , and that creates a lot of complexity. 

And within, uh, all that complexity, people, don’t get the overview. They don’t get the time to think through issues, and that reinforces then the types of stupidities that may be part of our human nature. Contemporary organizations, I mean, in many ways they are very smart and very rational, et cetera, but they also include quite a lot that tends to make us rather limited in terms of outlook and reflections and so on. 

So partly the matter of time pressures and all the complexities and all the noise in contemporary societies makes [00:03:00] that a carefully thinking, reflective person is not necessarily the hero of most companies.  

Christopher: Most people would get the idea of stupidity. We’ve seen that. 

We’ve probably experienced it. We maybe even demonstrated stupidity in different contexts but you talk about functional stupidity. What does that mean, functional?  

Mats: It’s not any kind of stupidity. So a lot of stupidity is that people are, um, just not using their small gray cells. 

Functional stupidity, that they’re using your brain power, your intelligence, your knowledge, your capacity, but doing that in a relatively narrow ways. So you adapt in a company to your level, division of labor. You work and think within the boxes. And the boxes, they can be a professional box: within our profession, we think like this, or it may be a part of the division of labor. So our unit, we think like this. Or top management may sometimes live in a world of PowerPoint presentations and [00:04:00] consultancy meetings, but not necessarily step out of that type of universe. 

And within the universe, within the box, then there are a lot of smart thinking people do the right things. They say the right things, et cetera. But there is very limited, or no effort to really transcend these limited boxes. And the functional stupidity means that you do things in such a way so that your nearest surrounding (people) think that’s really good. 

That’s clever. You’re doing, you’re saying all the right things. You’re doing all the right things, but you don’t step outside this kind of limited universe. It’s functional in a sense because it fits into the social situation. And people think this is good. So social relations, they are quite okay. 

And the part of the organization machine, which is functioning quite nicely, and people are relatively happy. But if you should go outside this and think more broadly about phenomena, then a lot of all these things seems to be rather stupid and perhaps counterproductive. 

Christopher: [00:05:00] Mats, one of the questions I’m exploring in my own work is why leadership systems lose decision velocity. And really what I’m referring to is the rate at which we move from, uh, making decisions or having ideas, identifying signals in the environment for change to making commitments, shared understandings, and ultimately execution. 

Today people are flooded with data, they have a lot of information, and yet they still have a hard time noticing, naming, and escalating these signals. And I wondered from your lens of functional stupidity, how you might interpret that.  

Mats: A lot of data should facilitate decision-making and make things work much better, but sometimes it’s the opposite effect. 

You have too much data. You have too much concerns, a lot of caution, a lot of people that really would like to be rational and play it on the safe side. So a lot of informations can sometimes be a showstopper and be a reason for people to postpone decision-making [00:06:00] and also be aware of different possible problems and difficulties. 

And with that, then you become a bit more hesitant. And with hesitation, recognition of all ambiguity, then things often tend to go a bit slower. And of course, sometimes all the systems that should shape up things and improve speed, they can have the opposite effect, particularly if there are too many of them, and people become too focused on really using them fully. 

Christopher: There’s an architecture of this, a process by which we sort of move from sensing to sense-making, to coming up with commitments through governance and execution, and yet there’s a psychology to all this. I wondered what your thoughts might be to help people overcome this, uh, sort of signal blindness or an inability to identify the information in our environment that suggests that we need to move outside of the box. 

We need to do something differently.  

Mats: Yeah. No, I think that sometimes, just having access to better sources, you talk to the right [00:07:00] people, you do something that make you feel a bit more comfortable, reduce your anxieties. You can get stories, you can get closer contact to specific examples of stuff. 

Christopher, what you’re pointing at is a really fundamental problems, and there are no quick or easy fixes. But sometimes we live in organizations that are full of rationalization efforts, and sometimes the solutions perhaps is to get more ground contact to see what’s happening, to talk with people, to move out of all these rationalized systems that are designed and to make things really functioning well, and then see if one could do things in quite different ways. 

Sometimes I think we could perhaps be a bit more imaginative and try different channels and different ways of working than those more standardized ones. 

Christopher: That’s very fascinating. So, when groups move from this idea of signaling and finding the proper signals that suggest that a change is needed, they often have to have a sort of common understanding among each other. And you talk [00:08:00] a lot about this notion of people sharing the same strategic language in the boxes they’re in, and yet have very different meanings attached to it. 

And I find that can result in a misalignment of leadership, and I wondered, what your thoughts are about that from your perspective.  

Mats: Christopher, I think it’s a very good point that sometimes we use the same words, but the words can have a very different meanings. Often there’s a tendency that we use words that sounds really good with a fantastically impressive PowerPoint presentation with a lot of pictures and, uh, the right keywords that can seduce any audience. 

And people then may not be so inclined to ask, “What do we actually mean by this?” And if you ask questions like that, which are very important questions often to raise, then there may be some embarrassment that people may not even have the answer to the question. And then they feel that now it’s a social embarrassment. So I think that there’s a tendency that we sometimes over-rely on saying the right [00:09:00] words, and then people sitting there nodding, but then we need to check, “What do you mean by this?” 

Christopher: You’re suggesting that there’s other incentives operating. So for example, rather than me awarding candor I’m seeking recognition for being positive. 

So I’m prioritizing positivity over candor or certainty over curiosity that might move us forward. Is that sort of the idea here?  

Mats: Yeah. That’s, nicely put. Lot of things in organizations, it’s not necessarily that you want to be very effective and, and doing the kind of right things in terms of producing results and so on. 

But it may be also that you like to protect yourself, your ego, uh. There’s a social order, a symbolic order that one like to retain. I mean, sometimes you have observations of executive meetings, and people come in there in a particular order. They sit in the right places. 

They say the right things. They speak in [00:10:00] line with the hierarchical position more than speaking in line with what they actually can offer in terms of credible or important viewpoints. In many cases there’s a struggle between what’s effective and, and what kind of sounds good and what is protecting of people’s egos, relations, the general order of an organization. 

Christopher: Your concepts sort of flow through our decision velocity model. We’ve talked about its impact on signal and signal blindness, on leadership misalignment, and now you’re bringing up this idea of escalation bottlenecks. You know, how I’m protecting the order of things, maybe prioritizing leadership theater over sense-making. And I wondered, given these escalation bottlenecks, for example: seeking senior approval when it’s really an opportunity for people close to the work to make decisions. 

Mats: Christopher, I think that’s a very astute and relevant observation. People tend not to take so much responsibility, [00:11:00] partly because of fear, but also partly because they think that the entire organization theater is made up of roles and role positionings, and then you’re supposed to do things just in order to confirm people’s positions and make everybody feel good about all this paying respect and so on. 

But sometimes we are overdoing this and could act much more, perhaps freely and independently, and here is where functional stupidity comes in. You can’t really imagine doing things differently from what is prescribed and what is ritualized. And often that leads to the kind of phenomena that you’re pointing at, that it becomes very slow and and very ineffective and, and the entire optimal flow is not really working as one would assume and hope. 

Christopher: I wonder if our organizations are systematically training or preparing people to distrust their own judgment.  

Mats: Many people in organizations, but particularly large organizations, you are used then to all the organizational levels. They have so many [00:12:00] rituals them producing people that are quite compliant and used to these rituals, performance management, reward systems et cetera, et cetera. 

So there’s a tendency that you just wait and see, and you don’t take so much of your own initiatives. With contemporary organizations, we’ve written a book called “The Art of Less.” Where we look at contemporary organizations, they are full of structures and systems and procedures and everything. 

So we talk about the all-inclusive organization. The all-inclusive organization. So whatever problem that may appear, there is a solution: the procedure, policies, arrangements, training, et cetera. And when you fill organizations with all this, just in case, because risk management, the lawyers may be after you, et cetera, then you produce people that are very cautious in many cases. 

And then there’s a tendency that you don’t take so much of [00:13:00] initiative or act or do things without so much of permission. So I think that this is a major problem. And of course, with all these arrangements, they are there for good reasons, but they create a lot of negative side effects. And one effect is that people in general, they tend to be rather cautious and compliant and not so prepared to act outside narrow stupidity box. 

Christopher: Mats, a lot of people would say, “Well, I’m showing that I’m really busy here. I’m genuinely busy doing all this work.” And I find that people that fall into those patterns oftentimes avoid the systematic question of asking themselves, “Is this still worth doing?” “Is this the right thing to be doing?” 

How do we break these patterns?  

Mats: That’s a great question. And, one could say that one could remove quite a lot in a lot of organizations. Mandatory training, couldn’t one say that this is training for those that really need it, or at least that are exceptions, and it’s voluntarily or [00:14:00] something in between. 

A lot of policies, uh, structures and, regulations could be used much more flexible. I mean, sometimes organizations that do things that try to work with half the meeting time , and you keep track on how much meeting time you spend. Some people they like to having meetings, to chair meetings, to hear their own voice, to meet a lot of people and do the networking and promote your career patterns and, and whatever through all this. 

So a lot of people are into this, but sometimes one could say, “Okay, now we think that there’s too little time for people to really to think, to reflect, and do things that are perhaps unnecessary to do, but are not that prescribed or that heavily institutionalized.” And then you can imagine then, okay, now we try here to half the meeting time and try to measure this and then see how much time is being spent in meetings. 

Or you sometimes also can work with a meeting budget, that there’s a cost for every bloody meeting, and [00:15:00] then you can make a calculation and then debiting of the meeting time being used there. I heard one interesting example here from CEO of a very large Swedish company, but also had a startup. 

And with the startup, after some time they needed to have some rules. Uh, And then they had the rules on the refrigerator door, so that’s very visible. So on about 20, 30 people or something like that. But then more and more rules came, and then they decided, “Okay, now if we incorporate one more rule and people can just feel it and put on the rules there on the refrigerator door.” 

But then they went for the one in, one out policy. So you can put up another rule, but then you have to remove one of the others. And then a lot of the things that are then being taken care of in conversations rather than through formal rules being on the refrigerator door. So sometimes organizations can be a bit more creative, and I guess that you probably, Christopher, have more interesting and good examples. 

But [00:16:00] a lot of things that one could do in organizations, partly in order to save time and save time then for more effective work perhaps, getting things done a bit more quicker, but also then to generally encourage a mindset that is a bit different . So sometimes it’s being then promoted by all the, these policies and regulations and hierarchies and a lot of other things that are overdoing compliance and passivity for many people. 

Christopher: Your prescriptions for breaking these patterns seems to rely on learning from experience. We talk in our decision velocity conversations about learning loops, and I think you, you talk about learning loops as well. But I wonder how does functional stupidity interfere with that conversion of learning from experience? 

Mats: I think that’s a good question. And one problem then with functional stupidity that you can do learning within a limited mindset. So you’re willing to learn and reflect on things, but you’re not necessarily transcending then [00:17:00] the boundaries or challenging the assumptions or think about a broader spectrum of possible learning points. 

So you may want to learn how to do leadership better way, or how to give people feedback in a better way as a manager to subordinate, but you’re not necessarily thinking about learning how to address the broader topic of feedback. It may be that you as a manager, you don’t know that much. 

You should, uh, give much more space to colleagues to give the feedback or, or try with the various systems or other sources, perhaps customers, subordinates to managers and other feedback sources. My point here is that we sometimes can be, be good at learning within a limited framework. 

Functional stupidity means that you’re very focused on learning how to be better in this and this and this ways, learning from experience. But you are not so good at considering broader [00:18:00] sets of assumptions that you also should challenge and then you transcend then your relatively small window of learning opportunities that sometimes people are caught in. 

Christopher: It sounds like sometimes, we have the data but we’re structurally unwilling to be changed by it. I’m willing to learn as long as perhaps my ego identity is maintained or my relationships are maintained, that sort of thing. 

Mats: Learn without too much pain or existential struggles or other things that sometimes is involved in, in relearning. that’s a bit more tricky, so sometimes it’s easy to learn what it’s easy to learn.  

Christopher: Yes. So we’ve raised questions across five of our failure modes. 

Uh, signal blindness, misalignment of leadership, escalation, activation delays, and weak learning was what the last topic we focused on here. Would it be fair to say that functional stupidity slows organizations not only by limiting what people think, but by limiting what they [00:19:00] feel permitted to question? 

Mats: Yeah, no, I think that’s the case that functional stupidity, it works partly for people not imagining other possibilities than those that are being kind of prescribed and they have picked up and they are used to. So it’s a narrow mindset. But then as part of this is also the disinclination then to, to raise issues, to point at problems, to communicate things that may be seen as a bit outside what is fully permitted or what’s conventional to, address. 

I think that there is an interesting interplay between what you think and you don’t think, and then what you say and what you are not really allowed to say or lack this confidence or also lack the language for saying. So people often like to save their faces and then they’re politically aware and cautious, and, and then there is a gray zone of this is perhaps dangerous or difficult. [00:20:00] I don’t know how to raise this issue fully, and I don’t know how people will accept that. And I think that’s enormous problem then in terms of learning and thinking through issues and then taking initiatives and a lot of other ideals that organizations are heavily dependent on, but are not always so good at living up to these ideals. 

Christopher: So it sounds to me that leadership isn’t just the source of the problem, but the leadership system is. The system that both the architecture and the psychology, the system that allows for sensing, that allows for sharing ideas and sense-making together and th- governance of how we make choices and how we execute. 

These are system-wide considerations, architectural concerns within organizations in addition to the psychology of people. But it can help offset some of the nature of man, as you described earlier.  

Mats: Yeah, no, I think what is the solution and what is the problem? 

So sometimes you have, um, dialectics [00:21:00] or a, an interface between solutions and problems. And in “The Art of Less” book, we pointed on the solution mongers. People like to have solution for absolutely everything. And then you have systems factors, you have enormous faith in leadership solving all problems. 

And sometimes then this faith in all these managers getting their egos a bit boosted and not so open-minded or cautious perhaps. But then you also have a lot of other people that are just used to “the manager will fix this,” and there’s a system that we need to comply with. Of course, that’s absolutely necessary in many ways, but sometimes they become a bit too rigid and then, uh, what appears to be a solution to a problem can in fact be the cause or reinforcer of a problem. 

And, and here we need organizations where people are a bit more alert and can give feedback and clearly, uh, they tell what’s not working and then sometimes deviate then from the systems and take initiatives and [00:22:00] doing some mild sabotaging in some cases, I would guess. 

Maureen: It does seem like with the range of changes that are happening now, creating both leadership that is reflective and systems that are learning, not just humans that are learning, allows us to navigate the ambiguity. I mean, if, just if we think about what’s happened in the last year , and these are, these are things that we hadn’t necessarily structured our organizations around, and as leaders, we need to be learning and unlearning and refining our systems at the same time. 

Mats: Yeah. What sometimes is happening if there is, uh, some turmoil, drastic things are happening, you, you have to shake up and shape up. 

So that can lead then to learning and, and people really starting to question truths and conventions, et cetera. Sometimes, of course, it can lead to everybody running to the [00:23:00] same kind of solution, and, uh, some guru consultant or- … whatever new, new, a new, uh, standard solution. 

And then that can create other kinds of problems. But hopefully we can see some improvements on the various levels in organizations.  

Maureen: I wonder if you’re seeing any kind of relatively consistent first move, like redesigning decision processes, changing the culture to promote more questioning- Yeah 

Or confronting forms of confidence and consensus that drive poor thinking.  

Mats: I think that all these kinds of activities are very important and worthwhile to engage in, that most organizations probably need to work on the spectrum of different fronts. My key point at the moment is very much around the art of less, that try to cut down then on too much policies uh, other types of regulations and [00:24:00] then give a bit more space then to people to try to think and then mobilize them for getting ideas, taking initiatives, et cetera. 

So rather than forcing everybody to go to the same training and follow exactly the same system, I could ask people, “Okay, what do you think that you would benefit from here? Do you like to have some exceptions from all this?” And then trying to encourage people to be a bit more free-thinking and take initiatives, et cetera. 

And of course, that can be a problem, so we need order and structure and, functional stupidity is partly because people are sometimes disciplined and obedient. But it- it’s easily too much of that, particularly in large companies. And then if one can do certain things to to change that situation, I think that could be good. 

And a lot of people agree that there are too much bureaucracy, too much compulsory mandatory arrangements and too much mainstreaming and too many solutions. So I think that a lot of people agree that we could do a bit better if we were a bit more relaxed in these [00:25:00] aspects. I sometimes refer to Nordstrom, the shoe manufacturing company, and it probably they partly have missed, but still rule number one: use your own judgment. 

There are no other rules. Hmm. 

Maureen: so I’m gonna ask both Mats and Christopher. In the spirit of innovating leadership and co-creating our future, what’s one leadership choice you believe senior leaders or boards should make in the next 30 days, and what system or practice must be put in place to make that choice stick? 

Christopher: Well, you know, Mats I think what you said made me think that organizations unintentionally slow themselves down through these patterns of functional stupidity. And so I think if that is the case and we want to accelerate decision-making and decision velocity, I would encourage leaders to engage in a review, a decision velocity review, one that surfaces maybe [00:26:00] one uncomfortable signal that they’re getting in their environment, one unresolved disagreement. 

We can pull that forward in a safe environment and talk about it. One blocked decision, one delayed execution item, and one lesson that they have learned but they’ve not acted on. And sort of doing an audit of these kinds of experiences to see if they exist in the organization, and then talking through how we might deal with it in a more rational way of using our best judgment and creativity, bringing out the intelligence of people, would be an approach I would take. 

Mats: I would support that. This is our formula or anti-formula, and that is stupidity fighting in organization. At Sleman Dos, we ask people to write down a number of the most irritating stupidities uh,. It can be system structures. It can also be particular activities, meetings that you really dislike or use of language that is is full of bullshit. 

[00:27:00] Uh, the worst … the point that things that are under the surface and people seldom directly raise but should be raised. And this can be a bit tricky, but you can do this in such a way so that it’s not obvious who is communicating the problem. You can have anonymous gathering here. 

You can have hate surveys where people can just anonymously write down the 10 most irritating things in this company that may not exactly address the problem with slowness and lack of velocity, et cetera, but it, it would somehow perhaps open it up for a bit more of free thinking and another mindset in the organization. 

One other thing here. I heard one manager, a new CEO for a large bank, and he said when he got the job, of course, there were a lot of business bullshit in his self-presentation. But he said one thing, according to my spokesperson, that was really valuable, and he said, ” Only go to or participate in meetings [00:28:00] where you have something to offer or you learn something from this. If you feel that that’s not the case, then you should be allowed to leave.” And, I would guess that five or 10% of working time could probably be saved.  

Christopher: Well, you know, Maureen, we should call this idea the auditing stupidities and the- … he was breaking out the BS meter, the- … the, the, the Mats measures. 

Mats: Okay. Thanks.  

Maureen: This has been so much fun. And you know, we’ve all seen consistently some amount of behavior that doesn’t make sense on the surface. My education is economics, and we say that people are rational self-maximizers, and that made sense when I was in university, and then I got my first job and was like, “Eh. That doesn’t seem true.” But yet when we consider through a systems view, people are [00:29:00] generally doing what makes sense at the moment in the context of the system, and the system is brilliant in some cases at manipulating humans. Either amplifying their intelligence or reducing it. 

Mats: Well, as an author then I always then, uh, can’t resist and, uh, pointing at my books. So “The Art of Less: How to Focus on What Really Matters at Work” or “The Stupidity Paradox”, these are written and being academically respectable but also to be accessible and relevant for a audience of practitioners.  

Maureen: And Christopher, where would people find more about your work?  

Christopher: Innovativeleadership.com, and visit the think tank page where we talk about designing leadership system-level architecture, including sensing, sense-making, alignment, decision rights, execution, all the things we’ve been talking about, and learning, of course, in this interview today. 

And I’m really excited, Mats, to [00:30:00] really give the cultural cognitive explanation some weight in all this as we think about why people stop questioning, stop escalating, and under-perform in agreements to preserve those routines. I’m really fascinated by your work, and thank you so much for your insightful contributions today. 

Mats: Thank you. It’s pleasure participating, so thanks very much for your interest. I’m very honored by this.  

Maureen: Thank you, and to our listeners, please like this, share the podcast. 

Share it, share it, share it so that others can benefit from both Mats’ wisdom and Christopher’s as we think about moving forward, needing more agility, needing faster decisions, but also higher quality. If we could just slightly reduce stupidity in our world, we would all be much better off. So thank you again, both Christopher and Mats. 

Christopher: [00:31:00] Thank you.  

Mats: Thank you.