a very high price. Osborne argued and pressed for more information. But given the apparent facts, he agreed to proceed with Option B. The “Osborne plan” was announced with fanfare and widely heralded as another instance of Paul Osborne's talent for revitalizing ailing bureaucracies. Osborne had moved on to work his management magic on another organization by the time the plan came online, leaving his successor to defend the underwhelming results.
Helen Demarco came away with deep feelings of frustration and failure. The Osborne plan, in her view, was a wasteful mistake, and she had knowingly participated in a charade. But she rationalized to herself that she had no other choice. Osborne was adamant. It would have been career suicide to try to stop him.
Helen Demarco's case is not unique. Note that her story mirrors the story of the coronavirus cover‐up in Wuhan. It is also easy to find similar stories in corporations. At the Geneva International Motor Show in 2012, Volkswagen CEO Martin Winterkorn proclaimed that by 2015 the company would cut its vehicles' carbon dioxide emissions by 30 percent from 2006 levels. It was a tremendously ambitious goal that would have beat the targets set by European regulators to combat global warming. But just like Paul Osborne, Winterkorn had set the bar too high. The engineers saw no way to meet the boss's goals, but no one wanted to tell him it couldn't be done. So, they cheated instead. There was a precedent because VW had already begun cheating on diesel emissions several years earlier, and observers reported that “an ingrained fear of delivering bad news to superiors” (Ewing, 2015, p. B3) was a feature of VW's culture. VW incurred huge financial and reputational costs when the cover‐ups became a global news item.
Like Helen Demarco, Wuhan officials and VW engineers had other options but couldn't see them. Paul Osborne and Martin Winterkorn both thought they were providing bold leadership to vault their organizations forward. They were tripped up in part by human fallibility but also by how hard it can be to know what's really going on in any organization. Managerial wisdom and artistry require a well‐honed understanding of four key characteristics of organizations.
First, organizations are complex. The behavior of the people who populate them is notoriously hard to predict. Large organizations in particular sport a bewildering array of people, departments, technologies, strategies, and goals. Moreover, organizations are open systems dealing with a changing, challenging, and erratic environment. Things can get even messier across multiple organizations. The 9/11 disaster and the 2021 invasion of the U.S. Capitol resulted from a chain of events that involved several separate autonomous systems. Almost anything can affect everything else in collective activity, generating causal knots that are hard to untangle. After an exhaustive investigation, our picture of 9/11 is woven from sundry evidence, conflicting testimony, and conjecture. Historians and scientists will spend years trying to untangle who should have done what to minimize global damage from the pandemic of 2020.
Second, organizations are surprising. What you expect is often not what you get. Paul Osborne saw his plan as a bold leap forward; Helen and her group deemed it an expensive albatross. In their view, Osborne was going to make matters worse by trying to improve them. He might have achieved better results by spending more time with his family and letting his organization take care of itself. Martin Winterkorn was stunned when the hidden cheating blew up in his face, costing him his job and hitting VW with devastating financial and reputational damage.
The solution to yesterday's problems often creates tomorrow's obstacles. A friend of ours headed a retail chain. In the firm's early years, he had a problem with two sisters who worked in the same store. To prevent this from recurring, he established a nepotism policy prohibiting members of the same family from working for the company. Years later, two talented employees met at work, fell in love, and began to live together. The president was startled when they asked if they could get married without being fired. Taking action in a cooperative venture is like shooting a wobbly cue ball into a scattered array of self‐directed billiard balls. Balls bounce in so many directions that it is impossible to know how things will eventually sort out.
Third, organizations are deceptive. They camouflage mistakes and surprises. Helen Demarco and her colleagues disguised obfuscation as technical analysis. After 9/11, America's homeland defense organizations tried to conceal their confusion and lack of preparedness for fear of revealing strategic weaknesses. Volkswagen engineers developed software whose only purpose was to cheat on emissions tests, hoping that no one would ever see through their deception. Officials in Wuhan, China, tried to cover up the seriousness of the coronavirus outbreak for a few critical weeks with devastating consequences for the world.
It is tempting to blame deceit on individual weakness. Yet Helen Demarco disliked fraud and regretted cheating—she simply believed it was her best option. Sophisticated managers know that what happened to Paul Osborne happens all the time. When a quality initiative fails or a promising product tanks, subordinates often clam up or cover up. They fear that the boss will not listen or will kill the messenger. A friend in a senior position in a large government agency put it simply: “Communications in organizations are rarely candid, open, or timely.”
Fourth, organizations are ambiguous. Complexity, unpredictability, and deception generate rampant ambiguity, a dense fog that shrouds what happens from day to day. It is hard to get the facts and even harder to know what they mean or what to do about them. Helen Demarco never knew how Paul Osborne really felt, how receptive he was to other points of view, or how open he was to compromise. She and her peers piled on more mystery by conspiring to keep him in the dark.
Ambiguity has many sources. Sometimes available information is incomplete or vague. That was a huge problem for decision makers in the early days of the Covid‐19 pandemic. Little was known about a novel virus that attacked people in complex and puzzling ways. Emergency room doctors around the world struggled to understand what they were dealing with and what to do about it.
In addition, different people may interpret the identical information in a variety of ways, depending on mind‐sets and organizational doctrines. During the pandemic in the United States, wearing masks and the value of ingesting hydrochloroquine became politicized, with supporters and opponents of President Trump interpreting available information in very different ways. At other times, ambiguity is intentionally manufactured as a smoke screen to conceal problems or avoid conflict. Much of the time, events and processes are so intricate, scattered, and uncoordinated that no one can fully understand—let alone control—the reality. Exhibit 2.1 lists some of the most important sources of organizational uncertainty.
ORGANIZATIONAL LEARNING
How can valid lessons be extracted from surroundings that are complex, surprising, deceptive, and ambiguous? It isn't easy, as many who tried have found out. Decades ago, scholars debated whether the idea of organizational learning made sense: Could organizations actually learn, or was learning inherently individual? That debate lapsed as experience verified instances in which individuals learned and organizations didn't, or vice versa. Complex firms such as Amazon, Apple, and Southwest Airlines have “learned” capabilities far beyond individual knowledge. Lessons are enshrined in protocols, policies, technologies, and shared cultural codes and traditions. At the same time, individuals often learn even when systems cannot.
Perspectives on organizational learning are exemplified in the work of Argote and Miron‐Spector (2011), Peter Senge (1990), Barry Oshry (1995), and Chris Argyris and Donald Schön (1978, 1996). Argote and Miron‐Spector review the literature on organizational learning and offer a rational perspective in which as organizational members use organizational tools to perform tasks, they acquire experience that leads to knowledge which is then embedded in the organizational context, including its culture. Changes in the context feed back to influence subsequent experience, completing the causal circle. Argote and Miron‐Spector acknowledge that knowledge can be ambiguous and difficult to verify, but devote little attention to barriers to learning. Senge, on the other hand, sees a core‐learning dilemma:
