Why Smart People do Dumb Things

Read any headline, and it is not uncommon to see a story about someone (usually a leader) who has done something that makes no sense. The headlines replay the Enron scam, the debacle of Wall Street, New York Governor Spitzer and his prostitution ring, President Clinton and Monica, President Bush getting a shoe thrown at him, and many more. On the other hand, one doesn’t have to read the headlines to experience smart people doing dumb things. I have been a patron of this little coffee shop for years. They know me by name. They serve pretty good coffee. They are reasonably faster than the competition. Why would the coffee shop owner implement a new software system that doubles customer wait time and impersonalizes the once personal customer experience?  Last week at my doctor’s office, they automated the prescription writing process to save the patient time. Instead of having the doctor hand-write my prescription, which I took to the pharmacy and had filled in 15 minutes, they have an automated system where the doctor sends my prescription directly to the pharmacy, but I can’t pick it up for 24 to 48 hours. Does that make sense?

Searching the Internet on “Smart People Doing Dumb Things,” there were more than 300,000 articles, blogs, and entries published on this very topic – articles on religious people doing dumb things, business people doing dumb things, educators doing dumb things, and government doing dumb things. Yet, when you search on “Why Smart People Do Smart Things,” there is little to nothing available. It was like the computer search did not recognize “Smart People, Smart Things” in the same sentence. So why do smart people do dumb things? Through scanning the literature and doing interviews, the following themes surfaced:

Denial of Current Reality. In some cases, people do dumb things because they don’t want to face the truth. In one of my interviews, the coffee shop owner admitted that he implemented the automated teller customer loyalty program because his brother-in-law was the sales person. The reality is that a coffee shop does not get repeat business because of customer loyalty programs. They get repeat business because of customer service and wait time. Instead of fixing the order-taking process or staffing more during peak times, the owner implemented the automated system because he didn’t want to face current reality that maybe his company lacked good help. He also didn’t want to face the current reality that maybe the automated system his brother-in-law was selling was overrated.  

Arrogance of Entitlement. Mortimer Feinberg, PhD and author of “Why Smart People Do Dumb Things,” describes arrogance of entitlement as leaders who believe they “deserve” a level of perks regardless of their performance. They believe wholeheartedly that they are separate from the pack and somewhat untouchable and deserving. Recently in Fargo, North Dakota, Mike Unhjem, president of Blue Cross and Blue Shield of North Dakota, was fired because of poor management practices, another way of saying “fired for being dumb.” The company requested rate increases in three categories at the same time their sales team went on a $300,000 Caribbean cruise. In addition, Unhjem’s pay increased 61% from $450,000 to $650,000 in two years, all while the company lost $28 million. What level of arrogance of entitlement must one reach to think this is remotely acceptable? To top it all off, Unhjem received a $2.2 million severance package that he wrote into his contract in 2007. What arrogance to think it even appropriate to take that money after you have mistreated your company, your customers, and your board. What happened to just being fired…PERIOD.  Further research indicates that the Unhjem situation is not an isolated case. Some leaders who do dumb things justify their actions by saying they “deserve” certain things because of the amount of risk and accountability they bear. “I deserve this because it is what the competitive companies are willing to offer me, and I just may ‘jump ship’ and go to the competitor.” As a company board, would you not welcome that decision if your CEO is under performing? Entrepreneurial leaders often make the same mistake by thinking their product is so much better than the competition that they are entitled and deserve a different market position from the one they earn. One small business owner told me that his products deserved front page press and his customers just didn’t deserve all they were getting for the cost. It is one thing to be confident in your product and quite another thing to be arrogant with what your customer deserves and doesn’t deserve. 

Psychology of Exception. Leon Hoffman, former chairman of the American Psychoanalytic
Association’s public information committee, said, “There’s the psychology of the exception. People in power sometimes feel they can do things that us, mere mortals, are forbidden to do. There’s a sense, as with adolescents, that ‘I won’t get caught.'” Former Governor Spitzer may have felt that with his power as Governor of New York, he was untouchable by the laws. He also may have felt that he covered his tracks so well that no one would ever find out the “dirty little secret.” This is no different than a small business controller who embezzled $130,000. (This person happens to be a classmate of mine, so she granted me the interview.) She indicated she did it because she thought there was no way anyone would miss the measly amount of money she put away each week. She also did it because she felt entitled to a pay raise that she was denied. She was a top honor student of my class who did a dumb thing because she thought she would be the exception and not get caught.

Worship the Expert.  According to Guy Kawasaki, “If there’s anything smart people worship, it’s other smart people. For example, you don’t know much about geography, so you hire a consultant who’s the expert in geography, and he tells you the world is flat. It’s tough to be strong enough to not defer to the expert.” For example, one company hired an outside consulting firm whose motive was to appease the executive sponsor who did not entirely understand his own business model. Although many employee experts tried to stall/stop/explain the reason why the consultant’s recommendation was dangerous, the employees did not carry the titles and the “perceived expertise” this group had, and therefore were merely patronized throughout the process. 

What should smart people do to avoid doing dumb things? First, remove the crowns. Kawaskai says, “When you hear people in your company saying things like ‘we need to do this because Bill/Steve/Carly/Larry wants it this way,’ you are in trouble.” The focus has shifted from being about what the customer and Partner really need to how to get promoted.

Second, court and respect the messenger. Jim Collins, bestselling author of “Good to Great” and ‘Built to Last,” says about companies with higher ROI have systems and processes in place that allow them to “surface current reality.” Often leaders become so attached to what they gave birth to (like a parent with their children) that they can no longer see how they have been misbehaving. They also are not open to criticism and become very defensive. It builds a culture of “yes,” which can be very dangerous. One company implemented a  “bullshit” practice. Anyone in the company can be rewarded for criticizing a “dumb” process, practice, or policy that affects a customer or an employee. They can do it anonymously or they can do it on Facebook. Messengers of “current reality” were given an elevated status within the company by receiving annual awards, having dinner with the president, and enjoying additional perks like premium parking and family trips. One often worries that you are breeding a culture of complainers by listening to “current reality.” If you keep the focus on the customer, this is rarely the case. The self-serving complainers are often ostracized by the community and given very little credence.

Third, squash the bad egos in the company. Egos are like cholesterol. There is good ego and bad ego. Bad ego is self serving and causes people to push personal and hidden agendas. Good ego fosters confidence to take risks on behalf of something greater than you. Smart people who avoid doing dumb things rarely have a personal agenda. Working with one company, a “good” ego leader recommended his position be eliminated because it was actually stalling progress in the company. This person took a great risk not only to put his job on the line, but to trust that leadership would assist in the transition. The dumb thing to do would have been to protect his territory at all costs and not innovate for a greater good.

Fourth, authenticate yourself. There is authentication software that ensures the user is the actual user. What if we could duplicate that authentication process to ensure the leader is really representing who they are? Authentication is risky. People may disregard your humility and interpret it is a character flaw or a performance issue. It expects people to admit when they are wrong.  It expects the truth even when it hurts. It requires forgiveness. It requires a less judgmental nature, a nature that accepts others who are different than you, who think differently, who have different values, who may even disagree with you. Smart people take the risk.

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