Don’t let post event rationalisations ruin your future decisions

Putting a favourable gloss on events even when it isn’t merited is in many ways a healthy part of human nature. It helps us preserve our self confidence and lets us move on. However, it can lead to a history being mis-remembered and then future decisions get made using bad data. That’s dangerous.

I often see this when good people leave a company. Before long their little faults are remembered as much as their contribution and everyone starts to think it was a good thing that they left. Then replacements are hired without addressing the reasons that the previous person left.

A common example at VC funds is to analyse investment decisions based on how companies fare rather than on whether the analysis behind the decision stands the test of time. This can make good investment decisions look bad when companies have either unlucky or lucky runs and undermine future investment decisions.

Another example is when good candidates don’t accept job offers. Pretty quickly people decide they wouldn’t have been good after all and that the company has ‘dodged a bullet’. Often without questioning whether that means they made a mistake offering the job in the first place, or whether there is something wrong with the role or package. That’s what’s on my mind today.

The challenge is the dissonance between what helps us function well as human beings and what helps a company to perform well. Eliminating falsely positive post event rationalisations and maintaining a positive and happy company culture is what we should all strive for, but requires over-riding human nature and isn’t easy. Going all in to eliminate any favourable gloss can hurt morale and be as damaging as sitting back and allowing it to happen. As with many aspects of corporate culture the key is to know where you are trying to get to, where you are today, and then be realistic about how quickly you can move. In this case holding regular post event ‘retrospectives’ and documenting the good and the bad is a good practice, maybe starting in the area that’s core to your business and then spreading to the rest of operations once the process is honed.