Logic of failure – our inability to deal with exponential growth and uncertainty

In these days (in my home office) I have been working on one of my favourite books again, namely “The Logic of Failure – Strategic Thinking in Complex Situations”. It was first published in 1989 and was written by Professor Dietrich Dörner, who held a professorship in psychology with the research focus on cognitive psychology, thinking and action theory. The book is about the fact that complexity triggers uncertainty in us humans. This creates fear, from which we naturally want to protect ourselves. That is why we ignore all that is complicated, inscrutable and unpredictable and only see what we already know. But this reduction is dangerous because we are still part of the larger whole and its developments. This is how we make mistakes; failure is logically inevitable.

His findings are based, among other sources, on experiments with people who have had to take a leading role in experiments, such as the mayor of a city in Germany or a development aid worker for a fictional country in Africa. In both simulations, people approached their work with a great deal of optimism and were able to experience success in the beginning, but then in most cases the exact opposite happened. Dörner justifies the failure with the complexity, intransparency, dynamics, interconnectedness and incompleteness, and often even falseness of the knowledge of the respective system. He makes this clear using the example of exponential development in nature. We humans tend to think in linear progressions and have great difficulty in estimating exponential developments, as we are currently experiencing with the example of the corona pandemic. This results in misjudgements with fatal outcome.

So, what can we do to improve decision-making in complex situations? Not responding to the first reflexes and falling into the trap of one of the many cognitive biases that we unfortunately often tend to. Professor Gerd Gigerenzer, for example, found out that after the terrorist attacks in the USA on 11 September 2001, there were more deaths in road traffic than those killed during the attacks. This can be attributed to the fact that people watched the horrible pictures on television and preferred to use the car instead of the plane – which in many cases ended fatally. László Mérö, in his book “The Logic of Unreasonableness – Game Theory and the Psychology of Action” justifies a shut down by saying that in uncertain times certain rules of the game must be imposed on citizens, so that cooperation develops which is useful to the overall system. Otherwise, some people celebrate “corona parties” purely out of self-interest, risking the lives of many people.

What does Dietrich Dörner suggest? In his opinion, the most important insights are the following:

  • In complex situations it is important to be clear about the objectives you are pursuing, that you cannot achieve all goals at the same time and that you must set priorities or make compromises.
  • To analyse and better understand the surrounding system and one’s own system before acting, so that side effects and remote effects can be anticipated before acting.
  • When gathering information and drawing conclusions, do not rely too much on your own opinion and reflexes, but rely more on (scientifically) sound information, weigh up opinions against each other and do not become too quickly fixated on certain measures (e.g. panic selling on the stock exchange or hoarding in the supermarket)
  • Common sense” is of the utmost importance and that it is used in the right way. However, we should learn again to think and act in systems, to estimate the timing of certain actions and to adjust our behaviour accordingly.
  • People are often unprepared for crises. Therefore, it´s so important to strengthen resilience.

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Author: Reinhard Wagner, CEO of Tiba Managementberatung



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