Managers, consultants, gurus, the press, and just about everyone else gives individuals too much credit and and blame for organizational performance. This misguided faith in the omnipotence of saviors and villains is due largely to a cognitive error made by most people in Western countries. This fundamental attribution error was uncovered decades ago by psychologist Lee Ross. He noted that people place excessive weight on individual personality, preferences, and efforts when trying to explain what people (and groups and organizations) do and why they do it, and underplay the setting, culture, or system. This occurs partly because of how human perception operates. When we look at a situation, like a company, we see individuals — individuals acting, making decisions, doing great or awful things. The context in which this happens, the industry and general economic environment, the actions of all those people we don’t see, are less obvious and vivid. So it is not surprising that we overattribute actions and consequences to individuals rather than to the constraints under which they operate. [Hard Facts by Jeffrey Pfeffer and Robert I. Sutton]
In the book Economics in One Lesson Henry Hazlitt shows how this cognitive error crops up in economic decision making. People make economic decisions based on what they immediately see (e.g. “adding a tariff will result in these — visible — people keeping their jobs, so let’s add a tariff”), and they fail to consider the unseen possibilities and things that could be (e.g. by adding a tariff some people keep their job, but the rest of the population — the unseen individuals — subsidizes them by paying higher prices at the market).
This cognitive error — focusing only on what is visible and seen — rears its head in many ways, resulting in many missteps.
A related blog: Organizations: focus on creating a great system, not finding great talent