8 Psychological Obstacles to Building a Better Company

Basic human nature can get in the way of better business practices. Recognizing these pesky traits to overcome them.
July 13, 2012

In a business climate where only the best companies survive and thrive, one thing is clear: You must avoid the stupid stuff. You've got to eliminate the things that leave customers and employees scratching their heads, feeling frustrated and mystified.

The problem is that every company, no matter what size, battles to some degree a central tension—people with ideas on how to make things better, and hidden obstacles that keep those positive changes from actually happening.

OPEN Forum spoke with Neil Smith, author of the recently published How Excellent Companies Avoid Dumb Things, to summarize the key barriers that hold back even the world’s best companies.

According to Smith, the following eight basic human tendencies are the typical barriers that stand in the way of desirable outcomes such as growth, efficiency, simplicity and profitability.

1. Avoiding controversy. Controversial ideas exist and are left unresolved because dealing with them would cause too much disruption. Politics, personalities, alliances and appearances all contribute to making ideas controversial.

2. Poor use of time. Even in organizations where people are very busy and long days are the norm, employees use their time very badly.

3. Resisting change. The most human and pervasive of the eight barriers, this involves resisting the impulse to remain creatures of habit and complacency. People fear change because it is about the unknown.

4. Erecting organizational silos. A company creates departments to provide structure and accountability, but if departments become isolated (turning into "silos"), they can prevent the flow of information, focus and control outward.

5. Committing ideacide. Many good ideas are shot down not for perceived lack of merit but because a manager feels threatened by the idea in some way. Employees are generally powerless in these situations. The result? Employees are frustrated and good ideas are never put to the test.

6. Making decisions on bad data and assumptions. Information can be incorrect, outdated or difficult to obtain. Assumptions are made when data doesn’t exist or hasn’t been calculated. Decisions made using bad assumptions or incorrect information will always yield poor results.

7. Ignoring size, scale and scope. A great challenge for many companies is managing the economies related to smaller and less profitable customers or transactions. Companies ignore or don’t think about the potential impact of even simple size-based changes in the way they conduct business.

8. Ignoring process. A company may have smart people brimming with innovative ideas about how to change the way they do things. But disrupting existing processes is tricky, because there's rarely ever a protocol in place to change them.

Smith told OPEN that he's never worked with a company that didn’t have all eight barriers present. Which raises the obvious question: Why is that?

"These eight hidden barriers are caused by both human nature and the way companies are naturally organized," says Smith. "The human nature type of barrier has to do with the way we instinctively behave. For example, most people get anxious about the fear of the unknown, so there is a reluctance to change."

The key to avoiding the dumb things, to breaking down the barriers, is consensus. Smith believes consensus about specific ideas is both the glue and the grease that keeps the business moving forward positively. It ensures full implementation of ideas for change.

"Everyone who is going to be affected by an idea has to be on board with it," Smith maintains. "Otherwise crippling problems will crop up during the implementation phase. If people weren’t consulted about something that will affect them or their sphere of influence, they may be resentful, they may have very practical, reasonable objections, or they may feel blindsided. None of these will help you get things done."

How many of the eight hidden barriers exist in your company? What are you doing to eliminate them?

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