Ascribing negative events to external factors is a recipe for trouble, says professor binna kandola obe as he ponders over what the aftermath of recession....

The recession is officially over, apparently, or so statistics say. Talk has turned, tentatively at least, to how companies can begin to grow again and the role that leaders can play in the process. One thing that is critically important is that leaders learn the lessons of the recent past and take the opportunity to re-evaluate the way things have been done, to look at what is good but also to be honest about what could be improved upon -- which means examining their own style of leadership. There are different ways to carry out reviews and reappraisals but there are also ones to avoid: Let's call this the Arsene Way, after Arsene Wenger, manager of Arsenal Football club. After dropping points in a scoreless draw away from home against Aston Villa recently, he complained about the opponent's overly physical and somewhat, in his opinion,
inelegant approach to the match. This type of statement is pretty typical of his behaviour, especially after a setback. He will regularly round on the teams that defeat him, stating, as he did on another occasion recently, that the better team lost. By contrast when his team wins he is naturally happy but more than that he will praise the performance of his players and by implication, himself and his coaching staff. After all, without his assistance, the team would never have achieved its victory. How we explain things by inferring causality is termed by psychologists as attribution theory. Generally speaking events can be explained in one of two ways; internal or external attribution. Internal attribution occurs when the events are deemed to have been caused by an individual -- it may be their skills, personality, decision making.

External attribution occurs when we explain the event by reference to some aspect in the environment or situation. Attributions are normally made quite quickly and automatically, and a typical sequence is followed.

First, an event occurs which may be something rather unusual or unexpected.
Secondly, the person will have an idea about what they expected to take place.
Thirdly, a comparison will take place between the expected and actual occurrences.
Fourthly, an attribution will be attached to the event.

Applying this approach to Wenger, he clearly expects his team to win whenever they run out onto a pitch. When they do not, he makes a comparison between his expected outcomes and the actual and then he ascribes a reason to it. These attributions are invariably external ones: It was nothing to do with him, his team or the tactics deployed. Clearly, there is an important motivation on his part not to be seen as being responsible for the unfortunate result. Conversely, when his team wins, this is not attributed to luck, poor refereeing or even substandard opponents, but due to excellence on the part of his team; in other words an internal attribution. This tendency of his is becoming more and more pronounced and is known as Fundamental Attribution Error.

It is no coincidence that the more Wenger does this the less progress his team makes. Kipling informs us to treat triumph and disaster in the same fashion, but Wenger treats them completely different. The way leaders deal with downturns will give us important clues as to how they will deal with any upturn. Wenger's method is essentially a rather closed one; by blaming external, essentially uncontrollable factors for defeats means that he will be slow to learn. The same belief system can be seen in many companies though. Read through the annual reports after a poor year and there will be many reasons given for the poor performance and they will be almost always attributed to external factors: Changes in consumer demand, problems with supply chain, new legislation, etc. In other words "it wasn't us". As with Wenger, good performance will be a clear testament to the wisdom and farsightedness of the company's strategy, the focus of the leadership and the skills of the people. Or, in other words: "Yes, it was because of us." This recession was global in nature and scope. Its speed and depth has led to it being called the worst recession ever. Those leaders who can see that there are lessons to be learnt from this for
everyone, not just bankers and politicians, are the ones who will bounce back in a more sustainable fashion.

 It takes openness, self-confidence and self-efficacy for a leader to operate in this way. Openness to experience and learning is highly important. Leaders need to look at not only their success but their failures as well in order not to repeat them. One well-known, highly respected, successful company chairman once told me that he probably gets one in every three decisions wrong. The important thing though was he said not to repeat today the mistakes he made yesterday and not to make the same mistakes tomorrow that will happen today. This recognition that errors occur and they need to be embraced and learnt from is an open, honest and extremely important factor in creating resilience within organisations. Self-confidence and self-efficacy are related but rather different. Self-confidence refers to a belief in one's abilities and the latter to a belief that some things are within your control. When both of these are balanced a leader will be able to recognise what they can and can't do and furthermore what they can and can't influence. It will mean that they accept there are limits to what can be achieved. In the long-run the leaders that succeed are those who can distinguish between internal and external attributions, who accept responsibility for mistakes, learn from them and then move on. Ascribing negative events to external factors is a recipe for trouble as evidenced by the recent troubles faced by Toyota. It appears that there was an extreme reluctance on the part of leaders in the organisation to accept that the problems being reported to them by their customers were the former's responsibility. The difficulties that drivers experienced were attributed to individual problems with the vehicle and even to bad driving. In other words, the Arsene Way of learning. The company's carefully crafted reputation, painstakingly built up over many decades, for reliability, customer care and value has been eroded in a matter of months. Trust in Toyota as a brand is what has been most damaged in this episode.

In any relationship, whether it is between people or with a brand, trust is a vital ingredient. It provides us with predictability and stability. When we say we trust someone or something we are essentially saying that we know what to expect from them in the future. Gaining trust takes time but losing it can be achieved very quickly as this episode shows us. Failure to attribute success and failure appropriately then means we limit our ability to genuinely see what is working and what is not. As a result leaders may not be aware of their own flaws in their style which, in the long term, will disadvantage the organisation. Unless Wenger is prepared to acknowledge that sometimes the reason why his team did not win is because of failings in the players' performance and his tactics, then, they are destined to make the same mistakes again. The other consequence of making the wrong attributions to either success or failure is that it breeds unwarranted self-confidence and self-belief which when taken to an extreme will come across as arrogance and if there is one quality that is antithetical, it is this one. Certainly Wenger has been accused of this but was this also part of the reason for Toyota's current woes? `If ' was voted Britain's favourite poem a few years ago. It is undoubtedly stirring and memorable. For all the qualities that Kipling says are needed to be a `Man' he omits accepting and learning from mistakes; maybe it was difficult to scan them or he never considered them to be important. If organisations are to make progress out of this recession, it is critical that leaders do not make the same mistake.

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