Are Executives Dumb? Or Do We Blame the Fog of War?Posted: December 12, 2011
But how do we get from “that was a bad idea” to “Reed Hastings doesn’t understand what business he’s in?” When internet commentators see odd behavior that they don’t understand, why do they assume that the most parsimonious explanation is that management must be a bunch of drooling morons?I mean, Reed Hastings did manage to build this rather large and successful business that killed off one of the most successful retail operations of its day. It’s possible that he just sort of did this by accident. But is this really the most likely explanation? That he didn’t understand the first thing about how people watched movies, or how to run a business?The available evidence seems to indicate that at some point, Reed Hastings was a smart guy. Smart enough to count to twenty with his shoes on. Smart enough read pages 1-15 of the kind of introductory strategy text where they solemnly tell you to figure out what business you’re really in. Smart enough to grind Blockbuster into a pile of gleaming blue-and-white sand while launching a streaming service so popular that it now accounts for something like 20% of peak-load internet traffic. If you want to write an article on how he’s a big fat idiot who couldn’t find his ass with both hands in the dark, then you should probably have a theory of the transition between these two states of Reed Hastings. Did he suffer a stroke? Start dating distractingly gorgeous supermodels? Has he been licking the paint chips in his gloriously restored Victorian mansion?
I too have been guilty many time at looking in the rear-view mirror and wondering what the executives were smoking? Megan’s point is that we are not giving the executives the benefit of the doubt – that these decisions are sometimes made with a limited choice set and very limited information. On the other hand I wish we could put data flight recorders in the C-Suite – this way we would know for sure that a problem was preventable and avoidable and entirely based on bad human judgement and decisions making –> case-in-point the Air France 447 disaster.