Select Page

Listen out for how people explain problems and faliures. Do they say:

  • “It was the weather. We had a wet summer and numbers were down”
  • “There were roadworks outside the shop for 6 weeks and that discouraged people from visiting”
  • “The economic crisis caused us to lose turnover and therefore profitability”

Or do they say:

  • “Despite the bad weather the real cause of our problems was not switching stock to products that would be attractive for the season we had”
  • “The unexpected drop in earnings were primarily attributable to some startegic errors we made”
  • “As a management team were were not sufficiently prepared for the economic crisis”

Work investigating how organisational attributes affect stock prices suggests that organisations that cited external reasons for their problems will come our WORSE that those organisations that attribute failures to internal causes. This affects public perception, and also profits. Thgis analysis was carried out on 41 companies over a 21 year period.

So if you want to suggest forces outside your control are at work, then do so. But do not expect the public and shareholders to believe that you as managers should not have anticipated them. At least own up and show that you intend to learn lessons and do something about it. Something that those who blame those cruel unpredictable external forces are unlikely to do.

Lee, Peterson, Tiedens (2004) ‘Mea culpa: predicting stock prices from organisational attributes’ Personality and social psychology bulliten 30, 1636-49
(cited in Golstein, Martin, Cialdini, (2007) Yes! 50 secrets from the science of persuasion)