Feedback and rationality

Organisations pursue intelligence. They look for long-term satisfactory outcomes. This is normal and to be expected. But the pursuit of intelligence has been depicted as something that requires special skills and has, over the years, become professionalised and specialised, replacing traditional practices. The primacy of rationality is obvious, but so are the complaints about it. Not everyone thinks it adequately explains human behaviour.

by Strategic Management Journal, March 2006
Last Updated: 23 Jul 2013

The notion of rationality pervades western thinking and is traceable back to the ancient Greeks. It was resurrected in the 16th and 17th centuries and made technical and modern in the enlightenment and 20th century. Throughout modern history it has been challenged, but nonetheless it remains popular and is seen as desirable in conventional policy making. Most formulators of strategy employ this model.

The criticisms are that it can be overly conventional and uncreative. Reality may be too complex for its tools to grasp; you may treat things you can accurately measure as more real, and so on. The alternatives to this model are more Darwinist, and involve adaptive models, learning by experience from others and variation and selection.

But these feedback-based models have problems, too. For example, exploiting an existing situation is safe, while insufficient exploration leads to stagnation. Yet exclusive exploration can lead to disastrous mistakes. You need to achieve a desirable mix which is difficult.

Combining feedback-based models and rationality could be the way forward, leading to improvements in simple situations. In more complicated ones, huge failures can occur. Examples of this are as diverse as turn of the millennium mega mergers and the Soviet Union. It seems likely then that it makes more sense for exploratory rationality to hitchhike on the back of safer exploitative-rational successes.

Nonetheless, there is something to be said for those who have an unshakeable belief in the exploratory value of rational technologies. A leap of faith is sometimes required and being impervious to feedback is both the despair of adaptive intelligence, and also, very occasionally, its salvation.

Source: Rationality, foolishness and adaptive intelligence
James G March
Strategic Management Journal, March 2006

Review by Rhymer Rigby

Strategic Management Journal, March 2006 recommends

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