Picture the scene: you’re walking down the street trying to decide where to eat. But it’s early evening and all the restaurants are empty. So you pick what you consider to be the most appealing – you think it has the tastiest menu – and go in. After a while some more people come along and see you sitting at a table. They assume that if you’re in there it must be OK, and enter and sit at another table. Very soon there are lots of people in the restaurant and all the other possible eateries are lagging well behind. This process is called the information cascade.
Information cascades are important in economic psychology as they are used to explain the behaviour of financial markets. That’s because they feed the process of speculation, including frantic buying or selling: bubbles v crashes. Now of course all this starts at a vaguely rational level (remember the restaurant example) but rapidly moves into irrational herd-like behaviour. Thus maybe it’s no accident that we talk about confident or ‘bull’ markets! Although perhaps in reality it’s more cow-like: put your head down, eat the grass and stick with the herd.
The bigger point is that information cascades affect all manner of decision-making. And the movement of the ‘herd’ (group, team, board) can be very difficult to resist, even if you, the individual, recognise it as being irrational. People en masse are easily convinced they are moving in the right direction, and frequently do not stop to ask the obvious question: why are we doing this?
At work this is made worse by the fact that many managers do not know how to probe the thinking of their colleagues. They simply base their understanding on what they assume is going on, and assumptions, as we all know, are often vague and unpredictable beasts. The real trick is to return to the beginning and pose clearly framed questions about the logic of projects and plans, and also to ask questions about the organisation. Not just, ‘why are we doing this?’ but ‘why are we doing it this way?’ So maybe the competency lists that are so beloved of HR professionals should always include the ‘ability to ask good ‘why’ questions’ behaviour…