How to Make Sense of Weak Signals

How to Make Sense of Weak Signals (Shoemaker and Day, 2009)

This paper is relevant to both managing weak signals and sense making 21st century competencies

Interpreting weak signals into useful decision making takes time and focus. 21st century managers should be able to sense as well as act upon early warning signals. Shoemaker and Day (2009) highlight how as early as 2001 there were many danger signals about the impending housing bubble and the rampant use of derivatives yet these signals were largely ignored by financial players such as Leham Brothers until they had to face the music sharp and abruptly. Groupthink has been use to explain why many early warning signs have not been interpreted. Managers are susceptible to distortions and biases. Organisations can get blindsided, not so much because decision makers are not seeing signals, but because they jump to the most convenient or plausible conclusion. Research carried out by Shoemaker and Day (2009) suggests that 20% of global companies have sufficient capacity to spot, interpret and act on the weak signals of forthcoming threats and opportunities.

There are various individual biases that may cause managers to be taken unaware. In addition there are organisational biases such as groupthink that may keep much of the periphery dwelling enemy in the shadows, even in organisation with an active scanning process. The decision making literature identifies many of the human weaknesses that impair our sense making skills. NASA’s ill-fated decision to launch the space shuttle Challenger in 1986, despite multiple warnings from its own engineers about risky O-ring seals, to multiple causes. Among them: incomplete data analysis by key engineers (cognitive failure); stress induced groupthink