Conventional Wisdom Can Be an Asset & a Liability

roadchoice copySeveral recent posts focused on “confirmation bias,” which is the tendency to pursue and embrace information that matches our existing beliefs.

A somewhat related concept is “conventional wisdom,” which has been defined as “the body of ideas or explanations generally accepted as true by the public or by experts in a field.”

Interestingly, it can be both an asset and a liability!

On the plus-side, conventional wisdom speeds up consensus and increases our confidence in our decision making, leaving us to focus our attention on challenges for which there is no conventional wisdom to guide us. And conventional wisdom has much truth within it — having been developed over decades of observations.

For example, conventional wisdom holds that specialization is good. A person can get very fast and reliable doing the same thing the same way again and again; and, generally speaking, when the volume and nature of the work flow is predictable, specialization can increase both efficiency and quality. The classic example is Henry Ford’s assembly line which broke the complex craft of auto assembly into a sequence of very specialized jobs that could be easily taught to the relatively unskilled labor on the assembly line.

But in a dynamic world when the underlying assumptions shift, we follow conventional wisdom at our peril as it can easily lead our organization to make some big mistakes!  In fact, when the quantity, timing, or nature of the demand for work is uncertain, specialization significantly reduces efficiency!

For example, when a service organization wanted to speed up throughput and reduce overtime costs for processing new account applications for clients in the Financial Services industry, they organized their processers into different groups to handle different clients. This enabled each processer to complete an account set-up faster because they could easily memorize the steps and forms for their small group of clients. Nonetheless, the efficiency of the operation as a whole declined substantially. Variation in the incoming volume resulted in one group being swamped one day and working overtime, while another group was very slow.

To achieve the benefits of specialization, you need something increasingly uncommon in today’s world: high volume/low variation work. For work that is low volume/high variation, specialization tends to reduce throughput. In such an environment, multi-skilled generalists are far more valuable. Specialization may maximize the speed of the individual, but sub-optimize the process as a whole.

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