MIT Sloan Management Review

Leadership and Organizational Studies

Between “Paralysis by Analysis” and “Extinction by Instinct”

By Ann Langley

April 15, 1995

IN THEIR DECISION-MAKING ACTIVITIES, MANAGERS NEED TO TREAD A FINE LINE BETWEEN ILL-CONCEIVED, ARBITRARY DECISIONS (“EXTINCTION BY INSTINCT”) AND AN unhealthy obsession with numbers, analyses, and reports (“paralysis by analysis”). The author examines the over- and underuse of formal analysis and describes its underlying motives. She identifies three types of situations that lead to excessive analysis and three that lead to insufficient analysis. She concludes that, since the causes are frequently structural, simply exhorting managers to be more or less analytical is unlikely to solve the problem. Attention must be given to deeper structural and cultural issues. Moreover, because the obvious solution to one problem may drive the organization to the opposite one, rational yet efficient decision making is a complex balancing act that requires frequent diagnosis and realignment.

Buy article & permissions

I come from an environment where, if you see a snake, you kill it. At GM, if you see a snake, the first thing you do is go hire a consultant on snakes. Then you get a committee on snakes, and then you discuss it for a couple of years. The most likely course of action is — nothing. You figure the snake hasn’t bitten anybody yet, so you just let him crawl around on the factory floor.” — Ross Perot1

As time passes, old management formulas become outmoded and are replaced by new ones, but the underlying message is often the same: formal analysis — the systematic study of issues — can help organizations make better decisions. This seemingly plausible hypothesis is supported by an extensive literature in cognitive psychology that shows convincingly that unaided human judgment is frequently flawed.2 For example, people seem to be unduly influenced by recent or vivid events, consistently underestimate the role of chance, and are often guilty of “wishful thinking.” Formal analytical techniques are a way to avoid such problems.

However, the “rational” approach has also had some influential detractors.3 For example, Peters and Waterman condemn formal analysis for its bias toward negative responses, its degree of abstraction from reality, its inability to deal adequately with nonquantifiable values, its inflexibility... To read the complete article, login or sign-up using the form below.

From The Magazine

Fall 2009

Special Report: Sustainability

8 Reasons That Sustainability Will Change Management

Michael S. Hopkins

Transparency, accidental innovation, trust, collaboration — as sustainability affects how the world works, so will it affect how business works in the world.

Intelligence: Management

Debunking Management Myths

Martha E. Mangelsdorf

In this interview, Henry Mintzberg questions some of the conventional wisdom about managerial work.