The smartest monkey fallacy - A lesson in the importance of 'choosing' the right leader for your business

For approximately seven years now when travelling on long trips for work, I have been enjoying listening and re-listening to a fantastic audio book by Rolf Dobelli titled ‘The Art of Thinking Clearly’. In the book the writer explores thinking errors, biases, regressions and other common fallacies that we humans, have and fall into when making important life and business decisions (Dobelli, 2013).

Rolf is Swiss and writes in a very Germanic 'matter-of-fact' style and his insights delve deeply into the human psyche. At its core, in my view, the theme of the book is how to assist your brain make better decisions, by stopping all the built-in short cuts it has developed over the years, with the ultimate aim to avoid situations that have the potential to impact your life negatively. For a generally positive, 'glass half full' person such as myself, it took a couple of years of listening to fully grasp and embrace the 'via negativa' (the negative path) and understand that highlighting negatives and avoiding them where possible, can be equally as valuable as having a positive 'can do' attitude.

So, how this book relates to my monkey fallacy leadership story is as follows.

One afternoon around 12 months ago at an airport coffee shop, I ran into a former colleague I had worked with in the 'heydays of the late 80’s' at a futures brokerage firm in Sydney. We quickly got into a relatively deep discussion on things such as the strength of the economy, interest rates, market multiples for businesses in various industries (and how they were calculated) and other topics. We laughed about some of the thinking errors we had seen over the years, such as businesses continuing to push through with unsuccessful marketing campaigns, even though they could stop them at any time and save the cash - the spent cost fallacy, or how people very rarely sell shares when they go below purchase price because for them, the painful realisation of a loss is far worse than a similarly sized gain - loss aversion......these and other paradoxes are covered well and at length in Dobelli’s book.

My conversation with him then expanded into his experience observing thinking errors and mistakes that even the so called 'best of the best' in business seem to make, with particular focus on leadership, or more precisely, choosing leaders within businesses that we know of or had dealt with in the past. He confided in me further on a few of his own costly thinking errors that mirrored these and the unique classification's he gave them. I thought I would share these with you.

My acquaintance who I will call 'Joe' is approximately 53 years old, has been in business for himself and occasionally multiple business partners for almost 30 years. By most common measures he has had a successful business life, he has been involved with many organisations that have made good to strong profits over many years. He owns, or has previously owned & managed these in diversified sectors including finance, insurance, transport/logistics, construction and public entertainment, with total turnover in the hundreds of millions per year. I have virtually eliminated luck as the main factor in his success due to the diversification of industries he has been involved with and his long term positive results - through both good and bad economic times. He recounted that he has had over 4500 employees on his various payrolls in that time and had many issues, especially in his first twenty years, with his top level managers (that he himself employed - so he wasn't trying to shift the blame elsewhere) not being competent to assist him to run his businesses and make decisions that he thought 'average level' business leaders and decision makers would find straight forward or logical.

The grouping terminology he used, which I thought was novel, was to relate his particular fallacies and errors to monkeys. I asked why he chose monkeys to which he replied that he picked them from his father’s favourite saying, ‘if you pay peanuts you will get monkeys!’.

To start the list, when Joe first began in business for himself, he employed people he had worked with previously at other companies or went to Uni with in leadership roles, basically mates or friends of his, 'known quantities to him' if you like. Over time, this then led to him occasionally hiring relatives and friends recommended by those original mates and friends when the need arose. He did this (and we’ve all been there!) when he needed to get out of a tight spot he couldn’t fill, or pay appropriately for, or wait for a more suitably experienced candidate or sometimes simply to gain favour within his circle of friends by looking after one of their own. This he called the friend or related monkey error. This error manifests itself whenever he employed people that were generally speaking 'not 100% capable' of making the best business decisions or handling tasks that they were assigned, just because he worked with them previously, knew or liked them. Which was hardly a sound logical basis for their employment........ He openly admitted the kicker for him at the time was he generally paid them less and therefore did not take his father’s advice about what you get when you pay peanuts. He also always thought in those early days that someone doing well in 80% to 90% of a required role would be good enough. Over my career I admit to occasionally having to 'fill in' and be that friend or related monkey when required - although, in my defence, I always stated it would be a 'short term fix' only deal.

As a direct result of the first monkey error, he then fell victim to an associated error which he referred to as the acquainted monkey error. As Joe’s businesses were successful and grew, he often listened to the multitude of friends and relatives he had as employees and took their advice and employed their friends and acquaintances. These candidates were always sold to him as ‘perfect for the job!’ and this nearly always proved to be the opposite, 'nepotism gone bad' was the phrase I used!

This then generally led him to the promoted monkey error, where after a period of time he had to move these non-delivering managers out of their current positions into higher or sideways roles with less direct responsibility and business impact, he was too emotionally invested in them by this stage to get rid of them, he also thought he couldn’t afford the negative impact it would have on the original related monkeys by either managing the non-performers out of the business or simply finishing them up and dealing with the consequences. As he said he shifted them permanently to 'special projects', which we all know is code for not doing or delivering much at all!

Joe did occasionally try to bring outsiders into his monkey troop, especially if he acquired or integrated a new business into his group that had existing management in place. This wasn't particularly successful as the leaders were generally undermined, driven away, or deflated, then defeated by the existing monkey troop who were very protective of the positions they had risen to in his businesses. There was no way they were going to sit by and see an outsider gaining momentum or favour within it, no matter how critical it was to the business' success.

So after doing this for a ridiculously long 15 years, working 14 hour days, six to seven days a week, mostly, but not always to cover for the deficiencies of his troop of chosen monkeys, he decided he would draw a line in the sand and from now on would only employ the smartest monkey that his money could buy.

So, true-to-type, he searched again within his circle of friend and related monkeys and known or acquainted monkeys to find the smartest monkey that they all knew (yep, he was making the very same mistake again..…). He did however try some new strategies and conducted business aptitude, EI and psychometric testing on the best monkeys put forward to limit his risk of selecting a rogue monkey. After a few weeks he found what his research indicated was the smartest monkey (within the limited pool) and he gave this particular monkey a start at the top. Over a period of time, he gradually passed control of his current businesses along with all the support staff, training and mentoring that he felt a smart monkey would require to be successful. He bought this smartest monkey an impressive work car for client visits and meetings and sent him on his way. Three or so years later and having delivered only moderate success, Joe’s smartest monkey made a major error with a significant client and lost their business. He also crashed his work car after having one too many banana daiquiris at a supplier function, injuring himself and his two passengers quite badly. Obviously, Joe had to let this monkey return to the jungle he came from and he set about picking up the pieces. His businesses struggled for some time in the aftermath of all this and Joe vowed to never employ a monkey as a manager or leader again, even if it was the smartest monkey he had ever seen!

So then about six years ago in mid-2014, Joe, who was an avid reader, also came across 'The Art of Thinking Clearly' and thought he understood where he had been going wrong, although there is no direct reference to the exact errors he was making in the book, he said the book gave him the clarity of thought that he needed to finally get it right and avoid the negative situations he had continually put himself in.

He went away from his circle of related and acquainted monkeys to find the right leader for his businesses. He did this by engaging a specialist recruitment firm that he had no previous dealings with and spent almost six months and $95k going through the process with them. Together they took the time to understand what was the right fit for him and his diverse businesses and they employed the best person they could find for the role. This person had a corporate accounting background, great natural leadership abilities, strong decision-making skills, had never worked in his current business sectors previously and was not related or acquainted to him or anyone else in his monkey troop in any way. To this day and to Joe's relief, she has been extremely successful for him and his businesses and he now only works a few days a week in them, he also knows that they are in great hands all the time. In his words the best money he ever spent................and not peanuts either!

So, what was the moral to his story?

Put simply…. if you employ the smartest monkey you know, or even the smartest monkey you and all of your friends and acquaintances know, just because they have an existing relationship with you or your monkey troop, you've still employed someone in all likelihood that may not be 'quite right' to be the leader of your business and sooner or later you will probably pay the price for it.

So, don’t fall for the smartest monkey fallacy when employing leaders in your business. If you are struggling to find the right person within, it may pay to go outside your nearest and dearest when looking to fill these roles. They won’t be burdened by related or acquainted monkey pressures and may just give you the edge and perspective you need to be successful.

# Disclaimer - from knowledge gained from my business analyst days and dealing with and assisting many successful family businesses, most are an exception to this fallacy (and I will highlight most - not all). These businesses generally 'know what they know' and aren't afraid to hire the specialised skills they are lacking from outside their existing troop to improve their businesses. Also having been involved with many mining and construction companies over the years where nepotism is traditionally rife, being related or friends with people you employ is not an issue, as long as you don't overestimate their ability to perform at the level required.

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Dobelli.R. (2013). The Art of Thinking Clearly [Audible Audiobook]. Retrieved from https://adbl.co/2xE3Whc

'The Art of Thinking Clearly' is a 2013 book by the Swiss writer Rolf Dobelli which describes 99 of the most common thinking errors - ranging from cognitive biases to elements like envy and social distortions.

Some of my personal favourites from the book are listed below, these I try my best to look for and either avoid, or at a minimum consider the influence they are having when I am making important decisions:

• Confirmation bias: we interpret evidence to support our current or existing beliefs.
• Availability bias: we create a picture of the world, or construct arguments, based on examples and evidence that most easily come to mind generally from previous experience.
• Overconfidence effect: we systematically overestimate our knowledge and our ability to predict outcomes or results.
• Outcome bias: we tend to evaluate decisions based on the result, instead of the process.
• Action bias: we feel compelled to do something, particularly in new or shaky circumstances, rather than do nothing i.e. acting too quickly or too often, where doing nothing and seeing what develops from the situation would have been the best move.
• Information bias: the delusion that more information guarantees better decisions.
• Alternative blindness: we systematically forget to compare an existing offer with the next-best alternative.
• Not-invented-here syndrome: when we think anything we create ourselves is unbeatable.
• Planning fallacy: we overestimate benefits, and underestimate the risks, costs and duration of a project.
• Déformation professionnelle: experts will tend to solve problems using their expertise, not necessarily the best method. “To the man with a hammer, every problem is a nail."
• Fallacy of the single cause: the belief that a single factor caused an event or phenomenon.

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Apologies for making this a longer read, I hope it was worth the effort if you got this far!....... I had it drafted before sending for almost 12 months, added to it at different sites I was working at late at night when I could (cutting/adding/re-doing parts that I wasn't happy with etc.). I also had both shorter and longer versions, but they didn't get the 'vibe' of the message across and missed the path as intended and relayed to me by 'Joe'.