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The Bottom Line
From information mismanagement to misinformation – the dark side of
information management
Merlin Stone, Eleni Aravopoulou, Geraint Evans, Esra Aldhaen, Brett David Parnell,
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Bottom Line, Vol. 32 Issue: 1, pp.47-70, https://doi.org/10.1108/BL-09-2018-0043
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From information mismanagement
to misinformation –the dark side
of information management
Merlin Stone,Eleni Aravopoulou and Geraint Evans
St Mary’s University, London, UK
Esra Aldhaen
Ahlia University, Isa Town, Bahrain, and
Brett David Parnell
Pcubed Consulting, London, UK
Abstract
Purpose –This paper reviews the literature on information mismanagement and constructs a typology of
misinformation that can be applied to analyse project planning and strategic planning processes to reduce the
chances of failure that results from information mismanagement. This paper aims to summarize the research
on information mismanagement and provide guidance to managers concerning how to minimize the negative
consequences of information mismanagement and to academics concerning how to research and analyse case
studies that might involve information mismanagement.
Design/methodology/approach –Literature review accompanied by conceptual analysis.
Findings –Information mismanagement is widespread in organizations, so all those involved in managing
and researching them need to be far more aware of the damage that can be done by it.
Research limitations/implications –The research is based on the Westernsociety (Europe and North
America). The same research should be carried out in other parts of the world. Also, all the case studies could
usefully be investigated in more depth to apply the taxonomy.
Practical implications –Managers should be much more aware of their own and others’tendencies to
mismanage information to their own benefit.
Social implications –Stakeholders in public sector activities, including citizens, should be much more
aware of the tendency of the government and the public sector to mismanage information to justify particular
policy approaches and to disguise failure.
Originality/value –The taxonomy on information mismanagement is original, as is its application to
project planning and strategic decision-making.
Keywords Strategic planning, Project management, Bias, Misinformation, Lies,
Programme management
Paper type Conceptual paper
Introduction
There have been many recent examples of what we call “dark side information behaviour”
(DSIB), but no reliable studies of its frequency or severity of impact, partly because there is
no accepted taxonomy of DSIB or way of measuring it or its impact. However, the increasing
focus on the incentives operating on managers, stimulated partly by the rise of
organizational and behavioural economics and finance (Kahneman et al.,1991), and related
aspects such as agency theory (Eisenhardt, 1989), has led to the creation of many tools to
identify and analyse DSIB. Environmental factors, such as the deregulation of financial
Dark side of
information
management
47
Received 29 September2018
Accepted 20 October2018
The Bottom Line
Vol. 32 No. 1, 2019
pp. 47-70
© Emerald Publishing Limited
0888-045X
DOI 10.1108/BL-09-2018-0043
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0888-045X.htm
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markets, the globalization of trade, the collapse of communism and the increasing incidence
of outsourcing, have increased incentives to engage in DSIB and the ease of doing so.
Meanwhile, insistence of regulators on stronger disclosure has led to many revelations that
would not otherwise have taken place.
Academic researchers are hampered in organizational DSIB, compared with, for
example, research into consumer DSIB. Although consumers may admit to certain kinds of
DSIB, or organizations may release information about the DSIB of their consumers (e.g.
fraud), it is less likely that managers questioned about their own DSIB will be honest. Those
whose DSIB is most extreme may be best at concealing it! However, in the age of the
internet, piecing together case studies of managerial DSIB is easier, owing to the many
public domain sources readily accessible. Individually, they might not reveal DSIB, but put
together, particularly when researchers know what they are looking for, they can present a
very different picture.
Known unknowns and the world of Rumsfeld
Before analysing the literature and case studies, we need to explore issues relating to what
protagonists (those inside organizations involved in making decisions) and other
stakeholders knew –or did not know –before, during and after the initiative (plan or project
where the DSIB is alleged to have taken place), and what analysts (those viewing the
situation from the outside) know or knew. Issues include:
what was knowable at the time;
analysts’wisdom in retrospect (what analysts later found out about the situation);
protagonists’wisdom in retrospect (what protagonists later admitted or denied
about the situation, perhaps in response to others’wisdom in retrospect –their
response might range from denial or reengineering of the facts to honesty); and
the balance/contrast between analyst and protagonist wisdom (one’s word against
another’s).
The latter three issues will be explored mainly in the context of the literature and the
individual case studies, but the first merits a short section of its own.
Donald Rumsfeld, then US Secretary of Defense, stated at a 2002 press conference that:
[...] we know there are known unknowns; that is to say we know there are some things we do not
known. However, there are also unknown unknown –the ones we don’t know we don’t know.
Although he was mocked by some at the time, he was making a serious statement reflecting
common issues in risk and project management (US Department of Defence, 2018). In fact, it
is more complicated than Rumsfeld suggested. If we take the first “unknown”as referring to
protagonists’knowledge of whether there is something to be known, i.e. whether there is an
area or situation that protagonists need to know about, and the second unknown as referring
to what there is to be known about that situation, i.e. the details of the knowledge, then there
is a third possibility (apart from the obvious fourth, the known known, i.e. protagonists
know that there is an area or situation that exists and know the details of it). This is the
unknown known, an area or situation of which the protagonists do not know the existence or
the importance of which they do not understand, but its details and/or importance are
known to others –but not to protagonists. They may be known to third parties, analysts,
competitors, governments or the people within the situation, but not by protagonists or
decision-makers.
This four-way classification is best represented by Table I.
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The unknown known is often the refuge of perpetrators of DSIB, in forms such as “but
we had no idea at the time that this was even a problem”,“this was a completely unintended
consequence, which we did not even consider a risk”,or“I was never told about this area,
although I discovered later that my people knew about it”. In these areas, data mining and
artificial intelligence and machine learning may be helpful. For example, if a health service
manager might want to find areas of risk, while not knowing what these areas are, systems
can be used to identify and learn about possible problem areas, such as high death rates in
particular areas or hospitals (e.g. to know them), overcoming the problems caused by health
services being assessed using quality standards based on “known knowns”(Beaussier et al.,
2016). When this information is communicated to the manager, it then becomes a known
known. Using the idea of unanticipated consequences as an excuse has been legitimized by
writing about unexpected events, or “black swans”(Taleb, 2007). However, in some cases, a
supposed “black swan”is really an example of poor risk analytics or poor risk management
(Paté-Cornell, 2012;Aven, 2015).
The situation is more complicated than shown in Table I, for several reasons:
In practice the known/unknown distinction is rarely binary, but a continuum from
completely unknown, to suspected but not known, to part known, to known but not
in detail, to known in detail. Some risks may be emerging, perhaps deriving from a
new phenomenon, e.g. a pattern of behaviour, and so perhaps unknown, partly
known or even just suspected by different parties (Renn, 2014;O’Rourke, 2016).
Emergent risk is particularly important in the insurance industry, where failure to
spot and mitigate emerging risk can threaten profit via an unanticipated claims
level.
When we say that “an organization knows”, we commit the sin of personification.
An organization does not know, but its people do. So, some may know well, some
partly and some not at all.
Protagonists and analysts may not be clearly separated. They may be in the same
organization, or the analysts may be in the pay of the protagonists, as for example
in the case of auditors, when their independence and desired scepticism may be
compromised by the nature of the commercial relationship, as we explain later in
this article. In the case of external organizations in the formal position of analysts,
this relationship can be very complex (Stone et al., 2017b,2003).
Techniques for analysing complex sets of information are advancing rapidly,
transforming how humans relate to data (Slowik and Spinoni, 2018). For example,
as we note later, artificial intelligence is becoming essential in analysis of large data
sets.
Table I.
A typology of
misinformation
What there is to
be known
Unknown Protagonist knows about tde
area but does not know tde
data tdat describe tde area or
arise from it
Protagonist does not know
about tde area, nor do tdird
parties
Known Protagonist knows about the
area, knows the data about it
Protagonist does not know the
area exists, but third parties do
Known Unknown
Whether known to the protagonist
Source: The authors
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There may be information asymmetry between protagonists and analysts, and
between different categories of protagonists and analysts, so one group may carry
out an analysis for which another group has not got the resources to carry out, and
depending on the results of the analysis, DSIB may occur. This issue is particularly
important in relation to governance (Brennan et al., 2016).
There may be a culture of DSIB in an organization, coming from middle or senior
management, usually from leaders (Pfeffer, 2016), conspired in by many members of
the organization, so from an independent analyst’s point of view, nothing said by
protagonists to be known or unknown can reliably be classified as such. This
culture may be related to the organization’s strategic situation. For example, market
incumbents may construct a view of the world that confirms their dominance
(Stone,1984, 2015).
Protagonists may change their description of what is known or unknown because of
errors made by their leaders or because of pressure from their leaders. Leaders may
engage in deliberate DSIB, with middle management being forced to comply with it
for fear of dismissal, whereas middle management may engage in deliberate DSIB
because otherwise information would reveal their incompetence, and top
management may unconsciously fall in line with the DSIB because they do not
know of its existence. Figure 1 shows a simple decision tree illustrating choices
faced by a CEO and board after a failure. In a company with a lying culture, the
CEO, if aware of the failure, will lie consciously, and the board might back up the
CEO’s assertion that the problem stemmed from an unknown unknown.
The taxonomy
One approach to analysing DSIB is to create a taxonomy not just of decision types but of
decision situations, classified by their management and academic disciplines, e.g. strategic
planning, projects and operational. This is because the literature on lying and behavioural
economics shows that incentives to engage in DSIB relate not just to individual decisions
but are systemic, i.e. present throughout a management process. The below taxonomy uses
previous research as input (Scherpereel, 2006). We do not argue that this is the only way of
Figure 1.
A decision tree of
lying
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approaching this topic, or even that it is better than the approaches used in other
taxonomies, e.g. the familiarity or repetitiveness of a decision, but we do argue that it is a
fruitful angle.
The taxonomy we use to classify decisions is as follows:
business model;
strategy;
programme;
megaproject;
project; and
operation.
Their characteristics are described in Table II.
These types are closely related. There is an intimate relationship between strategic
decision-making and business model decision-making, with some arguing that one is a
subset of the other, in both directions (Stott et al., 2016;Parnell et al., 2018). Many strategic
and business model decisions require transformation programmes, which can be described
as a collection of projects, some of which (for the largest firms) are effectively mega-projects.
Such transformations have special information requirements (Stone et al., 2017b;Parnell
et al., 2018). Finally, some information input into these decisions arises from operations, so
any DSIB applied to operational data (e.g. booking of sales ahead of them taking place or
registering that a project action has been completed when it has not) can feed into higher-
level decisions, and this “infects”them. A special aspect of DSIB is competitive information,
which often consists of “soft”information about actual or planned activities of competitors.
This kind of information is particularly subject to DSIB (Stone, 2015). The literature on use
of information is well-defined in the case of strategic decision-making process (SDMP) and
project management,and it is on this research that our review focuses.
The types of DSIB that can occur are classified as shown in Table III.
Previous research
In this review, we focus on three areas, as follows:
(1) the general research on DSIB, particularly on lying and behavioural bias in
managing information;
(2) project management research, focusing on construction and software projects; and
(3) SDMP, focusing particularly on the three areas conventionally researched –
rationality, intuition and politics, and their implications for DSIB.
The review has been limited to what we consider to be the most seminal research in the area.
Lying and behavioural bias
Among the first researchers to signal the general risk of DSIB were Cyert and March (1963),
who suggested that members of an organization may have incentives to manipulate
information, from lying to presenting data in a biased way, so as to influence decisions.
Table IV gives evidence that DSIB is systematic and widespread in business. The
combination of overconfidence and biased governance is particularly toxic!
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Type of
decision Process involved
Main management/
stakeholder
involvement –
suggestions Examples Timescales Issues
Business
model
Business initiation or
transformation
Senior management,
corporate investors
Low-cost airline
New information system
Dis/reintermediation
Duration of
business –years,
decades
Systemic change, with risk of
model not working, many
unknown unknowns
May involve new ecosystem, new
platforms, new partners
Strategy Strategic decision-
making process
(SDMP), change
management
Senior management
decisions, middle
management analysis
New product line
New market
3-5 years More known knowns, but
competitive issues can cause
failure
Often done with existing partners
Programme Programme
management, change
management
Senior management
governance, middle
management
accountability
Transformation to
achieve major cost
reductions
Replacement of major
systems
Merger or acquisition
2-4 years Significant change in work
patterns and responsibilities for
most people
Should but often does not involve
change management
Consist of multiple projects, so
managing connections between
them key
Megaproject Megaproject
management
Senior management
governance, middle
management
accountability
New railway line, new
aircraft
2-4 years Many unknowns as may involve
breaking new ground (literally in
the case of construction)
Project Project management Middle management,
specialist project
managers
IT system installation
Product line extension
New office
1-2 years Few unknowns, but classic failures
may arise due to misinformation
Operations Routine decisions Middle and junior
management, reporting
to senior management
Manufacturing
Service delivery
Ongoing Should be handled by routine
information systems, but failures
can still be covered up
Source: The authors
Table II.
Decision types and
their characteristics
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DSIB in projects
The project literature has very strong coverage of the information management issue, as
shown in Table V.
DSIB in SDMP
Although the rapidly growing literature on SDMP has not focused on DSIB, it gives much
insight into the nature of the SDMP and hence its vulnerability to DSIB, as shown in
Table VI. As we stated earlier, it is harder to research DSIB in SDMP directly, as this may
involve managers admitting deliberate deception.
Financial DSIB
Financial DSIB, which applies not just to the financial services sector but to all financial
issues (such as company reports and accounts), is so serious and widespread that it is the
subject of many reports. Much DSIB that originates in other kinds of information is
translated into financial DSIB. Exaggerated sales become exaggerated revenues and profits,
strategic risks turn into losses and so on.
A serious source of financial DSIB is the existence of many different stakeholders in
a company, each pulling in different financial directions and wanting financial figures
to tell different stories. We have already discussed the issue of personification of
companies –treating companies as if they are unitary entities, when they consist of
many individuals and organizational units, each with different attitudes to and
involvement in business initiatives –choice of business model or strategy, management
Table III.
Types of DSIB
DSIB type Examples
Deliberate
falsification
Deliberate denial
Concealment
Deliberate individual falsification of source information
Conspiracy with others to falsify source information
Deliberate individual misinterpretation
Conspiracy with others to misinterpret
Sins of omission Ignorance
Unconscious denial
Avoidance of information search
Unconscious misinterpretation
Sins of commission Poor prioritization/weak focus on essentials (risks, benefits)
Overconfidence
Over-reliance on intuition
Over-reliance on existing systems and processes (we have always done it this way)
Optimistic interpretation of information that might be regarded as negative or not
supporting a particular decision
Business case flawed (e.g. benefits exaggerated, costs minimized and information
now changed to fit case rather than reality)
Biased governance –stakeholders with interests that conflict with those of the
organization influencing decisions in favour of their own interests
System or process
problems
Information incompetence –systems and processes do not deliver required
information and situation is tolerated
Unconscious or deliberate creation/sustaining of a process/system known to support
a particular type of DSIB
Source: The authors
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Reference Focus Findings DSIB implications
Baker et al. (2002) Sources of
irrational
behaviour
Apparently irrational financial
behaviour can stem from investors
or managers. When the main
source is investors, managers must
be insulated from short-term share
price pressure, allowing them to
take “correct”decisions that may
be unpopular in the market,
whereas if it is managers,
discretion must be reduced and
managers forced to pay more
attention to the market
Managerial discretion may
lead to covering up or
falsification of information
relating to the returns to
particular actions, if these are
at variance with the market’s
view. Stronger governance is
required to prevent this
Grover (2005) Causes and
management of
workplace lying
Lying is part of every manager’s
life. People may lie purely for their
own benefit, but many lies are
associated with competitive and
social pressures. People vary in
their propensity to lie. Nearly
everyone lies in bargaining
situations, but only some people lie
when faced with conflicting
expectations
People need to rationalize their
lies, and organizational
cultures emphasizing honesty
do not seem to reduce lying.
Rather, they drive lying
underground. We should
therefore always be on the
look-out for lying
Güner et al.
(2008)
Biased
governance
Having bankers on a corporation’s
board increases financing to firms
with good credit and few financial
constraints, but poor investment
opportunities. Having investment
bankers on the board is associated
with more frequent outside
financing, larger public debt issues
and poorer firm performance after
acquisitions
Banker-directors act in the
best interests of creditors, so
board financial expertise may
not be in the best interest of
shareholders. The advisory
role of directors is affected by
director interests that conflict
with those of shareholders.
Governance needs
strengthening to prevent this
Lovallo and
Kahneman (2003)
Delusional
optimism
Many business initiatives fail due
to “delusional optimism”, which
includes emphasizing projects’
potential benefits, underestimating
their likely costs, and creating and
promoting success scenarios while
ignoring the possibility of errors.
This is due to cognitive biases and
organizational pressures to
accentuate the positive
Aggressive goals can motivate
teams and improve the
chances of success, but
external forecasts should be
used to decide whether to
commit. However, this implies
that the managers concerned
have an interest in realism,
although they may not,
particularly if the pay-off is
distant and the returns are
near term
Malmendier and
Tate (2005)
CEO
overconfidence
Overconfident CEOs
systematically overestimate the
return to investment projects. This
is confirmed in many other studies
of theirs, e.g. Malmendier and Tate
(2008)
Independent directors may
help cure this tendency, but as
Güner et al. (2008) suggests, if
these are investment bankers,
the result could be just as bad
(continued)
Table IV.
General evidence of
DSIB
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of programmes, projects and operations. For example, in banks, just in the area related
to risk management, can be found compliance specialists, quality assurers, risk
managers, internal auditors, investigators and of course senior and middle
management, and this does not include those managing stakeholders who may need to
be involved –staff in customer services and sales, in branches and contact centres. As
the past few years have shown, no matter how many such people exist, and no matter
how well aligned they may be in principle, it is not easy to manage them together to
manage risk, including that generated by the DSIB of staff within the bank.
One issue that allows large companies to get away with serious DSIB is the appointment
of seemingly independent non-executive directors who are actually not independent, with
their main “duty”being to make a board look impressive rather than to exercise a strong
due-diligence function. This pattern is visible throughout industry (and increasingly in the
public sector), but can be particularly damaging in financial services, where the risks are so
great. In some cases,non-executive directorsare members of many boards, giving them little
time to focus in depth on each company of whose boards they are a member. This
phenomenon is known as “overboarding”(Marlow, 2017).
Reference Focus Findings DSIB implications
Malmendier and
Tate (2009)
Superstar CEOs CEOs who win awards perform
worse after winning them. Award-
winning CEOs spent more time on
public and private activities
outside their companies, e.g. taking
other board seats or writing books.
Award-winning CEOs
underperform relative to their prior
performance and to a matched
sample of non-winning CEO. The
effects are strongest in firms with
weakest corporate governance
Information relating to the
quality of senior management
often refers to winning
awards, but this is negatively
correlated with performance.
Weak corporate governance
makes the situation worse.
Senior managers should be
discouraged by their boards
from this kind of narcissistic
behaviour
Malmendier et al.
(2018)
Long-run effects
of mergers
Where two or more companies had
a significant ex ante chance of
winning (close contests),
companies that failed to take over
did better than those that
succeeded, when their returns were
similar before the take-over
contest. Returns from the merger
were often exaggerated (perhaps
by both parties)
Take-overs are often toxic and
should be discouraged,
particularly if estimates of
likely returns come from the
managers who are keen on the
take-over
Schenk (2017) Rogue trading
in a bank
The actions of a rogue trader were
driven by seeking individual
reputation, whereas senior
executives took no responsibility,
nor were they viewed as
responsible
Stronger governance and
better information
management are required to
control the actions of
individual managers,
particularly when they can
take actions that can lead to
greatly increased exposure
Source: The authors Table IV.
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These and similar problems have led to the emergence of a model-based approach to the
management of risk, the three lines of defence model (Chartered Institute of Internal
Auditors, 2015), involving separating the functions that own and manage risk, oversee risk
and provide independent assurance. The first group owns and manages risk and engages
with the second group to agree on polices and risk limits that match the banks’risk appetite
and relevant delegated authorities, using business practices established to meet their
objectives while managing risk in accordance with these. The second group establishes
policies and limits for the first group that match the agreed (and governed) risk and may
also control aggregate risks by risk type. Immaturity or weakness in the first group
Table V.
DSIB in projects
Reference Focus Findings DSIB implications
Clegg (2008) The need to view
project
management
with a political
perspective
Flyvbjerg (2004) identifies that when
power and knowledge are entwined, the
greater the power, the less the need for
rationality. Power dominates rationality.
Those with power define the reality of
the project to further their preferences,
using any strategies and tactics
Project managers and those
responsible for project
governance must be alert to this
tendency and create sources of
information on project progress
that are truly independent of
those with power
Flyvbjerg
(2009)
Why the worst
infrastructure
gets built
Biased cost–benefitanalysesarisefrom
incentives to promoters of infrastructure
projects to underestimate costs and
overestimate benefits, to gain approval
and funding. Projects made to look best
in business cases –often intentionally –
generate the highest cost overruns and
benefit shortfalls, leading to “survival of
the unfittest”, with the projects made to
look best performing the worst.
Researching intentional deception is
difficult, but can be done (Flyvbjerg,
2004;Wachs, 1990)
Use “reference class
forecasting”(examining
similar past situations and
outcomes) in project business
cases (Flyvbjerg, 2004)to
reduce inaccuracy and bias, to
compensate for cognitive
forecasting bias (Kahneman,
1994;Kahneman and Tversky,
1979)
Priemus
et al. (2008)
Decision-making
on mega-projects
Mega-projects are often poorly thought
through, with all options not taken into
account, benefits systematically
overestimated, costs systematically
underestimated and little or no learning
from past experiences. Errors for recent
projects are often larger than for earlier
ones
More attention should be paid
to learning from past projects,
from planning through to
implementation
Glass et al.
(2008)
Lying on
software projects
The main forms of lying on software
projects are early cost and schedule
estimates, status reporting during the
project and political manoeuvring. The
rarest form of lying was hype. When
lying happens, developers often know
about lying even when management
does not. Estimation and political-
manoeuvring lies came mainly from
management, status-report lies came
mainly from project leads, and hype
mainly from marketing
More focus on trust, control
and independence of
information provision is
required
Source: The authors
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Reference Focus Findings DSIB implications
Thomas and
McDaniel (1990)
Effects of strategy and the
information-processing
structure of top management
teams on interpreting strategic
situations
Strategy and information-processing structures are
partly determined by how business leaders define and
analyse strategic situations
The bias of the SDMP towards the leader’s
interpretation of strategic situations must be
recognized and challenged
Hough and
White (2004)
Scanning and information
gathering for strategic decision-
making in situations of
environmental dynamism
Environmental dynamism and a manager’s functional
position explains scanning behaviour. Scanning behaviour
may be unrelated to the need for information and is
vulnerable to bias by those scanning or managing
scanning
Scanning and information gathering are critical
activities and require stronger governance,
particularly in situations of environmental
dynamism, where it may not be clear which
information is most needed for decisions
Carmeli et al.
(2012)
CEO relational leadership and
strategic decision quality in top
management teams, including
theroleofteamtrustandthe
extent of learning from failure
Trust between top management team members had an
important influence on CEO relational leadership and the
extent of team learning from failures, which in turn
affects strategic decision quality
CEOs can improve the quality of strategic decisions
by their top management teams by shaping a
relational context of trust and facilitating learning
from failures. Where trust does not exist, learning
from failures will be weak, so information relating
to failures may be suppressed
Hough and
White (2003)
Environmental dynamism and
strategic decision-making
rationality
Environmental dynamism affects the relationship
between rational-comprehensive decision-making and
decision quality
A dynamic, unstable environment can pose
problems for decision-making rationality and
open the door to DSIB, so stronger governance of
decision-making is needed in suchsituations
Citroen (2011) The role of information in
strategic decision-making
Executives using a rational approach collect and use
ample information in a structured multi-phase decision-
making process in which information plays a crucial role
in reducing uncertainty
More relevant information on issues affecting
choices allows board decisions to be better
controlled and more rational However, it is still
vulnerable to DSIB
(continued)
Table VI.
DSIB in SDMP
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Reference Focus Findings DSIB implications
Aravopoulou
et al. (2018)
Strategic decision-making
process in times of crisis
Rationality is a key dimension of SDMP. Decision-
makers use intuition in the form of past experience when
making acquisition decisions, whereas their personal
judgment and “inner voice”are neglected, and political
behaviour is not displayed
DSIB can be avoided when rationality prevails
and there is no or little political behaviour when
there is strong focus on identifying and analysing
all required information, use of external financial
advisors, reliance on many methods of
information gathering and when decision-makers
are open with each other about their interests and
preferences and there is no bargaining,
negotiation or use of power among them
Frishammar
(2003)
Information use in strategic
decision-making
The SDMP starts with soft information (visions, ideas,
intuition, cognitive structures, etc.), used to decide which
hard information is relevant, moving to hard/numerical
information, then back to soft information for the final
decision. Internal/close information sources (e.g. staff and
customers) seem to be preferred over external ones,
whereas solicited information tends to be preferred to
unsolicited information
Managers may not be sufficiently active in
seeking more of the important information they
need, and may be biased in their solicitation of
information. Tough questions should therefore
always be asked about the information
gathering and interpretation process that
supports SDMP
Papadakis et al.
(1998)
The role of management and
context in SDMP
The SDMP is influenced by characteristics which are
decision-specific, top management factors and contextual
factors. Decision-specific ones seem to have the strongest
influence on the SDMP. Management may manipulate
the meaning or categorization of strategic issues, to
influence organizational responses, e.g. manipulating
information from external to internal systems, such as
“Environmental Scanning”or “Strategic Issue
Management”or “Boundary Spanning”systems, to serve
their own goals
Management may filter information and
manipulate decision-specific characterizations to
control rationality, formalization, lateral
communication, hierarchical decentralization
and even internal political activity. Strong
governance is required to control this tendency
(continued)
Table VI.
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Reference Focus Findings DSIB implications
Dean and
Sharfman (1993)
Procedural rationality in SDMP Environment (competitive threat), organization (external
control), and strategic issue (uncertainty) jointly affect
procedural rationality. SDMP procedures were most
rational when competitive threat and external control
were limited, and problems were not uncertain
When firms are in environments of little
competitive threat, when they perceive little
external control and are facing well-understood
issues, they use rational procedures. DSIB is
therefore more likely in situations of
environmental turbulence
Miller and
Ireland (2005)
The role of intuition in strategic
decision-making
Intuition is a troublesome decision tool It is particularly vulnerable to DSIB, so strong
governance is required, focusing on monitoring
for DSIB
Abrahamson
and Baumard
(2008)
The organizational facade Reputations can be made or lost in a moment, so façades
pervade organizations in scale and in scope, perhaps
deliberately manufactured to create external support (e.g.
investors), when they bear no relation to organizational
reality
Lying behaviour associated with constructing a
façade may be infectious, leading to other kinds
of DSIB, which can only be controlled by
stronger governance
Eisenhardt
(1989)
Strategic decision-making
speed in a high-velocity
environment
Fast decision-makers use more, not less, information than
slow decision-makers, based on more alternatives,
leading to superior performance
Slow decision-making is not necessarily a good
decision, and may give more scope for DSIB to
emerge, so management should be aware of the
greater need for governance in these situations
Source: The authors
Table VI.
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demands greater scale, capability and strength in the second group. The third group checks
the effectiveness of processes and controls from end to end.
This approach should work well in theory, but is not immune to systemic DSIB to which
banks and others are prone (e.g. denial and restricted environmental scanning), sometimes
accentuated by command lines in which those with overall responsibility can force
particular interpretations of risk (e.g. that risk is lower than it actually is) on more junior
staff. The main way to avoid this is true independence between groups, perhaps even using
external checks, and a healthy dose of scepticism in any auditing (Lherm, 2016).
Each sector has its own particular pattern of DSIB. In one sector of financial services, the
patterns were analysed by the Fixed Income, Currencies and Commodities Market
Standards Compliance Board. Nearly every category of the dark side behaviour involved
manipulating information, ranging from creating deliberately misleading patterns of
information to falsifying information directly. All the categories analysed were entirely
deliberate and so akin to lying.
Case studies
Overview
There is not the space to give detailed case studies –instead, we have provided references to
where more detailed statements of situations can be found. As our review of research shows,
DSIB is common. It is literally almost everywhere. So in analysing an organization, the
critical question is not whether DSIB exists, but what was and is the extent of its influence
on it –then and now, and whether it reflects a severe underlying problem in terms of how
modern society works.
Our case studies cover several sectors (it would be easy to compile a list that is just
financial services), including public and private sectors. One weakness of the list is its focus
on large organizations, on which information about DSIB is more easily available because
they are investigated by analysts, the media and governments and have a larger number
and wider range of stakeholders interested in their behaviour and governance. All the cases
have been selected from Western developed countries, partly because they reflect the
authors’knowledge base, but also partly because if we were to include other countries,
particularly developing nations, we would be swamped with examples, as world indices on
fraud and governance indicate, for example the Corruption Perceptions Index (2017).We
have selected case studies only of project, programme and strategic initiatives, and not other
DSIB contexts. The main case study covers the authors’own industry. This is followed by a
brief summary of other cases (Table VII).
Higher education SDMP
The problems caused by poor use of information in higher education institution (HEI)
strategic decision-making were highlighted by Al Dhaen (2017) and Hargreaves and Stone
(2017). The latter highlights a particular severe case of information denial, in which senior
management in many UK universities refused to take seriously the likely impact of a short-
term decline in student numbers caused by a dip in the size of the cohort of university
applicants, making investments that drained their cash, so that they were forced to contract,
despite clear evidence of a likely upturn a few years later.
Tromp and Ruben (2010, p. 4) state that “there are generally few carrots and sticks
available to leaders as incentives (or disincentives) and where the communication and
organizational challenges are far from trivial”. In the UK, the issue of strategic planning and
re-formation of university mission and vision has become an important priority, including
meeting objectives of international accreditation bodies and meeting quality standards, both
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of which are put at risk by unethical behaviour relating to claims concerning quality (Stone
and Starkey, 2011).
Leaders of UK higher education rely on intuition in their decision-making but should
support their decisions with rationality and rely on specific strategic information, rather
than plan in an ad hoc and occasional manner (Universities UK, 2011). Rowley (1997)
Table VII.
DSIB in other
industries
Industry Issue
Accounting The accounting industry provides many examples of DSIB, particularly for denial of
conflict of interest that results from a strategic focus on developing consulting and other
advisory services and selling them to audit clients or from focusing on maximizing fees
from audit clients, leading to audits becoming window-dressing, as the auditing firm
fears loss of the client. This DSIB is usually a direct result of unethical decisions by
senior managers (Meckfessel and Sellers, 2017;The Economist, 2018)
Automotive This industry, once famous for focus on fashion rather than safety (Nader, 1965), has
produced strategic cover-ups relating to pollution. These may result from individual
middle management DSIB, resulting from attempts to meet targets, subsequently
covered up and/or denied by senior managers (Leggett, 2018)
Banking There are many reports about concealed strategic dependence on mortgage markets
before the financial crisis, often in the form of banks’off-balance sheet vehicles that
governments knew about but were slow to regulate or never regulated. Governments
were deeply complicit in what was effectively a cover up, particularly in the UK,
Germany and the USA. This is nearly always a result of DSIB by senior managers and/
or politicians, who created the strategy and lied about its impact (Deutsche Welle, 2018;
McNeil, 2014;Olson, 2007;Patrick’s Blog, 2018;Theil, 2009). There are also many
reports of major systems failures when attempts to upgrade systems go wrong,
following classic software project patterns, e.g. BBC (2018)
Construction A frequent problem is cover-up of delays in one part of a project that leads to delays in
other parts because other stakeholders are not informed of delays. This normally starts
with middle management denial or cover-up, with senior management then becoming
complicit (Construction News, 2014;Construction News, 2018;Sharp, 2018)
Governments Here, falsification of evidence about military achievements and threats, to justify
strategic commitment of resources to conflicts, is very common, e.g. US involvement in
Vietnam and US and UK military involvement in the Middle East. Such DSIB nearly
always involves conspiracy to lie at the highest levels, after information provided by
middle-level managers or state employees proves incompatible with the views of the
seniors (Beliefnet.com, 2018;Ellsberg, 2001;Marlantes, 2017;McSmith, 2016;Taylor,
2013;The Guardian, 2014)
Information
technology
As our summary of work on software projects indicates, one of the most serious causes
of failure is simple over-optimism and lying about capabilities and values of assets. This
usually involves senior management (Finkle and Leske, 2012;Flinders, 2012;Foss et al.,
2008;Fruhlinger and Wailgum, 2017;King, 2010;March, 2006;Out-law.com, 2018;Pries
and Stone, 2004;The Guardian,2013, 2016;Wright, 2011)
Pensions Poor strategic management of assets and involvement in businesses that do not fit with
objectives, especially prior to demutualization, are the main areas cited. Senior
management DSIB is often driven by direct financial incentives (Fraser, 2004;Mathews,
2000)
Retailing Under pressure from changing demographic and behavioural patterns (e.g. internet
buying), many retailers have been caught out with antiquated business models, but are
slow to admit this strategic planning failure to their shareholders. Accurate evidence
provided by middle managers is often suppressed by senior managers (Espiner and
Atkinson, 2016;Heller (2004);Ibitoye, 2017;Moore, 2018;Ruddick, 2013)
Source: The authors
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highlight the need for communication and participation in the strategic planning process,
specifically during strategic change and mission development, and identify that failure of
strategic planning is often due to inadequate information. Strategic plans are often
developed in a highly centralized and intuitive manner by senior management (Al Dhaen,
2017;Hargreaves and Stone, 2017). This intuitive planning leads to many HEIs facing
challenges in digital transformation, due to poor planning (Ladd, 2016), and in resource
planning (Hinton, 2012). Hargreaves and Stone (2017) argue that senior university
management sometime confuse excellence of research, teaching and academic leadership
with managerial competence. As highlighted in the SDMP literature review, strong
governance is often an antidote to DSIB, but it is often absent in universities. In the Gulf Co-
operation Council region, lack of transparency and accountability is a serious problem
(Gashgari, 2017).
Management implications
Behavioural and managerial factors
Our review of research shows various behavioural and managerial ways to avoid DSIB.
These include avoidance of politics, improved governance, trust and honesty –including
awareness of pressures to engage in DSIB and balancing intuition and rationality. Several
relate specifically to information, such as learning from experience, via detailed analysis of
past similar situations, admission and investigation of the known/unknown situation and
frequent recalibration in line with new information. In situations where DSIB occurs, it
makes sense to evaluate these factors to see where improvements arerequired.
Use of information technology
The advent of big data should have made mismanagement based on any kind of
information error (including DSIB) less common, particularly given the emergence of the
insight discipline (particularly customer insight), the increased ease of managing and
accessing information (Stone et al., 2017a) and analysis of how to make insight more
effective by ensuring that senior managers understand the story told by the data (Stone
et al., 2015). However, big data without intelligence and analysis merely leads to a situation
of overload, which is why big data and analytics should go hand in hand (Wright et al.,
2018).
In “soft”situations (Petkov et al.,2007;Hicks, 2004), one problem is knowing where to
focus analysis. A report from Tata Communications (2018) suggests that artificial
intelligence may help, by offering a counter-opinion, avoiding the problem of false
consensus and group-think. This builds on research on the importance of cognitive
diversity, which so far has focused mainly on the importance of having different points of
views, often from the perspective of different types of individual (Mohammed and Ringseis,
2001). Using artificial intelligence to create a different viewpoint requires conscious
admission by management that without such artificial intelligence, they risk making a
wrong decision based on DSIB that they may themselves have initiated or conspired to
create, including through suppression of cognitive diversity.
Management checklist
Here, we identify questions managers should ask about how information about initiatives
(projects, programmes or strategic initiatives) is being managed in their organization. When
answers to these questions are weak or absent, it indicates the need to tread carefully. Senior
managers who hear that these questions are being asked may try to suppress enquiry and
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force departure of staff askingthe questions, so strong governance is critical in this area, but
may itself be resisted by senior managers committing DSIB.
Information quality and analysis
Does the information we are using to manage the initiative have the right quality –
completeness, currency, integrity, accuracy, accessibility, consistency, objectivity,
transparency, relevance?
Is the interdependence between different elements understood –in relation to both
quality and value of data items?
Is there diversity in the sources and interpretation of information?
Is the information used to plan and estimate the feasibility of initiatives compared
with similar information for past initiatives, whether undertaken by the
organization itself or by similar external organizations?
Information management and governance
Do we know what the risks of initiatives are? Are we managing them? Are they
logged on a risk register related to each initiative? Is the register being managed? Do
we have contingency plans?
Is there proper governance of initiatives and their risks? Are the right people
involved in governance? Is there a steering group? If so, how well does it
function?
Is there transparent stakeholder management, in relation to information used in
planning or executing initiatives?
Is there proper and focused management of initiatives, in the sense of having clear
accountability and structures allocating responsibility for documenting progress
and for achieving success?
Do those managing initiatives have access to the right information?
Are we sharing and transmitting information about initiatives to all relevant
stakeholders?
Do we know how much of any initiative has been achieved so far, at any stage from
planning and resource allocation to actions and measurement?
Are risks of projects, programmes or strategic initiatives disguised as dis-benefits
or vice versa?
Are consequences that are described as unintended or unexpected actually intended
or forecast?
Have stakeholders developed an exit plan that allows them to look good after an
initiative fails? If so, is this affecting their involvement/commitment?
Are there strong incentives to any stakeholder or group of stakeholders to create
misinformation? Are stakeholders motivated to compound misinformation or cover
up failures? (This is known as the slippery slope.)
If there is deliberate information mismanagement, how are those doing it defeating
the information systems and processes designed to provide the correct information?
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Implications for university teaching and research
The implications are straightforward. Teachers of or researchers into management
need to be careful in interpreting statements made by managers about their
performance or intentions. They should be particularly alert to the tendency of
managers to engage in DSIB and to put up a facade or to window-dress the situation.
This approach should be integrated into all management teaching and into training of
academic researchers into business behaviour. It is not enough simply to “plug in”
courses on business ethics as an afterthought. Teaching in all business disciplines,
particularly in finance, project management, strategy, marketing and information
systems, should include content and exercises designed to help students explore the
incidence and impact of DSIB.
Implications for government and regulators
In most developed countries, government and regulators are now highly alert to the
incidence and impact of DSIB, and of the vulnerability to DSIB of organizations of all kinds,
whether they be private sector, charities or public agencies. DSIB is a systemic characteristic
of organizational behaviour, but also –as we have seen so clearly in the past decade or so –
of government and regulators, who like to position themselves as being above DSIB but are
often complicit in it. The common elements of remedies to DSIB are transparency and
independence of governance. However, these too are subject to manipulation and DSIB,
within regulators and governments as well as in other organizations, for example, in the
form of claims that transparency and governance existed when those responsible for it were
themselves complicitin DSIB. So, our conclusion to this section and to this article overall is –
be vigilant.
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Corresponding author
Merlin Stone can be contacted at: merlin.stone@stmarys.ac.uk
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