The Strategist's Analysis Cycle: Handbook by Elgersma Erik

Author:Elgersma, Erik [Elgersma, Erik]
Language: eng
Format: epub
Publisher: LID Publishing
Published: 2017-07-20T00:00:00+00:00

14.5

STATUS QUO BIAS

Another common analysis pitfall is the ‘status quo bias’, with ‘status quo’ being defined as the existing state of affairs. A fitting description of the status quo bias is given here, linking the comforting, warm fuzziness of the status quo to complacency (Friedman, 2010b):

“The worst sin of intelligence is complacency, the belief that simply because something has happened (or has not happened) several times before it is not going to happen this time.”

It was complacency of this type that resulted in the fateful decision to no longer watch out for Japanese submarines close to Pearl Harbor in December 1941, following seven ‘cry wolf’ false negative signals, as described in chapter 10 .

The status quo bias relates to fear (Roxburgh, 2003). People generally are more concerned about the risk of loss than excited by the prospect of gain. As long as stability is preserved, all is under control. With this mindset, warnings of change, such as those provided by new intelligence may be, underrated or downright rejected.

Great examples have been published that illustrate this phenomenon (Hoffman, 2011b). Let me share one I particularly like. In February 1985, in the weeks before Mikhail Gorbachev took power in the USSR, the CIA discredited all signals that Gorbachev would significantly change Soviet policy. Gorbachev could not be all that different. The Soviet system was a monolith. One individual that could drive change according to the CIA’s deputy director of intelligence, would ever be able to rise to the top of that system. That wasn’t consistent with the system’s thinking. Gorbachev was known to have been mentored by hardliners such as Suslov and Andropov. The CIA’s deputy director is reported to have said (Hoffman, 2011b):

“They [Suslov and Andropov] would not take a wimp under their wing.”

In what may well have been a yet undiscovered example of groupthink (see chapter 10 ). The CIA in this case had an ally in the White House. In his memoirs, US President Ronald Reagan wrote (Yarhi-Milo, 2014a):

“I can’t claim that I believed from the start that Mikhail Gorbachev was going to be a different sort of Soviet leader […]. He will be as tough as any of their leaders. If he wasn’t a confirmed ideologue, he would never have been chosen by the Politburo.”

Despite growing evidence – and as trusted allies like Margaret Thatcher tried to convince them otherwise – the CIA and the American President held steadfastly to their status quo bias. The president changed his opinion but only in response to vividly and personally experiencing in several face-to-face meetings that Gorbachev indeed was different.

Again, the same fawning devotion to the status quo is all too prevalent in business. In 1973 the world faced what it is now known as the first oil crisis. In response to political issues in the Middle East, global oil prices shot up. In the preceding quarter-century, up to 1973, global oil refining demand and capacity had steadily increased by 6% per annum. Despite the oil crisis, the 1973 oil price

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