Lies, Errors and Bullshit: Inside Strategic Decision Making
To understand how management teams reduce uncertainty to make strategic investment decisions, I analyze qualitative data gathered over six years from a sample of 36 investment decisions made by the senior management teams of an organization experiencing disruption in its core business. I find that management teams rely on bullshit — unsubstantiated claims, independent of the facts and stated with confidence — to reduce uncertainty that otherwise did not meet the threshold for investment. Different from lies — statements defying known facts and intending to deceive others — bullshit is stated as fact, but without knowledge of supporting or disconfirming evidence. This study adds to strategic decision-making and judgment under uncertainty research by identifying bullshit as a common behavioural pattern distinct from confirmation bias and other decision shortcuts in terms of motivations and consequences. In small doses, bullshit plays a positive role in the innovation and uncertainty reduction process. It moves decisions forward when uncertainty cannot otherwise be reduced sufficiently, dampens overconfidence leading to more cautious investments, and helps generate more alternatives. However, when decisions are comprised of abundant bullshit claims and there is pressure from underperformance, the positive consequences of bullshit are reduced and more severe forms of deception — omissions and lies — are detectable.