The Terra Incognita of Outsider Executives Rule by Systematic Managerial Ignorance

Abstract

Systematic managerial ignorance (SMI) is concealed as a dark secret especially to protect the rule of outsider executives. SMI is terra incognita, an unknown land that evades usual research methods. A longitudinal semi-native anthropological study of automatic processing plants by a management educated and experienced insider-outsider ex-manager found that SMI characterized outsider managers who concealed it by detachment from knowledgeable employees. Detachment retained ignorance and engendered distrust, secrecy, mistakes and failure cycles, while a few knowledgeable outsiders prevented total failure by the opposite practice of involvement that created virtuous trust and knowledge cycles. These brought successes and empowered them, but then were suppressed by power-losing SMI superiors and left. They were replaced by outsiders who chose detached SMI as superiors’ loyalists and failed. New knowledgeable outsiders were called to the rescue, but their success just repeated the empowerment-suppression-succession-failure cycle. SMI exposure is explicable by phronetic research (Flyvbjerg, 2001); it calls for remedial action such as preferring Bower’s (2007) inside-outsider successor CEOs and using new yardsticks for assessing outsider and insider executives’ candidates. Further study of SMI and other concealed supportive negative practices of outsider executives is suggested.

Keywords: systematic managerial ignorance, involved/detached managers, managers' expertises, insider/outsider successors, high/low-trust cultures

JEL Classification: J54, M14, O31, P26