How leaders can learn from rare events
Executive Education / 9 November 2021
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Vice President for Academic Affairs
Claus Rerup is Vice President Academic Affairs at Frankfurt School. Prior to joining Frankfurt School as a Professor of Management in 2017, Rerup was an Associate Professor of Organizational Behavior at the Ivey Business School, Western University, Canada. His areas of expertise include routine dynamics, sensemaking, and organizational learning.

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Rare events are special and unprecedented situations, such as the Covid-19 pandemic, the Lehman bankruptcy, or the nuclear catastrophe of Fukushima, just to name a few. Rare events entail challenges for decision-makers, but they also offer interesting learning opportunities.

Leaders need to address effective learning

When faced with making a difficult decision in a rare event situation, one must trade-off between two different criteria for effective learning: The first criterion is validity—the extent to which learning can be used for understanding, prediction, and control. Which information provided and which statements made are valid? How to react when contradicting information is being spread and people come to believe in different “truths”?

The second criterion is reliability—the extent to which understandings of experience are public, stable, and shared. Many interesting questions can be derived from this: How can you ensure as a leader that only valid information becomes public, stable and shared? How can decision-makers assess which information is valid and reliable? Should they categorically ignore invalid knowledge? What about unreliable knowledge?

The two metrics validity and reliability allow us to understand the political dynamics of learning. Different claims, for instance, about the cause of a rare event can be politically motivated. In order to develop a more complete picture of learning from a rare event, decision-makers need to explore the political actions that shape the trade-off between validity and reliability. They need to consider not just the validity and reliability of any specific piece of knowledge but also the system that produced the knowledge. Politics – in this context – is more than just noise that interferes with learning. It is decisive in terms of opinion-forming and giving direction, and therefore a central topic in learning.

In addition, different actors belonging to different groups often make different trade-offs between validity and reliability. Without active conflict, the diversity of both understanding and knowledge would diminish. Indeed, when dominant coalitions control outcomes, minority voices make politics even more important. They point out what might be muted otherwise. Coalitions and in-groups can potentially be dangerous for learning because consensus can constrain discovery.

Reliable information is the basis for decision-making by responsible managers

Leadership skills and communication capabilities are essential these days. Today´s leaders and decision-makers have to handle a flood of different and fast-paced information. Assessing which information is valid and reliable is difficult, but crucial for effective decision-making. Responsible leaders are able to navigate a “soup of mixed information” and aspire to only share valid information even if they experience a conflict with their own motives and goals. This advice is difficult to follow in practice, however, because incentives and beliefs can blind leaders and make information appear more valid than it is.

In addition to decision-making, those skills are as important for the success of your company and for your career as professional qualifications. Frankfurt School’s leadership portfolio offers a wide range of programs to help you acquire these abilities.