In 1879, the Congrès International d'Etudes du Canal Interocéanique (International Congress for Study of an Interoceanic Canal) was convened in Paris under the auspices of the Société de Géographie de Paris to consider proposals to build a canal across Central America, from the Caribbean Sea to the Pacific Ocean. Ferdinand de Lesseps, the French ex-diplomat who had spawned and led the company that created the Suez Canal, chaired the conference and dominated the discussions and the decision making.
Despite an immense amount of evidence against the success of a sea-level canal across the Isthmus of Panama, de Lesseps' vision prevailed. More than 22,000 lives were lost and thousands of investors were out the equivalent of nearly $6 billion in current dollars when that Panama canal venture finally collapsed in 1889.
Why was it that the errant views of one Frenchman won out over the combined wisdom of the engineering community, the financial community and many others who had spent time scouting the terrain and who had identified the huge problems of disease, torrential rain, dense rain forest, raging rivers and mountains that stood in the way of success? Why in this striking case did not the underlying wisdom of the group prevail?
Reduced to the simplest level, the answer is that the leader facilitated the group discussion and decision making. Or, perhaps better said, de Lesseps controlled the agenda, the setting and the deliberations.
Group decision making typically results in better decisions than individual decision making, but groups still can make faulty, sub-optimal decisions. An easy "best practice" for avoiding group biases that lead to bad decisions is to use an outside, professional facilitator to structure and lead the discussions and the decision making.
The decision making leading to the failed French effort to dig a Panama Canal was beset by a variety of traps and biases, as well as process flaws - all of which an outside facilitator might have helped the conference avoid or mitigate. A monumentally critical decision was made very poorly, seemingly caused in part by these 17 decision-making traps and biases:
Power. Those in positions of power tend to be overconfident in their ability to make good decisions.
De Lesseps was certain that a sea-level canal in Panama was the right answer, and that his twice-reduced budget and accelerated schedule were correct. In fact, both were tragically wrong.
Dunning–Kruger effect. Incompetent people fail to realize they are incompetent because they lack the skill to distinguish between competence and incompetence. This becomes even more dangerous when others think they are competent even when they are not.
Those most qualified to assess the success of the venture - engineers who knew the ground - were greatly outnumbered at the conference: Essentially, the decisions to proceed with a Panama sea-level canal were made by those without the necessary competence.
Generalizing. When conclusions are generalized from an unrepresentative sample, the strength of the argument from that sample can be overestimated.
De Lesseps and others saw the success of the Suez Canal venture as a sample of one that assured that the French Panama Canal would be successful. "We were successful in Suez, we will succeed in Panama."
Anecdotal Evidence. Generalizing from a few firsthand stories rather than accumulating evidence from various reliable sources can lead to erroneous conclusions.
The direct knowledge that de Lesseps and his allies had of the proposed Panama route was woefully inadequate: They did not have access to American surveys and relied on limited stories from those whose direct knowledge was nonexistent or paltry.
Availability cascade. In a self-reinforcing process, a collective belief gains more and more plausibility merely through its increasing public repetition.
De Lesseps time and again said, "This project will succeed," without the addition of more evidence supporting the statement.
Bandwagon Effect. People, often unconsciously, do something or support an action primarily because other people are doing it or support it, regardless of their own beliefs or the underlying evidence.
The resolution passed 74-8 supporting the sea-level Panama canal, instead of one of many other options presented. Yet, 38 delegates were conveniently absent and 16 abstained from the vote. None of the five delegates from the French Society of Engineers voted in favor. Of the 19 engineers who did support the resolution, only one had ever traveled to Central America.
Commitment heuristic. Because we want to remain consistent with our prior beliefs, attitudes and actions, we tend to make decisions that are consistent with our past commitments. Also, unconsciously gravitating to decisions consistent with our earlier decisions is the easiest path.
For de Lesseps and his associates, the easiest path consistent with prior decisions was a sea-level canal. "It worked in Suez!"
Shared information bias. It is natural for a group to devote the greatest time and energy considering information with which all members are familiar, that is, what they already share in common, and give less time and energy to considering information with which only some members are familiar, that is, what they don't share in common.
"Outsider views" such as the American position that a sea-level canal was untenable were given short shrift.
Ingroup bias. We naturally form tighter bonds with our immediate group, whether it be friends or associates, and favor the value and abilities of the group over others not in the group. This bias arises because of our need for self esteem and tendency to be competitive.
The Panama canal proposal was driven by the French and the French controlled the decision-making conference - as de Lesseps and his team thought it should be, because in their minds their views were superior.
Illusory superiority. Humans have a tendency, relative to others, to overstate their desirable qualities, and underestimate their undesirable qualities.
De Lesseps' mindset that "I know best" was a manifestation of illusory superiority.
Emotion. While we like to believe that we make decisions through a rational analysis of available alternatives, emotions often bias our decision making.
De Lesseps whipped up fervor for the sea-level option in an empassioned speech before the final vote.
Disconfirmation bias. Sometimes people scrutinize and discount evidence with which they tend to disagree more than they examine evidence with which they tend to agree. When a group develops sides, more evidence does not necessarily bring the group together: Instead, the sides can move in opposite directions as more evidence is put on the table, because each side selectively favors the evidence with which they agree.
In the case of the French sea-level canal proposal, supporters hardened in their support as the conference proceeded and many professional engineers dropped out of the discussion as contrary views were disputed and discounted.
Group think. Because of group pressure for harmony and unity, group members tend to want to minimize conflict and come to a decision without critical evaluation of differing viewpoints. The group ends up isolated from outside viewpoints. This bias discourages creativity, and can result in irrational or dysfunctional decision making.
Critical evaluation of the 14 canal proposals put forth at the conference was lacking; pressure from de Lesseps and his associates for the group to coalesce on the Panama sea-level proposal was intense and unrelenting.
Reciprocation. We typically feel indebted and obliged to reciprocate when we see someone doing us a favor.
Conference delegates were treated in high style during the meeting; delegates paid nothing to attend - even their travel expenses were covered by de Lesseps' company. This largess made it harder for attendees to vote against de Lesseps. In fact, the two American representatives who spoke ardently against the sea-level canal proposal wound up voting for it!
Liking. We tend to gravitate to, discount the flaws of and favor people whom we find likeable.
De Lesseps was by all accounts highly likeable, even magnetic, on a personal basis. He attracted followers, which presumably influenced some delegates to support his proposal.
Semmelweis reflex. People have a knee-jerk tendency to reject new evidence that contradicts their existing beliefs or world view.
Most of the delegates at the conference immediately rejected evidence presented by the American representatives that their surveys showed that a sea-level cut through the Culebra Range was not possible. There was even booing from the audience!
Social proof heuristic. We have the tendency to believe that a behavior is correct when other people with whom we associate are engaged in it. Others have a powerful influence on our decisions, especially when we are uncertain to begin with.
The fact that de Lesseps and his allies came prepared with a full-blown proposal that others merely needed to approve was a major factor in attracting backing for the proposal.
WHY OUTSIDE FACILITATION IS BETTER
To assert that substituting de Lesseps' dominating leadership with that of an independent, qualified, outside facilitator would have changed the outcome of the Paris conference is speculative. Yet, it is obvious that skilled facilitation would have offered an avenue for escaping negative effects of the many traps listed above, which otherwise paved the way to an immense error.
Whether it be for an international conference or an organization's strategy sessions, outside facilitation of the strategic decision-making process is a best practice because the facilitator is positioned to provide what the leader very likely cannot:
- Objectivity. An outside facilitator is less likely to share the biases of the leaders and can be more objective.
- Process expertise. Professional facilitators are fair and neutral process experts who bring skills and experience to help the group generate creative solutions, reach consensus and obtain successful outcomes.
- Input. An outside facilitator can help shape issues for discussion and obtain valuable stakeholder input.
- Boundaries and buy-in. Good facilitators set boundaries, spot biases and promote buy-in and follow-up.
- Questions and issues. As a third party, a facilitator can ask questions and spot and raise issues that leaders miss or avoid.
- Participation and understanding. A good facilitator promotes discussion, encourages all to contribute, manages dominant participants, elicits divergent views, enables leaders to participate as group members, and builds shared understanding.
- Time sensitivity and closure. A good facilitator is skilled in crafting realistic agendas and moving the process to closure.
- Output. A good facilitator captures decisions and unresolved issues and can help assure implementation.
YEARS LATER, WE HAVE NOT LEARNED
Opportunities have abounded in the 137 years since the French Panama canal disaster to learn its lessons. For example, here are four subsequent situations that have involved extraordinarily bad decisions with consequences of great magnitude:
- The siting of the Japanese Fukushima Daiichi nuclear power plants decimated by the 2011 tsunami.
- The U.S. invasion of Iraq.
- Wells Fargo's incentives to employees to cross-sell financial products.
- The BP oil rig explosion in the Gulf of Mexico.
In the many decades following the French Panama canal disaster, facilitation has been shown to be a great tool that can help ensure better organizational decisions. Yet, evidence from our just-released 2016 Strategic Leader Survey Report, "Making the critical strategic decisions: How leaders and organizations fall short," shows that the value that outside professional facilitation can bring to the decision-making process remains mostly ignored. Survey results reveal that more than 90% of organizations do not use outside facilitation for strategic decision making. No matter the level of success of the organization, whether the organization is large or small or non-profit or for-profit, outside facilitation of the strategic decision-making group and process is a little-used best practice.
Given the risk of harm to the organization - and even of organizational failure - that can result from bad strategic decisions, we have to question why leaders and organizations don't use outside facilitation, as well as take other steps considered in the 2016 Strategic Leader Survey Report, to ensure that they do not fall prey to their own version of the French Panama canal disaster.
Note: For those not familiar with the ensuing history of the Panama canal venture, the U.S. eventually bought out French interests for $1 billion in current dollars. Plans were switched to a realistic canal with locks. Previously spurned evidence was embraced, that mosquitoes were the carriers that spread the deadly malaria and Yellow Fever from which so many workers on the French canal had died. The redesigned canal was built, albeit at a further cost of 5,609 lives and more about $8.5 billion in current dollars, and opened in 1914.
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