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Iceberg of Ignorance: How Much Do Top Managers Really Know About What Happens in Their Companies?

The recurrent limited perspective that some of the most senior executives tend to have on issues that make the operation of their businesses more complex, slow and obsolete is striking.

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This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process. Opinions expressed by Entrepreneur contributors are their own.

That the top management of any organization tends to ignore what is happening at other levels is nothing new. What is striking is the recurring limited perspective that some of the most senior executives tend to have regarding issues that make the operation of their businesses more complex, slow and obsolete.

Ryoji Iwata vía Unsplash

In a widespread study called " The Iceberg of Ignorance, " consultant Sidney Yoshida, a researcher on the Japanese automobile industry, concluded that:

  • 4% of an organization's front-line problems are known to top management,
  • 9% for middle managers,
  • 74% by supervisors,
  • 100% for the employees of the first line of operations (front line).

The author made it known in 1989 based on cases analyzed in medium-sized companies, and, over the years, this work became a point of reference for other analyzes on the subject.

With differences according to the size of the companies, those of us who work within organizations know that in many it is fully valid.

The meaning of the iceberg

If only 4% of the problems reach the ears of top management, how does this impact decision-making?

Severity is appreciated when viewed in reverse: they are unaware of 96% of the things that happen in their organization, and this becomes serious because it directly determines how resources are allocated, lowers efficiency and effectiveness, creates a myopic and distorted vision of what is really lived, and demotivates and generates staff turnover because they do not feel represented by the vision of those who lead.

And why does this happen in companies? On the one hand, because in the operational lines, supervisors and even middle managers, problems are hidden for fear of reprisals or negative consequences if they are made known.

But what I have found is that, in most cases, it is a serious communication problem.

Most often, when a problem arises, it escalates with distortions in the message, so that the final version that reaches the corporate decision table has almost nothing to do with reality.

And it also happens that the information does arrive in the correct way and to the appropriate people, even if it is out of time; which is just as counterproductive because the problems surely have already happened.

3 ideas to melt the iceberg of ignorance in your company

1. Implement a culture of humility: This is the least frequent trait at senior management levels, although there have been notable advances in this regard in recent years. When you do not have this attitude to your role, you lose the peripheral view of the relevant issues, because your lenses are those of the ego.

For example, an excessive effort to make decisions quickly and without hesitation - because it is believed that this is how a person who manages effectively should be - can lead to a dull vision of what really happens. With humility it is possible to get off the pedestal, relate to all levels of the structure, and collate data before giving definitions.

2. Go directly to the place of the problem: The sin of top management is to believe that receiving an email with a report of their direct report is enough. Reports that are often long, poorly written and cumbersome.

For this reason, in many cases it is necessary to go down to the operational line to ask, inquire, cross information from different sources, and not be left with a single opinion that, in itself, will be formatted so that it is "better digested" by the management of the company.

3. Encourage assertive communication: Whatever happens, even if there are problems and unpleasant situations, it is only possible to correct the course knowing the truth without anesthesia. In many meetings with senior management I observe the tendency to want to minimize, mask or hide management errors by presenting pale versions of the issues that really burn.

When a company makes assertive communication its permanent strategy, these deviations are minimized and they begin to operate at another relational level that allows them to address issues in time and find the best alternatives together. And when I say together, I mean the board of directors and all the lines.

The good news is that this is a soft skills practice that can be trained and implemented with consistency and dedication. starting from top to bottom.

By consciously implementing these points, starting with senior management, who should lead by example, it is possible to melt the iceberg of ignorance. Then it will move to another much more appropriate dynamic: the flow of relevant and timely information from and to all levels, which will lead to making wiser decisions, considering the impact it will have on each member of the company.