The Law Of Triviality

In 1957, C. Northcote Parkinson proposed the law of triviality.  Organizations of any kind from family to business to government give too much attention to trivia and much less to important decisions.

His example was that of the construction of a nuclear power plant where the decision makers spent a great deal of time on the question of what colour they should paint the bike shed, and very little time on the design and execution options for the nuclear plant itself.  The process has come to be known as bike-shedding and is a common problem with committees, boards of directors and multi-level approval structures.

Over the years, I have seen enough of it to know it is the nature of people to discuss things they understand and to guess at the rest.

Trivia allows people to contribute and to be seen as involved.  It is inclusive.

It is further proof of the need to shrink the size of governing bodies.  A 20-person board at a golf club could discuss the manager’s discretionary spending limit almost forever.  A 7-person board would be less entangled.  A benevolent dictator least entangled of all.

Most decisions are not improved by endless debate and narrow focus on the details.  Sometimes people think that depth is a defense to error.  It is not.  While the board spends time on trivia, other decisions are not happening.  Success can be found by making six decisions of which three turn out wrong as opposed to making one carefully considered decision that has a 90% chance of being right.

It is also about understanding how risk works.  Some people cannot deal with ambiguity so try to make perfect decisions.  Those are time consuming and despite the effort, are never 100% right.

A better approach is to recognize that any decision that can be reversed at an affordable price has no meaningful risk.

I recall a secretary telling me that we needed new china in the board room.  Would I like mugs or cups?  After thinking intensely about it for 3 microseconds, I said mugs.  She said I didn’t even think about.  So after 1 nano-second, I said cups.  Same response.  Finally said, “Let’s go with mugs for now and if that turns out wrong we can buy cups.”  How right do you need to be on a $50 decision?

When making decisions, and especially investment decision, do the reversibility risk analysis.  Don’t waste time or resources on decisions that can be made to disappear.

Contact: don@moneyfyi.com  

Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

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