Institutionalized Incompetence

The Dunning-Kruger Effect of Corporations and Social Groups

I have mentioned “institutionalized incompetence” a few times in my YouTube videos, and it really resonated with a few people. I had only mentioned it in passing, but this term struck a chord. Let’s unpack this phenomenon.

One of the most quintessential examples of institutionalized incompetence I came across in my career was when I was working as a virtualization and automation engineer as a medium-sized cloud MSP. A “cloud MSP” is basically just a company that provides private data center services for other companies, allowing them to rent cloud compute, storage, and applications without buying the infrastructure themselves. As an automation, virtualization, and infrastructure engineer, my work was pretty central to the business model. The systems I built and maintained carried the money-making workloads for hundreds of other companies.

Now, for some context, I had previously worked at Cisco Systems, a world-class tech company. Some of our customers included NASA, entire nations, and core Internet infrastructure for the planet. There were no problems beyond us. I have never worked anywhere with as much of a “can-do” attitude as Cisco. One of my good friends at the time was frequently high as a kite while solving complex internet routing problems. One day he was like “Oh yeah, this entire nation’s internet is down right now, I’ve been working on it for like twelve hours.” He was casually using his “volcano” - a type of vaporizer that can nebulize insane quantities of marijuana, enough to hotbox an entire house. One of his pulls was enough to incapacitate me, yet he was toking for hours on end.

At the time, Cisco had a tacit “don’t ask, don’t tell” drug policy. So long as you fixed the problems, and no one got hurt, and nothing got stolen, whatever works.

So, fast forward to this midsize MSP. Everything was constantly chaotic. The sales team would lob nuclear grenades at us on a regular basis, saying that new customers needed to be onboarded in a few days because they made impossible promises. Even worse, my direct boss had raging untreated ADHD and was utterly incapable of reading emails. One day, I confronted him about the chaotic way in which he ran things, constantly yanking us in different directions, never finishing a thought let alone a project, and generally increasing stress because of his executive dysfunction.

His answer dumbfounded me.

“That’s just the way IT is. Why don’t you know this?”

I said no, the fact that he believed that was the problem.

To be fair, there were departments in Cisco that operated this way. Mine didn’t. The director of my department had once brought me to consult with a peer inside the company. This other director looked more like an overwrought alcoholic father with a teenage daughter who constantly got arrested for public indecency rather than a director at a world-class company. He was hunched over, staring somewhat blankly at the table, making big helpless gestures about how hard everything was. He reminded me of the father of a friend who was quite histrionic, someone who was addicted to drama and tragedy, often manufacturing it to accrue pity. At one point during this meeting, I pushed back on the self-defeating stories this directory was telling himself.

“If you’re constantly running around with your head on fire then you’re doing it wrong.”

An ounce of prevention is worth a pound of cure. Fortunately, my very first IT instructor had taught me this. If you’re doing your job right, it should be quiet and predictable. Solve a problem once, such that it’s never a problem again. He said that’s the differentiating factor between mediocre technologists and great technologists. Mediocre technologists are frequently confused, overwhelmed, and frantically putting out fires. True competence is revealed by virtue of the fact that there are no fires.

Unfortunately, this sometimes leads leadership to believe that IT is unnecessary, or underperforming. Development teams are often measured incorrectly, as well. The optimal number of disasters is zero. If you measure MTTx (mean time to resolution, identification, etc), then you’re assuming that disasters are commonplace and should be tolerated. Likewise, if you measure developers by “number of bugs solved” you’re actively incentivizing sloppy code. The optimal number of bugs is zero.

Measuring the wrong things, and believing that chaos is normal, are both signs of institutionalized incompetence. Being constantly close to burnout and making excuses for untreated ADHD are also signs of institutionalized incompetence.

Now that you have some stories and context, here’s a definition of institutionalized incompetence I came up with the help of ChatGPT:

Institutionalized Incompetence

Institutionalized Incompetence refers to a systemic and pervasive issue within organizations where collective norms, practices, and narratives inherently limit recognition and resolution of incompetence due to a blend of learned helplessness, ego preservation, and a false consensus on capabilities and limitations. It is characterized by an organizational culture that, either knowingly or unknowingly, promotes a standard of performance that is mistakenly believed to be the pinnacle of potential achievement. This belief is sustained by a complex interplay of individual cognitive biases, social dynamics, and institutional narratives that resist change and innovation, thereby perpetuating a state of mediocrity or suboptimal performance.

Characteristics

• Learned Helplessness and Corporate Anosognosia: Individuals within the organization may develop a form of learned helplessness, where, due to their education and experience, they consider themselves experts within their specific context. This is accompanied by a corporate anosognosia, where there is a lack of awareness or acknowledgment of their deficits and limitations. Consequently, they mistakenly believe their personal or departmental limitations represent the maximal capacity of human achievement in their field.

• Projection of Limitations: This phenomenon leads to the projection of individual limitations as universal constraints, fostering an environment where evidence of superior capabilities or methodologies is met with skepticism, denial, or outright hostility. This is partly due to cognitive biases similar to those observed in the Dunning-Kruger effect, where individuals overestimate their own abilities and underestimate those of others.

• Social Conformity and Faux Pas: Institutionalized incompetence is further entrenched by social dynamics within the organization. It becomes a social faux pas to challenge the prevailing narrative about what is possible, feasible, and acceptable in terms of performance and failure. A tacit agreement emerges about operational standards, which discourages innovation and critical evaluation of current practices.

• Mediocrity as a Standard: The phenomenon is most prevalent in organizations that perceive themselves as high-performing based on insular assessments and benchmarks. These organizations lack the willingness or capacity to genuinely achieve high performance by external standards. There is a collective resistance to initiatives that would raise performance standards, driven by the fear of leaving behind the current culture and exposing widespread incompetence.

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“Your limitations are not my limitations.”

When I got into the AI space, and I became an expert in GPT-3, prompt engineering, and finetuning, I started seeing so-called “experts” deriding me as not having any idea what I was talking about, etc. In general, I’ve been about two years ahead of the curve. I was talking about synthetic data on the OpenAI forums more than two years ago. Now synthetic data is all the rage. A few “researchers” (I put this in scare quotes because they claimed to be professional researchers… on the internet) posted vitriolic rage, one of them even stalked me for a while to criticize everything I was saying.

Since this was the first time I was operating in a new tech space, and some of the so-called experts wanted to gatekeep - which always happens by the way - I was somewhat confused. Is this how toxic the scientific community is? Where even suggesting that new things are possible provokes blind rage and toxic abuse? It’s true that many scientists and engineers have poor communication skills, but even worse, many of these people (myself included) have been mistreated by society (nerds, etc) and so there’s a lot of real pain behind that viciousness. Pathological rejection sensitivity, for instance, explains a lot of these behaviors. Status threats provoke rage, as seen when catty women get into fights, when children steal toys from each other, and so on. Low status people, or people who are at risk of losing their high status, tend to be the most vicious.

Some of this is just human nature, and some of it is a sense of decorum, social norms that have just become so pervasive and commonplace that they are accepted. This is seen in the casual sexism often discussed in gamer, tech, and construction social groups.

Most organizations, and indeed most people, are within one standard deviation of average. This means, by definition, most organizations are not top performers, and most people are not top performers either. I’ve made the mistake of pointing out this fact a few times in my life. The difference is subjective performance versus objective performance. Some of the worst companies I’ve worked for had strong positive beliefs they were “top performers.” Informing them to the contrary was… ineffective. But the reason they believed they were “top performers” was because they were performing near the top of their capacity. They had the education, experience, and financial success proving to themselves that they were hotshots.

This is collectively called “illusory superiority.”

Illusory superiority arises, similar to the Dunning-Kruger effect, because individuals and organizations lack the awareness, willingness, or ability to even recognize superior performance, or their own deficits. This is why I included “corporate anosognosia” in the formal definition of institutionalized incompetence.

Anosognosia is a horrific neurological condition where someone is cognitively incapable of recognizing or integrating any deficits or disabilities they have. There are videos of people who are partially paralyzed but unable to acknowledge this fact. They will make excuses like “I’m tired, that’s why I’m not using my arm.” or “I used my arm yesterday, it works just fine, now leave me alone.”

Corporate anosognosia, as part of institutionalized incompetence, means that self-awareness and self-improvement is simply beyond the cognitive horizon of the superorganism. They are fundamentally incapable of mentally grasping the truth of the situation.

Again, there is no benefit from pointing any of this out to any group. This includes corporations, epistemic tribes of any kind, such as political parties, or even social groups.

The reason is because we’re all equipped with a status-conscious social operating system.

The Social Operating System

This is not a specific scientific term. But this is something that I’ve come to believe in, especially after reading THE STATUS GAME by Will Storr. This book is, far and away, the most important single book I’ve ever read. I consider this book as foundational a text as Adam Smith’s THE WEALTH OF NATIONS and Plato’s Dialogues.

We are social apes. Our survival is predicated upon cooperation, and so our evolution has constantly pitted the individual against the group. This gave rise to the art of lying and manipulation - which I view as an evolved trait to increase social status without having the goods or putting in the work. In a complex, uncertain environment, we need to look for proxies of social value. Many social groups have “costly signalling” norms to demonstrate adherence and conformity. Going to church every Sunday, dressing the way you’re supposed to dress, and toeing the party line are examples of costly signalling.

Everyone virtue signals. It’s just a matter of how much effort and sacrifice are required. Virtue signalling is often derided as being superficial and low effort. But going to church every Sunday and sucking up to the boss are also superficial, only they are higher effort.

Will Storr’s book creates a highly compelling argument that social status, above all else, is one of our most powerful motivations. Yes, we will steal food when starving, and spring into action when a toddler is trapped in a car. But these are base instincts, reactions to acute distress. We do not live in a constant state of acute distress. Most of the time, we are a position to participate in the grand game of status, pecking order, and social clout.

Social clout has many advantages. Better jobs, better sex, better health, more satisfaction, more power, prestige, and opportunity… the list goes on and on. There’s a reason that celebrity culture sells. There’s a reason that most Gen Z and Gen Alpha aspire to be influencers above all else. Having made it as an influencer, I can say it’s not all it’s cracked up to be, but I would also be lying if I denied the benefits and advantages that come with it.

“Fame amplifies everything.”

I heard this turn of phrase on a podcast with an influencer who is about 40 times more famous than I am. The context of this quote was stress, anxiety, and scrutiny. The more famous you are, the bigger of a target you are. But it also amplifies opportunities, influence, reach, and power. Social status is a double-edged sword. Jim Carrey, the famous actor and comedian, is quoted as having said something to the effect of “I wish everyone had an opportunity to experience wealth and fame to see tat it doesn’t solve all your problems.”

Now, a common retort to this kind of talk is something like “Horse shit, money absolutely would solve a lot of my problems!” And it’s true, money is highly protective, but I’m getting off topic.

All else being equal, people want social status above all else. As a social species, status is a proxy for everything we’re meant to optimize for. Our evolutionary pressure has pushed us to see ourselves only in the context of our social milieu. Monks and hermits who disconnect from society end up believing they are enlightened only by virtue of the fact that they have exited the status game - and some cultures valorize the spiritual practice.

Our Social Operating System (SOS) is finely tuned to learned complex, sophisticated, and sometimes arbitrary social rules to play the game. In one of the most opulent and exaggerated social games ever, the Palace of Versaille, the ultra wealth French aristocracy of the time refined arbitrary status rules to a high art. There were strict rules about pecking order, who could even sit in chairs in the presence of others, who was allowed to speak, and in what order. Bored, affluent, privileged, and entitled people who lived in the lap of luxury had nothing better to do than refine their social rules in a natural sort of experiment.

The same thing happens in prisons. The only thing that matters in prison is status. This means a culture of respect, trust, and group solidarity takes over most prisons. It’s a ruthless pecking order with strict rules and harsh punishments for transgressions. Sounds pretty similar to Versaille, actually. But they had better parties at the palace, plus more drugs, more sex, and booze.

This SOS (Social Operating System) is why institutionalized incompetence can develop and become entrenched. It is ultimately a breach of decorum and social norms to point out the emperor has no clothes… or that your boss has raging ADHD or is a pathological liar.

I learned the hard way, several times, that most people would rather be high status in low-performing and mediocre groups than allow the group to pass them by. So far as I can tell, the only way to improve your lot in life is to find other groups. Corporations who want to revamp their corporate culture have only one option: fire a lot of people.

I’ve been at several companies, including my last corporate job, that were in the midst of a corporate transformation. I was hired on as part of the new wave of talent to raise the bar. Let me tell you, this rubs some people the wrong way.

“Don’t scare the tippies.”

“Tippies” is a pejorative term for neurotypicals, or allistic people, used in the neurospicy community. People like me (and there are more of us than you think) possess cognitive abilities that venture straight into the uncanny valley for most people. Our ability to make predictions, for instance, is often seen as crazy or prescient. Furthermore, our perceptiveness and ability to dial in to people’s motivations, flaws, reasoning, and bias is downright unsettling. For disordered people, it’s actively threatening. You see, pathologically disordered and toxic people bank on plausible deniability. Thus, being seen and understood by someone means they lose their superpower, their ability to gaslight and hide behind uncertainty. “I was just kidding! That’s not how it happened!”

Narcissists, in particular, use their own observations and perceptiveness to play people off each other, to find people’s vulnerabilities, weaknesses, and get the lay of the social landscape to deftly maneuver, get what they want, portray themselves as the hero or the victim as needed, and so on. The most savvy narcissists are often the most observant people in the room.

Unless one of us is in the room.

And they hate it. It makes them squirm. It provokes a sense of rage. And it’s one reason why narcissists will very frequently target top performers to either be their friends or enemies. If the narcissist can’t control the top performer, then they push them out. Narcissists are generally smart enough to keep their most overt actions hidden, again, banking on plausible deniability. After all, they are frequently top performers themselves, well-liked, and well-connected. It’s their word against yours.

But narcissists, more than anyone else in an organization, will fight dirty to maintain the current level of incompetence. They are master manipulators and if anyone threatens to raise the bar on them, they will go nuclear, given the opportunity.

In one case, there was an old-school middle manager at a company I was at. He was very, shall we say, “traditional” in his attitudes and approaches. Very early on in my tenure at the company, he started dumping work on me that was very explicitly his responsibility. I didn’t mind because, first of all, it was trivial work (to me, not to him) and second of all, he was in a position of power. My boss eventually intervened and told this other manager to take a hike. After that, this other manager became manipulative and nasty. One of the last calls I had with him, he said “This places is sinking fast! Get out while you can!”

“The trash takes itself out.”

Organizations going through a transformation simply make it increasingly uncomfortable for narcissists, manipulators, and low-performers to stick around. Unfortunately, it’s impossible to make this transformation happen with the same social dynamics that codified and entrenched the incompetence in the first place.

One director explained it to me this way: You must shake things up. That means firing people, hiring new people, and restructuring the organization to break those paradigms and entrenched structures. It is deliberately messy. Of course, no organization will openly admit to it. “Hey, yeah, so there’s a bit too much institutionalized incompetence here, so we’re going to outright fire some of you ring leaders, and then the rest of you we’re going to exile to shitty roles until you just leave.”

But that’s what they do. I don’t make the rules, I just learn them. I had one manager, while I was on contract as an automation engineer at another small MSP, who was part of the “Old Guard.” These were the words of the director who explained it to me. Looking back, he was basically telling me “Hang in there, your manager is on his last leg.” But that manager was too much of an asshole, and plenty of people warned me “I don’t know who he knows, but someone up high has his back.”

Like many narcissists, this guy loved testing boundaries. We were an Agile shop, and this guy would openly mock Agile methodology. He sent an email once demonstrating the tiniest inkling of flexibility and ended it “Look, I’m being Agile, haha.”

I was not nearly as savvy then as I am now, so I left without giving any notice. The consulting firm was angry at me, but I told them I’d warned them. I’d warned the company, too, that everything was going to hell in a handbasket.

That manager was fired a few weeks after I left as his project was an abject failure, as I predicted, and my sudden departure reverberated up the chain a ways. I know all this because a year or so later, I got an automated email to my personal email (somehow) from the automated systems I’d been building. My colleague contacted me to apologize, so I think he made some kind of mistake. Anyways, he told me “Oh yeah, that manager is long gone. They replaced a few other directors too.”

That was neither the first nor last time that my departure preempted the firing of a toxic manager. Managers, unfortunately, can do a lot of damage in service to maintaining institutional incompetence.

It all comes back to status though. Raising expectations is a status threat, and once you learn to recognize the status game, you’ll see it everywhere. From scorned lovers attacking mistresses with boiling water to narcissistic managers throwing star players under the bus, it’s all the same game.

Tall Poppy Syndrome

This turn of phrase comes from Australia, I think. I asked ChatGPT to give me a concise definition, because honestly, it’s way better at that than I am:

Tall Poppy Syndrome describes a social phenomenon where individuals who achieve notable success, stand out due to their talents, or exhibit conspicuous achievements are targeted for criticism, undermining, or backlash within their community or social group. This behavior is driven by a desire to enforce conformity and discourage deviations from the collective norm, often motivated by jealousy, fear of inequality, or the disruption of social harmony. The syndrome reflects a cultural attitude that seeks to diminish the status or accomplishments of those who are perceived to rise above the average, promoting a level of mediocrity through social pressure and criticism. It serves as a cautionary tale against excessive individualism or ambition, emphasizing the value of humility and the collective over personal achievement.

Tall Poppy Syndrome is one of the chief ways that institutionalized incompetence is enforced. Because of norms around humility, and the fact that people are allowed to be vicious under certain circumstances, any time one is elevated above the rest, they become susceptible to attack. This happened to me repeatedly in my corporate career, which is why I eventually checked out of that rat race altogether. I started playing a different status game, one that was more my speed, where my strengths would be rewarded rather than punished.

In China, they say “A crane stands out among chickens.” A helpful YouTube commenter taught me that. According to ChatGPT, 鹤立鸡群 translates directly to “A crane standing among chickens.”

There are a few other Chinese phrases, some anchored in ancient Daoist or Confucian philosophy. They go something like “The tree that bears fruit will get picked.” Being useful makes you get used. Thus, if you don’t want to get used, be useless.

Similarly, the English phrase “Big fish in a little pond” apparently comes from the Germans.

Again, there’s not much you can do about this except break the social dynamics by make structural changes to the organization. In cases of social groups, all you can do is leave.

So, I’ll leave you with the most sage advice I’ve ever received on this topic. It came from a fellow neurospicy person who is a bit younger than me, and is one of those “scary smart” and “crazy energetic” kind of people.

This is what she said:

“If you’re the smartest person in the room, you’re in the wrong room.”

That’s pretty much all there is too it. You can’t change people, or social dynamics, unless you’re the CEO and you have the chutzpah to break a few (a lot) of eggs. Otherwise, just go to a new room. If you’re a crane among chickens, it’s way easier to just find your own kind.