The Ostrich Effect -What is it?

Over the last few days I have been pondering a problem, where a capable senior manager was obviously avoiding dealing with a situation; this situation wasn’t a minor one either, it was financial and just as importantly was cumulative, in that the longer you leave it the bigger the problem becomes.

The Ostrich Effect

For some reason ‘The Ostrich Effect’ came into my mind; the image of a large bird hiding its head in the sand and hoping the threat of danger would just pass it by felt quite poignant, as in essence, this is exactly what he was doing; by hiding he hoped the problem would resolve itself, even disappear. In fairness to the Ostrich, the truth is that they don’t actually do this, but that is the power of stories for you…

All this said, the Ostrich Effect ‘idea’ resonates with many of us as it seems ever present in our business and personal lives. I can recall, on more than a dozen occasions in previous months, thinking ‘why don’t they just deal with it? It isn’t that difficult.

So what does the Ostrich effect actually mean? And why does it happen?

A Google search presented a Wikipedia statement:

‘In behavioural finance, the ostrich effect is the avoidance of apparently risky financial situations by pretending they do not exist.’

Not an ideal situation to say the least. According to the same article Galai and Sade (2006) coined the phrase ‘The Ostrich Effect’, they attribute this to “…anomalous behaviour to an aversion to receiving information on potential interim losses.

The article also states that research conducted by George Loewenstein and Duane Seppi indicated that individuals “looked up the value of their investments 50% to 80% less often during bad markets.” Once again avoiding the bad news…

Misrepresenting the Real Problem

All this is interesting stuff, but what I found particularly of use was the suggestion that an ‘inability to deal with a situation’ can lead to the creation of a more significant issue designed to deal with a problem in a roundabout way, such as “…a partner in a firm has had communication issues with the other partner. He feels that he is doing the majority of the work. Instead of addressing the issue the partner asks his team to create a partner buyout plan.” Not dealing with the simple issue has created another one, and escalated it to a whole new level. I wonder how much time is invested in side-stepping matters and not directly dealing with the obvious problem.

On Psychology, it also refers to the Ostrich effect in this way. In that, the current situation might not necessarily be the problem, but an underlying one is.

It quotes a story about two senior managers who were having issues dealing with a customer problem, which wasn’t being resolved. When an organisational psychologist intervened he discovered the real problem was that a feud between the two managers had been present for some time and never dealt with effectively. This situation was causing tension, inhibiting business progress, causing a lack of trust and introducing volatility to situations where there shouldn’t have been any.

The author of the article Bill Kahn Ph.D. states that “The right conversations occur when we move past the surface that has preoccupied us—such as the difficulties with customer service—and into the layers below. The right conversations begin with someone naming what is just under the surface—emotions spilling over, tension, struggles in relationships.

How might you deal with this type of situation?

Malcolm Lewis, a previous lecturer on my MBA and friend, used many tools to uncover the layers, as highlighted by Bill Kahn Ph.D. One of the simplest tools was The ‘Framework for Exploration’ this approach provides a simple tool for getting to the root cause of how someone is feeling; it provides three (x3) simple questions ‘”How are you?” asked the first time gives a corporate view, ok but “How are you?” asked again, gives a personal external view, ok but “How are you?” gives a personal internal view.

Malcolm used to use this on me all the time…it works…

A conversation might look like this:

How are you? Trading is good, we never enough time, but we are doing really well.

Ok, how are you? I am ok thank you, busy; you know how it is…so many things I need to do.

But, how are you? Well now you ask, I am finding it really tough; I am not sure how much longer I can keep up with the pressure I am being put under. I could really do with some help.

Sounds simple doesn’t it – it genuinely is, demonstrating that in order to get to the true feeling you might need to be open minded, considered, non-assumptive and fluid in thinking.

Now I am not saying that this is the answer to ongoing feuds within organisations, but you need to start somewhere; by getting the problem out in the open you have a more significant chance of resolving it. Sometimes you just need to spend time talking to people and caring about their responses. I have witnessed many situations where seemingly insurmountable (deep set) problems have been resolved by people, not necessarily managers, who have taken the time to understand concerns or problems, this has led to those involved finding a way through by themselves.

The Bigger Picture

In order to understand the ‘Bigger Picture’ it is important that you are aware of all the variables of a given situation; this might need to be assessed one layer at a time until you arrive at the root cause, or the problem might be more obvious and provided by information from internal surveys, performance reviews, word of mouth or from feedback loops etc. Whatever way you arrive at your ‘identified problem’ it should be properly considered before trying to resolve it; it won’t help anyone if you get it wrong.

Personal Perspective

My personal perspective is that we need to take the time to understand the true situation. We should take steps to ensure that we do not assume, or accept the first identified problem by checking facts with  colleagues, employees, suppliers (who ever) in order to ensure that we arrive at the root cause of the problem.

As in the example presented previously with the two senior managers, anything done to resolve the customer complaint would have only ever been short lived; without dealing with the feud directly, the senior managers would continue to have stand-offs disrupting business and creating tensions; it would have only ever been a matter of time before the next problem arose.

We live in a complex world and it is easy to move from putting out one fire to the next. A good leader looks to identify why fires are starting in the first place and resolve the cause, not just manage the effect. In a previous blog I spoke about ‘finding the right speed’ in a meeting environment, it is all too convenient to jump over a problem or come up with a short-term solution avoiding conflict or difficult situations.

It is all too easy to avoid a problem because it is difficult or seems impossible to resolve. Quite simply, we need to persevere and find a way…

In Summary

In Summary, what might be seen as avoidance, in that of The Ostrich Effect, might actually be a completely different problem that needs resolving?

I, as I am sure many of us do, can be guilty of ‘focusing on the effect and not the true cause’; this ability to deflect real issues and deal with a bigger non-confrontational one is a real business threat. It takes up time unnecessarily; it is ineffectual in dealing with the real problem and causes undue stress to those not involved, who more often than not, can clearly see the true cause of the problem.

I found this new diversionary interpretation of ‘The Ostrich Effect’ to be most useful in the context of my situation. A black and white idiom, although descriptive and helpful, does not always aid in developing a solution to a problem, but thinking broader allows you to examine the cause and effect more precisely, leading to a plan to tackle the actual problem, not the effect.

*All comments are based on my personal experiences and given freely. That said, you need to make your own choices. I can’t and won’t accept liability for you employing any recommendations. Business is all about risk. It’s your choice.

Nigel stone has, over the last fifteen years, started, led, consulted and nurtured both UK and European businesses to achieve quite outstanding results. Please feel free to drop me an email at

*Further articles are available on my blog:

Articles discussed in this blog can be found at:

Image courtesy of:


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s