The Institutional Imperative
Warren Buffett · 1989
"Corporate behavior is driven largely by an invisible, gravitational force that causes otherwise rational managers to mindlessly imitate peers, resist change, and deploy capital foolishly to satisfy their own egos."
Buffett expected smart, experienced executives to act logically to maximize shareholder value. Instead he found something closer to physics: large organizations resist changing direction, available cash gets spent on whatever project happens to be available, and any CEO's pet idea — no matter how strategically dumb — gets a detailed study from subordinates proving it's brilliant. He named this drift the Institutional Imperative, and it explains far more bad corporate decisions than stupidity or dishonesty ever could.
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The Psychology of Human Misjudgment
"The human brain relies on roughly two dozen hardwired psychological tendencies that, while evolutionarily useful in isolation, routinely combine to cause catastrophic misjudgment in modern, complex environments."