If you are anything like me, it will strike a discordant note when people, particularly senior managers, prove unable to relinquish a failing strategy—if indeed it is a strategy and not a platitude. Part of the reason for this is the sunk cost fallacy in which people continue to push on because of what they have invested so far. However, another reason is that people are worried about the appearance of changing course—they are worried about appearing reckless. Drawing on Margaret Thatcher's (1925–2013) defiant pose that came to define her premiership:
To those waiting with bated breath for that favourite media catchphrase, the "U" turn, I have only one thing to say. "You turn if you want to. The lady's not for turning."
Managers often stick to their guns. Usually when they would do better to reassess based on new data, which can change the odds significantly. In business, refusing to turn can drive your organisation straight into a wall.
Enter the Monty Hall paradox, a probability puzzle named after the host of the American game show Let's Make a Deal, appears to be one of simple probability; yet, it has profound implications for decision-making, rational thinking, and even the ethical dimensions of business strategy. It also serves as a sobering reminder that intuition and correctness are often at odds—a concept with no small resonance in organisational behaviour.
Before diving into the corporate ramifications, the paradox in a nutshell is that a contestant is presented with three doors. Behind one is a car (the desirable prize), and behind the other two are goats (decidedly less desirable, unless you happen to be a goat enthusiast). The contestant picks a door, upon which Monty Hall (1921–2017), the host who knows what is behind each door, opens one of the two remaining doors to reveal a goat. The contestant is then given the option to stick with their original choice or switch to the remaining unopened door. The optimal strategy is to switch doors, as it provides a 2/3 probability of winning the car, compared to the 1/3 probability of sticking with the original choice. Yet, most people instinctively believe the odds are 50-50.