The Continuum of Psychotic Organisational Typologies

Introduction

Peoples’ perceptions and views of the world are influenced by both conscious and unconscious phenomena. The world is a totally socially constructed reality where the people make sense of it from their culture, experience and learning. Within the bounds of culture and experience, each person has some unique interpretation of the environment and understanding of its dynamics. Thus everything can be viewed with multiple perspectives or realities.

A person’s psychological state will directly influence perception of people, objects and events. This can potentially lead to perceptive distortion, especially if the person has any psychotic tendencies[1]. Therefore any construed reality, decisions made, strategies crafted, resulting actions and consequential behavior would be based upon biased perceptions. Thus everything that develops within a firm including culture, management style, interpersonal relationships, rules and procedures, strategy, symbols and behavior will have some unconscious basis to it (Kets de Vries & Miller 1984).

As different psychotic states channel perception and thinking into specific frames, this becomes relevant to how people see opportunity and take action to exploit it. Thus perception and thinking processes that identify opportunities and shape subsequent actions have their origins both in the psych and the external world. Identifying an opportunity and exploiting it may have as more to do with inner needs i.e., recognition, love and affection, power and control, self esteem, or grandeur, etc., as with any rational thought processes.

Cognitive distortion and delusion are more likely to occur at the extremities of the psychotic continuum. However, most people whose personalities can be considered within the bounds of normality will exhibit some psychotic traits. This can include compulsion, anxiety, depression, attention seeking, fantasies, irrational fears, paranoia, shyness or narcissistic behavior, etc. For example, psychographic research shows there are large variations in the levels of depression across regions (Cohen, Slomkowski & Robins 1999).

It is usually very difficult to see abnormality as many psychotic traits are also important drivers of manager and entrepreneur behavior. Many well known business leaders could be considered narcissistic in nature (Maccoby 2000). Some forms of psychosis (attention-seeking, paranoia, obsessive-compulsiveness & narcissism) are actually qualities that help bring people to the top of their fields. However these same qualities in excess can lead to an arrogant and overconfident delusion, once at the top. Many managers have fallen from corporate grace for this reason (Kramer 2003).

Psychosis can prevent firms seeing the environment in new ways and hinder the process of creativity and innovation. US industry faced this situation in the 1970s and 80s when rising energy costs changed the competitive environment and new competition came from Japan and East Asia. The leaders of US industry failed to see the need to adapt to the changing market environment. Many companies hung onto their old perceptions and failed to see the realities of their new environment and the need to change. This cost many companies very dearly for this delusion (Schoenberger 1994).

Firms and organizations can also show ‘collective’ patterned behaviors just like individuals and groups. Individual and group psychosis has been well researched and written about. However ‘collective’ firm and organization psychosis has been the subject of only a small handful of articles and books, and generally ignored in management theory. The psychotic paradigm is useful in looking at the issues of how a person sees and constructs meaning, how a person’s needs influence the decisions they make, and how psychological pathologies affect behavior.

There are a number of basic psychotic pathologies which can affect both perception and behavior. These pathologies include the paranoid, obsessive-compulsive, attention-seeking, depressive, schizoid and narcissistic typologies shown in figure 1. These are not absolute disorders and may vary in intensity from organization to organization. Some psychotic conditions may act in together with other forms of psychosis creating part of a complex personality[2]. Looking for evidence of these typologies can assist in seeing the way others see the world and form their underlying assumptions.

Figure 1. The Continuum of Psychotic Organizational Typologies

The Paranoid Typology

Paranoia is based on an intense fear, suspicion of others (both internal and external to the organization) that is exaggerated or irrational. Paranoia usually brings with it deluded perceptions that the person ‘is being singled out by enemies’, who are harming or intend to harm him/her. Paranoia is ego-centric because it is about ‘I’ and ‘me’ and usually sees another as ‘out to get him/her’ (persecutory complex). People with paranoid tendencies tend to see the world as a threatening place and are usually very guarded until they know their fears are groundless. This leads to little loyalty towards others.

Relationships and interpersonal behavior is generally governed with the belief that ‘people somehow have it in for him/her’. Paranoid people tend to avoid relationships. However relationships they do form tend to be cold, lack intimacy and involve jealousy and suspicion, i.e., the other person is doing something harmful behind his/her back. They are usually very sensitive to criticism and will brood for long periods of time if criticized. Criticism can also invoke anger, argumentation, and uncompromising stands which often lead to great antagonism, if challenged. Even though they are very sensitive to criticism themselves, they are very critical of others. Anything that goes wrong is someone else’s fault and not theirs.

Paranoia is usually focused on the present where someone is trying to undermine him/her and the future, where someone is plotting a plan to harm him/her. Suspicions based on past experience cannot be classed as paranoia when experience as a basis of concern. However, if this concern is blown out of proportion to any potential harm that can be done, paranoia is present.

Paranoid people have the urge to collect as much information about the market as possible. They will scan for information of threats and spend a large amount of time thinking how to formulate reactions to them. They are in fact looking for evidence that reinforces their suspicions but at the same time pride themselves on their rationality and objectiveness. They centralize organization decision making because of lack of trust in other peoples judgments and their beliefs that people are looking for ways to sabotage him/her. Consequently budgeting and controls will be very strict. The organization culture will be one of suspicion where looking for problems and wrong doers (scapegoats) is the norm.

The resulting crafted strategies are primarily designed to protect the company’s position and defend it from any potential competitor attacks rather than be proactive moves in the marketplace and take risk. Therefore the firm will miss many opportunities to be creative and innovative in the market. Paranoid companies tend to lag behind the competition and muddle through with disconcerted and inconsistent strategies. They will follow the market leader rather than risk being innovative with their own ideas. However they will very easily revert to legal litigation if they believe harm has been done to them. Paranoid people will tend to avoid certain products and markets if they believe there is a more powerful competitor in the market.

Paranoia usually occurs when there is some form of traumatic and stressful issues or some challenge arising. In many cases paranoia will be a temporary condition until the immediate sources of stress pass. Paranoia can also be a selective phenomena where an object, event or situation. For example, the belief that ‘multinational companies always target local companies for takeover’ will influence perception and behavior.

Paranoia can also merge with the schizoid typology where a strong persecutory complex develops. Paranoia sufferers can also develop grandiose delusions where he/she believes they have particular skills or abilities to carry out a special mission, but someone has a master plan to prevent him/her from successfully fulfilling their calling. Such a fantasy was shown in the movie The Blues Brothers where Jake and Elwood believed they were on ‘a mission from God’ and being prevented from carrying out their calling by a number of groups (the police, the sheriff, the other group and eventually the whole United States armed forces).

A mild form of the paranoia typology could be positive where the organization will have good knowledge of its external threats and opportunities and internal strengths and weaknesses. This would be well suited to extremely dynamic environments where there is rapid change going on.

The Obsessive-Compulsive Typology

The obsessive-compulsive typology has many similarities to the previous paranoid typology where there is great emphasis on control of the organization and surveillance of the environment. A leader with this type of behavior will tend to be stubborn and frustrated with his/her subordinates because of his/her inner need to pursue perfection. This behavior is often a characteristic of many high achievers in society.

Compulsive people are usually perfectionists and take great care and diligence in their own work to the point of being very slow to complete tasks. As a manager of others he/she will have great difficulty in delegating work. To maintain control, they will develop many rules, procedures and policies to keep a check on their subordinates work. The firm’s preoccupation with planning, budgets, procedures, rules and action plans will greatly influence how the company is internally organized and how the environment is seen and interpreted. Strategy will also be crafted taking into account the firm’s existing rules and procedure structure, limiting its own strategy options.

Productivity will be sacrificed for perfection of work. Obsessive-compulsive people also expect perfection from others and become very frustrated when people don’t live up to their standards and expectations. In extreme situations this leads to get mistrust of coworkers and subordinates, leading to the loss of respect and falling out of relationships. This is generally part of a wider inability to develop and carry on relationships with people because of their feeling that socializing is wasting time.

Strategy is usually developed and implemented with a very clear concrete objective and underlying and uncompromising philosophy which serves as the organization’s reason for being. This philosophy based on the founder’s sense of ethics will remain steadfast within the company’s mission and strategy, even at the cost of exploiting some potential opportunities arising during the life of the company. Strategy will tend to be based more on this philosophy than what is happening in the competitive environment.

Success is often jeopardized with to the reluctance to commit the necessary resources in the implementation phase. The obsessive-compulsive organization will tend to hoard and hang on to resources, being reluctant to use them.

The entrepreneur who started the firm will in most cases also manage the firm during the growth and maturity stages. A person may find it very difficult to release control and delegate power and authority. Where compulsiveness and centralized decision making worked well in the early stages, this style of management in later stages of development becomes an obstacle to firm creativity and innovation. This form of positional status can increase the power-distance relationships in the organization[3]. Formal controls and organizational hierarchy creates a very static and stable internal environment. Formal authority is through position in the hierarchy rather than experience. This status and dominance over subordinates is clearly shown in these types of organizations.

Obsessive-compulsive behavior in organizations may tend to be a defense mechanism against some form of anxiety or fear, in a similar way to the paranoia typology. Obsessive-compulsive people hold the belief that some form of calamity will happen if action is not taken to prevent it. To them this means that work must be completed to the upmost highest standards possible. This scenario is often reinforced by organizational stories about a previous major problem that occurred because the firm was not adequately prepared. In times of great uncertainty this typology can lead to organizational breakdown.

The obsessive-compulsive typology is useful during entrepreneurial start ups, in very stable environments and repetitive manufacturing operations, etc. However the resulting organizational form created out of this typology will become very rigid because of the core philosophy and the high number of controls in place. If controls become too excessive, organizational motivation, creativity and innovation will decline. This will hinder the organization from identifying and exploiting new opportunities. However in a moderate form the organization will have a well integrated check and balance system and focused product strategy. When new products/opportunities are discovered, the underlying need of producing perfection will make the development process very slow.

The Attention-Seeking (Dramatic) Typology

The attention-seeking (dramatic) typology is manifested when a person is hyperactive, impulsive and dramatically venturesome in their lives. They work tirelessly to impress others, often appearing flamboyant, craving novelty and excitement. Attention seeking people base their actions on hunches and intuition, without any formal analysis before making decisions. An organization within the attention-seeking (dramatic) typology will have very centralized decision and command structures. The attention-seeking leader sees the primary role the organization is to carry out his/her bold and dramatic ideas thought out by the leader.

Attention-seeking (dramatic) leaders are usually great charmers of people they want to impress. They continually seek positive feedback and admiration of their actions. They are very opinionated on topical issues, but lack substance to support their ideas and will change their position to suit their audience. They have very low self-esteem and rely on others to suppress this. Being at the centre of attention relieves this tension and the insecurity they feel. Consequently it is hard to get along with these people unless one helps to fulfill this craving for attention. These leaders tend to surround themselves with people who will always agree with them.

Decision making is unreflective and borders on the impulsive. The larger and more complex the organization grows, the more opportunity for dramatic events and less time there is for the leader to focus on detail in the decisions he/she makes on behalf of the organization. Decisions tend to be made on the potential to gain attention rather than any factual analysis. Narcissistic behavior also can occur, where bullying, manipulation and deception become tools of control and domination. Subordinates usually see through the insincerity and become de-motivated, uninspired, skeptical, and stop giving creative suggestions to the leader. This uncreative environment is reinforced by the way managerial posts are filled through politics and nepotism. Those who have real influence are those who are favoured by the leader. The leader sees employees only as tools to implement his/her grand plans. The views of subordinates are rarely taken into account for major decisions.

Strategy is based on the general craving for visibility and exposure. Consequently strategy often diverges from previously set goals and objectives because other circumstances have created opportunities where attention can be quickly gained. As a consequence, strategy becomes very disjointed and ad hoc. Organizational structure is hap-hazard and does not take account for the needs of the environment. The structure is developed with the need of the leader to control decision making. It is not uncommon for the leader to meddle in even the most mundane decisions and give out assignments that are very difficult to satisfy. Short term advantages are sort at the cost of long term gains for the organization. Resources are used very inefficiently. Attention-seeking (dramatic) organizations may borrow heavily and become highly geared companies.

Attention-seeking (dramatic) people my start projects with great enthusiasm, as it seemed a good idea at the time, but very quickly loses interest. The general motivation behind what they do is to gain notoriety and attention rather than create something of long term substance. This trait may be very valuable in start ups in high profile industries like entertainment where there are no shortages of examples. However this form of strategy can be disastrous in a mature organization, where new strategy will be inconsistent, with an unnecessary high risk with rash expansion.

The Depressive Typology

The depressive typology is characterized by a feeling of hopelessness, inaction, passiveness, low confidence and conservatism. There is a feeling that there is little control of the outside environment and even if they intervened there is little chance of success, so the best option is to carry on as usual and not be proactive.

In a depressive state cognitive information coming in will become distorted resulting in a stream of negative thoughts. Beck (1967) suggests that people who themselves are depressed will develop a cognitive schema that organizes incoming information in a negative way. Things about self, the world and the future will be subject to overgeneralization distortions which will create negative outlooks into matters of competency, ability, luck, fate and potential outcomes, etc. Other cognitive distortions (Beck 1976) like arbitrary inferences (jumping to negative conclusions about everything), personalizing (assuming everything is one’s own fault), and castastrophizing (thinking the worst case scenario about everything) will also distort incoming information, leading to the feeling of being a total failure, where a self fulfilling prophecy develops.

Within the organizational context, there will not be much interest in anything, leading to a number of stifling consequences such as failure to replace assets, little, if any new product development, little market intelligence gathering, poor customer service and leader indecisiveness. There is a basic pessimistic outlook towards the outside environment. The organization will tend to be very bureaucratic and hierarchical, the same it has been for decades before (if it is an established company). Managers will not take any initiative and leave major decisions for the board and committees to make. The company operates through procedures with little impact from happenings in the marketplace. This brings complacency which brings strong barriers to any form of change.

Strategy tends to develop from within, rather than from the market as managers feel they already understand the market well enough and there is little point doing any further field analysis. The competition is seen as being the same and customers are homogenous as far as managers are concerned. Too much field analysis could bring uncertainty, shock and anxiety about the need to change which is what the organization is trying to avoid.

This typology is common in very established firms in stable market environments where technology in production processes have been already automated. Examples of these types of industries would include the steel, automotive (prior to the 1980s), agriculture and some industrial chemical industries. Industries that have been protected through tariffs and formed oligopolies would be very susceptible to depression. Because these industries have been stable for many years, environmental change is very difficult to see from inside the industry, something like the goldfish not being able to see the water it is swimming in. In an organization with a moderate form of pessimism, one would expect a high degree of management involvement in strategy formation, resulting in firm focus. However where complacency has developed, anarchistic strategies and stagnation in a declining market would be very characteristic.

When firms become pessimistic bringing on complacency, this leaves them open to takeover by stronger and more ambitious competitors. For example, CEMEX the Mexican cement giant took the opportunity to takeover cement companies in South-East Asia during the 1997-1999 Asian financial crisis, where many firms became very pessimistic. Novel strategies in very stable markets can shake complacent competition. Singapore Airlines left IATA and shook up competition by providing better in-flight service in the 1970s. Existing TV networks were caught off-guard when CNN launched its 24 hour news network in 1980.

The Schizoid Typology

The schizoid typology is relatively rare in new enterprises as someone in this state would be unlikely to develop an enterprise unless it is of solitary nature, like graphic design or computer programming. The world to the schizoid is unhappy, unpleasant and empty of meaning. Nothing really excites the schizoid who tries to remain detached from everything. Sometimes schizoid tendencies carry an eccentric nature or beliefs with them such as belief in the supernatural, UFOs or conspiracy theories, etc. In private life the schizoid person is greatly devoid of personal relationships except for parents and closest relatives. He/she would have very few friends as they are seen as intrusive and a waste of time. For these reasons the person lives a very sheltered life, where any social support network will not likely exist.

Under the schizoid typology, any leadership in an organization would appear directionless, always changing and confused, indifferent to praise and criticism, and seemingly detached from the reality of what is going on. The leader would appear to be in a world of fantasy or daydreams. Deep down this state would be caused by anxiety or fear of being attached to intimacy from either the feeling self conscious, worthless and at the same time superior to others (Stone 1993).

Firms in the schizoid state would carry out very little environmental scanning. There is no firm philosophy to follow, resulting in undisciplined and uncoordinated product/market strategy. Little direction would come from the leader who will tend to be withdrawn, indecisive or uncommitted. It is likely that the leader will not even have any close advisors to fill in his/her apathetic void. Such a company would tend to pay little, if any attention to criticism and complaints by customers, stakeholders and authorities. Due to this underlying apathy there is great risk that strategies developed will operate with little regard to rules and regulations. If these breaches are serious and the company is caught out, it could lead to heavy consequences.

Company strategy and operations will just continually muddle along unless one or more groups within the organization takeover and dominate the decision making process, e.g., marketing, finance or operations departments. There may be a struggle between two or more groups within the company, where demarcation lines with will be created with an “us and them” mentality. If this occurs then the organization will become a political battleground, resulting in little collaboration. These barriers between departments would lead to very little flow of information around the organization.

If conflict is managed within the organization this could promote many different points of view. However this may be difficult if political competitiveness destroys any potential cooperation. Most strategy and operational decisions will be very inconsistent because they are based on political processes. The organization will lack the strength in the top leadership to steer it all subordinates in the same direction and overcome the climate of suspicion and non-cooperation.

The Narcissistic Typology

Narcissistic behavior can occur from extreme behaviors within the paranoid, obsessive-compulsive and the attention-seeking (Dramatic) typologies or it can occur as a psychological response to the need to manage self-esteem. Narcissistic individuals have a strong need to be admired, a sense of self importance and a lack of insight and empathy into the needs and feelings of others. They see themselves as great achievers, even if they haven’t achieved anything, which can lead to an overconfidence bias. They seek to associate themselves with those who have been successful to seek more acclaim through the association. Narcissists find it very difficult to cope with their own emotions, particularly when their self view comes under scrutiny. For this reason they find it very difficult to learn from others, are poor listeners and don’t teach, but indoctrinate their subordinates.

Narcissists are highly ambitious people. They are attracted to business and driven by their need for power and glory. This is a trait of many successful entrepreneurs, where self confidence and ambition assisted them. The dream of success and the accolades it brings is something they think about a lot. Some narcissists are truly experts in their field and they will extend their knowledge and skills into other areas. Where narcissists have little intellectual knowledge in their field, they will think very shallow, but at the same time they will be very ‘street-smart’.

Narcissists expect a lot from their subordinates. When they don’t receive the total devotion and dedication they expect of their subordinates, they will punish them in Machiavellian ways. The narcissist is highly distrustful and overly exploitive of his/her subordinates. However he/she is extremely sensitive to criticism and will very quickly grow into childlike deep anger and rages if they are not given the respect they think they deserve.

Strategy will be underlined with a great desire to compete and win at any costs. This drive to win can be positive but at the extreme, devious methods will be employed which can border on the unethical and illegal. In extreme narcissism, objectives can be unrealistic as they are based on fantasy. This results in grandiose strategies objectives which are impossible to achieve (Brown, 1997, P. 648). The arrogant nature of the narcissist will lead to intuitive decisions where little analysis and interpretation of the market is undertaken (Brown & Starkey 2000). The narcissist likes to think in terms of the big picture and leave details to his/her few trusted loyalists who tend to tell their leader what he/she wants to hear. The narcissist wants to leave a legacy and be ready for a fight. However he/she will always look for potential enemies along the horizon. There is a reluctance to change strategy even when it is not working as the narcissist views this as a sign of weakness and failure. This weakness can lead to large scale disasters.

Table 3.21. Six psychotic typologies, characteristics, associated thoughts and beliefs.

The firm will become self-absorbed and seek to capitalize on opportunities that show greatness. These are very inward looking (Christensen & Cheney 2000), where stakeholder interests are rarely considered, often leaving them to drop off support. Self rhetoric can become so intense an echo of unrealistic dreams and grand schemes, that in telling himself who he is and what he stands for, that he will forget who he is and what he stands for (Hatch & Schultz 2002).

The typologies above have some influence in how the world is perceived. Structure, management style and strategy reflect or mirror how the leader and members of the organization see the world. This is heavily influenced by the leader at the top (Mitroff 1984), especially if the leader was also the founder of the organization. Although organizations can be seen as a psychotic phenomenon, very little research has been undertaken on this aspect of misalignment to date. The psychotic continuum is a worthy paradigm through which to view organizational opportunity, strategy, operations, and decision making, potentially capable of assisting in diagnosing the causes of organization dysfunction.

References

Beck, A. T. (1967). Depression: Clinical, Experimental, and Theoretical Aspects, New York, Hoeber Medical Division, Harper & Row.

Beck, A.T. (1976). Cognitive Therapy and Emotional Disorders, New York, International Universities Press.

Brown, A. D. (1997). Narcissism, identity and legitimacy, Academy Management Review, Vol. 22, pp. 643-686.

Brown, A. D. and Starkey, K. (2000). Organizational identity and learning: A psychological perspective, Academy Management Review, Vol. 25, pp. 102-120.

Christensen, L. T. and Cheney, G. (2000). Self-absorption and self-seduction in the corporate identity game, In: Shultz, M., Hatch, M. J. and Larsen, M. H. (Eds.) The Expressive Organization: Linking Identity, reputation and the Corporate brand, Oxford, Oxford University Press, pp. 246-271.

Cohen, P., Slomkowski, C., and Robins, L. N., (1999). Historical and Geographical Influences on Psychopathology, Mahwah, NJ., Lawrence Enblaum Inc.

Hatch, M. J. and Schultz, M. (2002). The Dynamics of Organizational Identity, Human Relations, Vol. 55, pp. 989-1018.

Kets de Vries, F. R. and Miller, D. (1984). The Neurotic Organisation, Diagnosing and Changing Counterproductive Styles of Management, San Francisco, Jossey-Bass, Inc.

Kramer, R. M. (2003). The Harder They Fall, Harvard Business Review, Vol. 81, No. 10, pp. 58-66, 136.

Maccoby, M. (2000). Narcissistic Leaders: The Incredible Pros, The Inevitable Cons, Harvard Business Review, Vol. 78, pp. 68-78.

Mitroff, I. I. (1984). Stakeholders of the Organizational Mind, San Francisco, Jossey-Bass.

Schoenberger, E. (1993). Corporate Strategy and Corporate Strategists: Power, Identity, and Knowledge within the Firm, Environment and Planning A, Vol. 26, pp. 435-451.

Stone, M. H., (1993). Abnormalities of Personality: Within and Beyond the Realm of treatment, New York, W. W. Norton & Co.

 

 

 

 

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Murray Hunter, University Malaysia Perlis

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