A few years back LEGO was stuck in an unhealthy fear-based vision about the future that electronic games would take over the toy world and that they needed to move in that direction. It almost closed them down. Now they are back to basics (bricks) and have become the world’s biggest toy company.

At IBM they can tell the opposite story. Even though IBM ThinkPad was a top premium brand, they needed to abandon basics (manufacturing and selling of personal computers) because of fierce price competition. IBM turned into a service and consulting company and entered into a market with a lot higher margins. They turned the big blue ship just in time.

But at NOKIA and at KODAK things didn’t go that well. With a market share of 50% of the total world market NOKIA didn’t notice a massive shift in consumer preferences and thought they were big enough and clever enough to do everything by themselves. Now the NOKIA mobile division is taken over by Microsoft. And at KODAK they somehow ignored major advances in digital technology. Now the famous KODAK moment is nothing but history.

Most of us have been introduced to these ‘big’ fascinating stories about flawed business decisions on the large business scene. And it is pretty hard to understand that the clever decision-makers at LEGO, IBM, NOKIA and KODAK were not able to see changes coming a lot sooner. One might even be inclined to laugh a little bit at them – but the truth is it could happen to everybody. And it does.

The thing is that making sense of things is necessary and important to us. Without it we would take forever to come to any kind of conclusion. We couldn’t make any decisions. We would be very confused the most of the time. Sensemaking normally works really well for us – especially when everything else is being equal.

But the way we make sense of things also make us biased. It directs our attention and makes us literally blind towards the unexpected. It makes us highly selective to the extent that we discard even compelling evidence. Sensemaking makes us easily be fooled by confident experts and analytical reports. It makes us risk averse when there is no real danger in sight – or makes us accepting too many risks when we shouldn’t. It can limit our access to creative thinking. It makes us fear the wrong things – and hire people who are wrong for the job. It makes us jump to conclusions. It makes us remember things very clearly – that never have happened. It makes us see causal relationships as easy as we see colors. We are so good at pattern perception that we see patterns and causes that aren’t really there.

In fact, sensemaking influences all aspects of decision-making. It profoundly affects the way we think about and look at the world. This might lead to poor judgment about what is happening in the future – and what your organization should do about it. It might lead to poor assessments about what has happened in the past – and why. The dots you have connected – the conclusion you have made – might make sense to you … but sometimes you got it all wrong.

Problem is we don’t know it is happening. Most of us aren’t really aware of it. It’s automated. It’s going on below the radar. Question is do you want to do something about it?