Inside banks' information and control systems: Post-decision surprise and corporate disruption

Article history: Received 15 July 2014 Received in revised form 6 May 2015 Accepted 9 May 2015 Available online 23 June 2015 In response to the catastrophic outcome of the 2008–2009 Financial Crisis we report on a qualitative study of decision maker surprise in the banking industry. Banks use a remarkably sophisticated ensemble of information technologies for supporting their management control systems and enabling oversight by government regulators and industry watchdogs. Banks depend on a global network of data processing and information systems to provide their core banking services and to manage the complexfinancial andmacroeconomic elements of their environment. They are also subject to federal and/or state oversight, which includes on-site examinations and quarterly financial data monitoring, to reaffirm their safety and soundness. Yet, the financial crisis caught them unawares. To get behind the headlines of the crisis, we opted to not study crisis decisions overtly, but rather to explore bankers' general ability to interpret the data that they were receiving via their information technologies and observations and to follow a number of crisis and non-crisis decisions that had surprise outcomes for them. Our focus is on understanding the context, process and patterns of decisions that resulted in surprise outcomes for bankers.We interviewed 23 senior executives from banks in the southeast who recounted fifty-one post-decision surprises that had occurred between 2008 and 2010. From analyzing those interviews, we found that they attributed surprise outcomes of their decisions to specific behaviors, including their complacency and over-confidence, their over-trusting of others, their deviation from protocol, their habitual information reporting and decisioning efforts, and their deficient detection of warning signals. In addition they tended to rationalize surprise outcomes by diverting blame to others. Combined, these symptoms reveal a chronic organizational and cultural susceptibility for being surprised. It was evident from our analysis that the bankers exhibited a narrow focus of attention and a reduced sense