Sunday Strategist: Mount Everest and the High-Altitude School of Bad Decisions

(Bloomberg Businessweek) -- The annual climbing window on Mount Everest just closed, and it was a doozy of a year, with a record number of people summiting and at least 11 fatalities. For people more familiar with navigating the corporate ladder, the mountain is a living, breathing lab for studying supply-chain management, leadership, team dynamics, and decision-making–specifically, flawed decision-making.

The best breakdown of these dynamics can be found in a case penned by Michael Roberto when he was a Harvard professor. It provides a peek at the Everest experience without the frostbite and altitude sickness. Roberto focuses on the awfully fatal Himalayan climbing season of 1996, an imbroglio best described in Jon Krakauer’s book Into Thin Air. That May, five climbers died on one fatal summit push, including two of the mountain’s most-celebrated guides.

Extreme mountaineering is an exercise in ignoring sunk costs—the time, labor, and money already invested. Roberto writes that “a dangerous escalation of commitment” occurs as climbers near the summit. One of the fated guides in 1996 had even established a hard stop—the “Two O’clock Rule”—to short-circuit debate on when to retreat. It's not a bad idea for any organization working on a risky venture. It’s also good framing for anyone about to suffer through an all-nighter at the office.

Tellingly, the group that overwhelmingly ignored pre-established turnaround times included some of the most experienced people on the mountain. This brings us to another common leadership flaw that Everest exposed: overconfidence. In the Himalayas, overconfidence can be linked to recency bias. In 1996, the guides had extra swagger in part because the mountain’s weather gods had been kind the previous few years. They minimized the many worst-case scenarios they’d been through in the distant past. Roberto, who now sells an Everest simulation to the C-suite crowd, says the best leaders uncover their biases and weigh decisions accordingly.

Arguably most damning to the 1996 climbers were team dynamics. The guides were in the awkward position of bossing around paying clients, their customers and de facto managers. Meanwhile, climbers weren't encouraged to dissent or have open conversations. And what's worse, folks teamed up under a particular guiding service were largely strangers, unfamiliar with each others’ strengths, weaknesses, and work rates. It's a sound argument for team building. If you're going to climb Everest or do something similarly bold, do some trust falls first or, at the very least, some karaoke.

Finally, there's the complexity of the task. Everest is essentially an on-demand environment, and any hiccup in the supply chain wreaks havoc all the way down the line. In 1996 the situation was exacerbated by customs delays on oxygen canisters and an unexpected wage negotiation with local porters. Guides spent hours fixing these issues when they should have been focused elsewhere. Sound like anyone in your office?

The challenges on Everest this year are more macro than micro. Guides are blaming high casualties on a lax permitting system as the Nepal government tries to boost visitation. Meanwhile, a strong global economy has brought a crush of climbers, many inexperienced and unfit.

In short, Roberto has the makings of another case on his hands.