This article is part of an ongoing series on behavioural psychology, exploring personality, scarcity, social dynamics and the ways our environments shape behaviour.

How scarcity teaches organisations to hide the value sitting directly in front of them

When I was about twelve or thirteen there was a girl at school who sat somewhere near the bottom of the social hierarchy.

She was associated with a group of kids we rather cruelly thought of as the “stinky kids”. That was simply where the school had placed them, and children are extraordinarily good at building hierarchies and then treating them as if they are facts of nature.

I remember her as warm and good-natured, but otherwise I barely noticed her.

Years later, probably when I was about eighteen, I was sitting near the back of a packed bus when she got on near the front. I remember looking down the bus and having one of those slightly disorientating moments where your brain struggles to reconcile what it is seeing with what it thinks it already knows.

She was jaw-droppingly beautiful.

And I remember thinking, what the actual fuck? How did I not properly see this before?

Obviously she had grown up, and so had I, but that did not feel like the whole explanation. What had really changed was the environment in which I was looking at her. At school I had not just been looking at a girl, I had been looking at a girl through the social system around her. Her position in that system had become part of what I perceived.

Outside it she was just standing on a bus.

There was another kid at the same school who was enormous and had a reputation as one of the school bullies. Enough people seemed frightened of him that the reputation felt self-evidently true.

My experience of him was almost completely different.

He was warm, funny, straightforward and, with me at least, surprisingly gentle. He was also profoundly dyslexic and, looking back, almost certainly had ADHD. In science lessons he realised that I understood the work and started copying enough of what I was doing to get himself through the tests.

I didn’t particularly mind. If anything, I thought it was quite clever. He had a problem, had identified a resource and worked out how to use it.

That does not mean the other stories about him were necessarily false. I wasn’t there for every interaction he ever had. The point is that both versions could exist at the same time, while one version became powerful enough to determine what everybody expected to see.

That is the bit I keep coming back to.

Reputation does not merely tell us what other people think about someone. Eventually it starts changing what we are capable of seeing ourselves.

When the story becomes the asset

This becomes considerably more interesting when you move from playgrounds into organisations, because organisations manufacture these stories constantly.

Someone is difficult. Someone isn’t commercial. Someone isn’t strategic enough. Someone is brilliant but impossible to manage. A supplier is unreliable. A team never delivers. A product failed. A particular technology “doesn’t work here”.

Sometimes all of those things are true.

The problem is that the story can outlive the evidence that created it.

The first time somebody tells you a colleague is difficult, it is clearly one person’s opinion. By the fifth or sixth repetition it starts feeling like something everybody independently knows, particularly when you can no longer remember where you heard it first. The story acquires weight through repetition rather than through new information.

Once that happens it can become actively useful.

Think about the cliché of a dragon sitting on a pile of gold. Obviously there wasn’t an actual dragon sitting on somebody’s gold, but maybe the dragon is the story that stops people looking for the gold.

That is what some organisational reputations start to do.

If somebody has already been classified as difficult, there is very little incentive to rediscover them as useful. Doing that means questioning the existing judgement and perhaps the people who made it. The same applies to an abandoned product, an awkward supplier, a team that supposedly cannot deliver or an idea that “we tried before”.

The story saves everybody the cost of looking again.

And in a scarcity environment that can be particularly attractive because looking again creates risk. If the existing explanation is wrong, somebody may have to give something up. Territory. Authority. Credit. Perhaps simply the comfort of having understood the situation correctly.

So the story stops being a description of the asset.

The story becomes the asset.

What scarcity protects

I have written before about scarcity and abundance because I increasingly think they explain an extraordinary amount of organisational behaviour.

Some of the most materially constrained organisations I have worked in have actually behaved with enormous abundance. When you start a company with almost nothing there is very little to defend. You look outside. Where is the next client? What can we make? Who could we work with? What happens if we combine these two things? What can we try cheaply?

Material constraint and psychological scarcity are not the same thing.

In fact, businesses can become more psychologically scarce as they become materially successful, because success creates things that can now be lost. Revenue. Budgets. Headcount. Territory. Products. Careers. Status.

The organisation becomes progressively better at protecting the value it already understands, and sometimes progressively worse at discovering value it does not.

Information gets hoarded because knowing something creates leverage. Teams protect territory because another team succeeding might reduce their own importance. Decisions accumulate owners. Relationships become political. People become strangely careful about who gets acknowledged for what.

Credit is interesting here because I don’t really think of it primarily as status. I think of it as acknowledging contribution, and that makes it a social signal.

As a manager I have sometimes given people more credit than a strict accounting of the work might justify. There may be something I have helped them with quite substantially, but if they were the person who pushed it over the line I will often publicly give them the credit for doing so. Partly because they did, and partly because recognising promising people encourages them to keep going.

You can’t create a hard and fast rule for that. You have to feel it out case by case.

But being prepared to give somebody else credit says something important. It says their contribution does not diminish mine.

Scarcity makes that much harder.

If somebody else’s recognition feels like your loss, you start protecting contribution rather than combining it. If another team’s success threatens your relevance, collaboration becomes dangerous. If information is power, sharing it becomes irrational.

The result is fragmentation.

And that fragmentation is expensive because most interesting things in organisations do not sit neatly inside one person, department or discipline. They emerge from combinations.

A programmer sees one piece. An artist sees another. Product sees something else. The person who has been there fifteen years knows why something failed last time. The supposedly difficult person may be the only one prepared to point out that the assumptions underneath the whole thing are wrong.

If the system has already decided what each of those people is worth, it stops discovering what they might be worth together.

Looking again

I don’t think the answer is some vague instruction to be more open-minded.

Sometimes the difficult employee really is difficult. Sometimes the failed product was rubbish. Sometimes everybody agrees about somebody because everybody has independently reached roughly the same conclusion.

The problem is not making judgements. Organisations cannot function without them.

The problem is forgetting that they are judgements.

Once a story becomes embedded deeply enough, the organisation begins treating it as infrastructure. People inherit it without examining it. Decisions are made around it. Eventually nobody can quite remember what happened in the first place, only what everybody knows about what happened.

That is how value gets hidden in plain sight.

The girl on the bus had not been invisible. I had seen her plenty of times. I simply had a story sitting between me and what was actually there.

Organisations do the same thing with people, ideas and opportunities every day.

Scarcity makes those stories valuable because they protect the existing arrangement. Abundance makes it possible to ask whether the arrangement still makes sense.

Sometimes the dragon is real.

Sometimes somebody just needs to look behind it.