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| Source: pexels |
My favorite comments from corporate quarterly earnings reports tend to be those that blame the weather for poor same store-sales growth, when no natural disaster or major weather event has occurred. They simply blame the unusually rainy month of May or the above-average snowfalls in the month of February for lackluster sales. Hmm..... what's really going on? Analysts and investors must accept these explanations with great caution.
Remember that human beings tend to exhibit what psychologists call the fundamental attribution error. When others fail, we look inside of them for their faults or their inadequacies that may have caused that failure. When we fail, we look outside of ourselves, blaming external conditions or unforeseen situational circumstances. Corporate leaders do the same, of course. It's easy to find fault with external conditions, rather than looking in the mirror.
How does one distinguish between invalid attributions or honest assessments of external factors that may have inhibited performance? One easy way is to look at competitors. Are they suffering the same fate? The analysis applies to many metrics, not just sales. If a few rivals are doing exceedingly well in the same competitive environment, then one has to ask why executives are so readily blaming external circumstances for the poor performance.
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