In hierarchical organizations lower-level agents can often censor the information that a higher level principal has available to make a decision…the principal can also access an independent source of unfiltered but lower-quality information besides that provided by the agent. This provision of outside information can be thought of as ‘stovepiping,’ ¹

Stove piping is the process by which decision makers circumvent the standard information processes of an organisation and reach into otherwise raw data. This can have benefits of placing analysis in context but often has serious issues.

We have all had a manager that, upon being told the potential options, has said… “well I had a look at the data myself and I think”. This scenario can be incredibly frustrating for analysts but, more problematically, can result in far worst information chains and decisions being made on the basis of those information chains.

It would become much more frustrating if when offered the potential options on the cost analysis of a new product the manager said… “Well I’ve been speaking to bill from accounts and we both think that…”. How annoying.

Second, the stovepipe induces the line agent to report information to the principal in situations where the line agent would not report if there were no stovepipe. This is precisely because the stovepipe’s information is of lower quality than the line agent’s, and given that policy will be changed in such instances, the line agent would rather its higher-quality information be used as the basis for it.