SOME THOUGHTS ON MANAGEMENT & DECISION MAKING
For about 25 years now I have been teaching a senior management course, Seminar in Decision Making, while all the time being uncomfortable with the idea that decision making isnt something that can be taught. Nothing has driven that fact home more dramatically than a study that I recently came across. The study involved a number of manufacturing executives who were given a comprehensive business policy case and asked to identify the key problem in the case. Almost without exception, the problem that each of the executives identified was consistent with his or her functional work area. In other words, production executives identified the problem as a production problem, marketing executives saw the problem as sales, and so forth.
The author who cited this study was using it as an example of "selective perception." I teach it as one of problem framing. It is not a new or unusual problem. What made this study significant was the fact that it involved senior executives, who seem to be no better than anyone else when it comes to problem identification–at least in terms of problem framing or selective perception. If the study tells us nothing else, it is telling us that heterogeneous, group decision making has yet one more benefit; avoiding the pitfalls of selective perception.
In my Seminar I give a hypothetical situation to the class. Half of the students are told to imagine that they have arrived at a concert and discovered that they have lost their ticket, which cost $40. There are still seats available. Will they purchase another ticket? The other half of the class is told that they arrived at the concert to purchase a ticket and discovered they have lost $40, but they still have enough money to purchase a ticket if they so desire. Each individual is asked what he or she will do. Without fail, a clear majority of the people who lost their ticket do not purchase another, while the people who have lost the money are almost unanimous in their decision to purchase a ticket.
In both situations, the loss involves a $40 value. The only difference is how that loss is perceived. Those losing the ticket view the concert as now costing $80 (a narrow framing of the problem), while the people losing the money view it as a separate problem from the cost of the concert (a broader framing of the problem).
What I see from these two examples (the executive study, and my students) is that extensive business management experience appears to have little, if any, affect on improving ones ability to perceive a problem beyond his or her own narrow frame of reference. Anyone with much exposure to medical doctors knows that highly-trained medical specialists tend to diagnose their patients problems with exactly the same reference biases as the executives. It is a depressing thought for both stockholders and people who are sick. If you are a sick stockholder, you are in double jeopardy. But then your choices of doctors and stocks were probably selectively biased in the first place. I dont know if all this depresses you, but it does those of us who attempt to teach decision making.