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VIKALPA • VOLUME 34 • NO 2 • APRIL - JUNE 2009
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covers reviews of currentbooks on management
KEY WORDS
Decision-makingDecisive IndecisivenessManagement EducationNeuroscienceConsumer BehaviourExperiential ConsumptionSocial MarketingEmotional BrandPositioningInformation Processing
Harvard Business Review onMaking Smarter Decisions
Boston: Harvard Business School Press, 2007, pp. 208, Rs 595
W
hat is a decision? What is decision-making? How are we to explain the per-ennial fascination with decision-making? Why is decision-making synony-mous with the managerial function though not necessarily with managers? Whatare the differences between the different professions in terms of decision-makingstyles? Can decision-making be taught? Should decision-making be taught? If so,what are the relevant modalities? How do professionals learn to make decisions?What can professionals in different areas learn from each other about decision-mak-ing? What would the relevant examples of such a process of decision-making be?These are amongst the innumerable questions that have to be thought-through bythose who are interested in the theory and practice of decision-making. This antho-logy of essays on decision-making from the pages of the
Harvard Business Review
isan attempt to address not only some of the questions given above but many othersthat are equally important. The essays collected in this anthology are an attempt tocome to terms with the fact that the scientific ideal of decision-making continues to bewitch us, even while we know pragmatically that it will elude us. That however isno excuse to resist the intellectual demands of the theory and practice of decision-making. This anthology therefore sets out the basic problems in decision-making,the role of information/evidence in making decisions, the difference between plansand decisions, the role of business analytics in choosing between options, the rela-tionship between decision-making and the structure of the human brain, the cultureof decision-making in firms, and the ‘hidden traps’ in decision-making.
On Decision-making
It is important to remember that decision-making is not only a point of entry intomanagement education; but, interestingly, also the object of management educa-tion. In other words, the odd thing about decision-making is that it is both the pointof departure
and
the point of arrival for management education. The term, ‘manage-ment education,’ can also be extended here to include the education of any set of professionals who are interested in the managerial function, especially in relation tothe modalities of decision-making. So whether decisions are ultimately rooted inintuition or rationality, and whatever might be the relationship between these twocategories of cognition, the fact of the matter is that unpacking the modalities of cognition that are either presupposed or structurally ‘built-into’ the process of deci-sion-making, is an exciting exercise for both the instructor and the participants inmanagement programmes. The complexities that emerge in this seemingly simpletask of setting out logically the pre-suppositions involved in decision-making is not
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only interesting in itself, but can be a source of continualfascination for those interested in the relationship be-tween the contexts of situation analysis, the case method,and the modalities of decision-making. It is not surpris-ing therefore that the theoretical foundations of such anattempt are important even if it is not possible to for-malize the process in its entirety by demarcating the logi-cal paths that had to be traversed in any given instanceof decision-making. That is why the decision sciencesrepresent an interesting locus of convergence for schol-ars in a number of areas that are linked to not only man-agement but also to cognitive studies, diagnosticmedicine, psychology, psychoanalysis, and the socialsciences. While each of these areas has its own acceptedmodalities of decision-making, they all work in the hopethat while rational decision-making may be difficult toachieve, it is at least within the ambit of human reach.
Decision Reports
A comparative analysis of decision-making modalitiesin these and other related areas will therefore throw upany number of interesting insights on what is at stake inthe core-curriculum of management education, espe-cially if it is organized as a series of decision-makingcases that will force the case discussant to make choicesrepeatedly in the context of a case analysis. When thesechoices have to be rationally justified, the case discussantwill be forced to work within the context of the criteriaof evaluation. While this in itself is not a proof of ration-ality, it will at least give students an understanding of the need to anchor decisions within acceptable criteriaof evaluation that can be formalized. If this is done inclass in the context of innumerable cases then seekingout the appropriate criteria of evaluation for any givendecision, and asking furthermore whether or not the cri-teria of evaluation can bear scrutiny, will make rationaldecision-making a habit of mind for MBA students. Thatis why decision reports are also called justification re-ports. It is important to remember that the students maynot have had any other opportunity to think about themodalities of decision-making. Writing up a decisiontherefore not only calls for a lot of analytic intelligence,it demands an understanding of the symbolic dimen-sions of the criteria of evaluation as well. This is espe-cially important in those industries that require complia-nce/justification reports as a part of their regulatorystructure; that is why multinationals increasingly insistthat managers must learn to write decision reports.
Compliance/Justification Reports
The other advantage of writing decision reports is thatit helps with ‘continuity’ in decision-making, especiallyif the successful completion of a task requires the co-operation and participation of a number of managersacross different functions in the firm. In the absence of decision reports, a new manager will often have no ideaof why his predecessor did what he did, and what is itthat he, as the incoming manager, is expected to do ei-ther by continuing in the same strategic direction that isimplied by a previous set of decisions, or embarking ona new course of action which, simply put, in the contextof a decision report, means the need to rethink the crite-ria of evaluation before taking any decision. In otherwords, decision-making, as I will discuss later in thecontext of the essay by Mankins and Steele, does not fallneatly within the structure of a strategic plan since deci-sions are often taken throughout the year, and not nec-essarily in the time-frames envisaged in the plan. It isalso important to remember that managers do not nec-essarily have the freedom to decide everything, as ispopularly believed, especially if the criteria of evalua-tion have already been decided upon by the regulatorsas statutory requirements that are not negotiable. In suchcases, decision reports are often ‘compliance’ reports or‘justification’ reports.
Sources of Decision-making
While there is no guarantee that understanding the theo-retical foundations of decision-making will make themanager a better decision-maker, it will at least make itpossible for him to understand what exactly is at stakein the cognitive function that will not only define hissense of identity; but give him a sense of being, when allgoes well, and the confidence necessary to understandthat decision-making is not necessarily an ‘event’ but aprocess, and that therefore decisions are not isolated butlinked to each other. Understanding these in-built pat-terns in decision-making, and how they relate to eachother, can not only be a source of intellectual excitement but an opportunity to learn how to handle complexityin firms on a daily basis. Therefore it is difficult to find atheorist of management who is not pre-occupied to someextent or the other with the modalities of decision-mak-ing whatever his formal area of expertise might other-
BOOK REVIEWS
VIKALPA • VOLUME 34 • NO 2 • APRIL - JUNE 2009
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wise be. Disagreements, if any, between theorists of de-cision-making and theorists of management then per-tain more to the actual modalities of decision-making,and on the potential ‘sources’ of decision-making.So the question that makes it difficult to close the de- bate on the modalities of decision-making is ultimatelyrelated to the cognitive or psychological sources of de-cision-making. Where do these decisions come from?Are they related to consciousness? Or is there an uncon-scious component? If so, what is the proportionate dis-tribution of concerns between consciousness and theunconscious as possible ‘sources’ of decision-making?How furthermore is the cognitivist pre-occupation withrationality to be linked to the modalities of decision-making? Is rationality in decision-making a means toan end? Or is it an end in itself? Can rational decisionshave sources in the unconscious? Or is a decision that isrooted in the unconscious necessarily irrational? Thesethen are some aspects of decision-making that are dis-cussed in this anthology of essays. The complexities andtraps involved in decision-making must be obvious bynow. That is also why there is no breakthrough in theprescribed modalities of decision-making that can betaught in the classroom as a ‘science.’ Instead, the bestthat we can do, while theorists continue to fight it out indifferent domains of knowledge, is to ‘situate’ the prob-lem rather than seek precipitous solutions in the con-text of management.
Problems of Decision-making
There are a number of problems in decision-making thatstem from the structure of the organization itself sincean organization is basically a collection of functions thatseek to add value rather than a ‘thing’ out there. Thesedifferent definitions of what constitute effective decisionroles, across a number of functions in the organization,emerge as bottlenecks since they do not have the sameset of priorities. While strategic harmonization acrossfunctions may be the organizational goal, it is not easyto either attain this in a timely fashion or sustain it overa period of time. The conflict between functions is ‘struc-tural’ and will not go away. There is no locus of magicalsynthesis from which the chief decision-maker can nec-essarily decide what must serve as the strategic direc-tion of the firm without annoying some function or theother. Having made this argument, Rogers and Blenkoset out to examine the different types of bottlenecks thatare relevant to the situation in organizations, and try towork out what decision-makers must do to negotiatethem. They then set out the modalities that they feel willhelp to ‘clear’ the organizational bottlenecks before end-ing with a decision-making diagnostic. This decision-making diagnostic is interesting in the sense that it canalso serve as a form of psychic interiority to help a deci-sion-maker ruminate about the modalities of his cogni-tive/decision-making style, especially since a profe-ssional manager will have to take innumerable decisionsover a life-time. Understanding therefore the relation-ship between his style of thinking-through problems andthe different models of decision-making in the literatureis necessary not only in order to become a better deci-sion-maker, but to internalize the theoretical learningson decision-making. The important thing to rememberthough is that theoretical work on decision-making doesnot offer a decision-making model as a solution to allforms of decision-making, but merely as a set of modalities that can work under a given set of circum-stances. Using the decision-making diagnostic is impor-tant because unless a decision-maker is acquainted withhis own style of decision-making, he will not be able tosort out the decision-making models that are relevantfrom those that are irrelevant, given the culture of thefirm, and the demands on his time.
Diagnosis …
Decision-making diagnostics are also useful in profes-sional contexts as the term implies in the domain of evi-dence-based medicine, where the basic challenge is tofind a way of incorporating the latest breakthroughs inmedical research not only into the modalities of differ-ential diagnosis, but also into the inventory of possiblecures, modalities of intervention, the pharmaceuticalscope of the
materia medica
, etc. This is an interestingproblem because clinical medicine is extremely demand-ing as a profession and the sheer range of medical knowl-edge that is being generated in any given year is noteasy to track, let alone be incorporated into the main-stream of medical practice. What must clinicians do insuch a situation? What are the most effective modalitiesfor transferring the latest research directly into clinicalpractice, with as little delay as possible, so that morepatients benefit from this knowledge than might haveotherwise been the case? How, furthermore, will thisknowledge make doctors into better diagnosticians?
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