Fakultas Ekonomi dan Bisnis

School Economics and Business

Section 01

2 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business EXAMPLE OF THINKING ERRORS

”I think there is a “It would appear that we

world market for have reached the limits
maybe five of what it is possible to
computers“ achieve with computer
technology.”
Thomas Watson, Chairman of
IBM in 1943 John von Neumann in 1949
They are the
expert on the
field. How can
“640K ought to they get it “There is no reason
be enough for wrong? anyone would want a
computer in their
anybody.” home.”
Bill Gates in 1981 Ken Olsen, founder of the Digital
This Photo by Unknown Author is licensed under CC BY
Equipment Corporation in 1977

Creating the great business leaders

From: https://www.quora.com/What-are-some-statements-said-by-famous-people-that-turn-out-to-be-false
3
 Fakultas Ekonomi dan Bisnis
School Economics and Business SELECTIVE THINKING: TYPOLOGY
SELECTIVE ATTENTION

• The tendency to “see” what we

expect to see

Selective thinking SELECTIVE OBSERVATION

is the tendency to
validate certain • The tendency to accept certain
piece of information that support
ideas and discount our position
others
SELECTIVE RECALL*

This Photo by Unknown Author is licensed under CC BY • The tendency to remember the
things that we want
*It is similar to the concept of selective retention

From: Griffiths and Costi (2019) 4 Creating the great business leaders
 Fakultas Ekonomi dan Bisnis
School Economics and Business NEGATIVE EFFECTS OF SELECTIVE THINKING

Go into denial and ignore

facts. Avoiding tough
questions and opt for
confirmation bias
Have you ever
experienced or
Stop at the first right answer saw one of these
and miss out on a multitude
of possible answers effect of selective
thinking?

Get overly attached to pet

ideas, even if they don’t turn
out to be all that great This Photo by Unknown Author is licensed under CC BY

From: Griffiths and Costi (2019) 5 Creating the great business leaders
 Fakultas Ekonomi dan Bisnis
School Economics and Business NEGATIVE EFFECTS OF SELECTIVE THINKING

Be made a fool by your own

expectations. Interpret the future
based on what you expect to Have you ever
happen experienced or
saw one of these
effect of selective
Avoid taking risks owing to fear of thinking?
losing. Instead of being driven by
what you may gain, you are more
worried about what you may lose
This Photo by Unknown Author is licensed under CC BY

From: Griffiths and Costi (2019) 6 Creating the great business leaders
 Fakultas Ekonomi dan Bisnis
School Economics and Business THE CAUSE: IGNORING THE FACTS

• In the early 1900, this automobile

“Any customers can have manufacturer dominate 60 percent of
the US market
a car painted any colors
• In 1920, the trend has changed. Car
that he want as long as it was not merely a tool of
transportation but also a symbol of
is black” status

• As the result, customers demands for

more colors and design

• As the result, the market share of this

automobile manufacturer declined to
45%

From: Griffiths and Costi (2019) 7 Creating the great business leaders
 Fakultas Ekonomi dan Bisnis
School Economics and Business THE CAUSE: ONE RIGHT ANSWER

What will happen to the

ball when the person that
hold the ball let go of it?

Thi s Photo by Unknown Author i s licensed under CC BY-SA

From: Griffiths and Costi (2019) 8 Creating the great business leaders
 Fakultas Ekonomi dan Bisnis
School Economics and Business THE CAUSE: ONE RIGHT ANSWER
310
The common steps to find the present
value of these cash flows are: 300

1. Use PVIFA (present value of 290

annuity) to find the present value of Could you find a simpler
1st month and 2nd month cash flows 280
way to calculate the
2. Use PV (present value of a single 270 present value of this
flow of cash) to find the present cash flow?
260
value of the 3rd month cash flow
250
3. Use PVIFA to find the value of the
4th and 5th months cash flow in the 240

3rd month
230
4. Use PV (present value of a single
cash flow) to find the present value 220
Month 1 Month 2 Month 3 Month 4 Month 5
of the 4th and 5th months Series 1

From: Fajar Prabowo (2012) 9 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business THE CAUSE: ATTACHMENT TO A PET IDEA

• Kodak was the most successful

film-based camera manufacturer
for nearly a century
• However, Kodak failed to realize
the potential of digitalization
• Several applications of digital
technology are digital
photography and printing, file
sharing, and the thrive of third-
party apps including social media
• By 2010, its stock price was 96%
below the stock price on 1997
when they hit the peak
This Photo by Unknown Author is licensed under CC BY-SA

From: Griffiths and Costi (2019) 10 Creating the great business leaders
Fakultas Ekonomi dan Bisnis
School Economics and Business

Which one will you

choose to drink
when you are
thirsty?

“Pepsi” by Sally Mahoney licensed under CC-BY 2.0

11 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business

THE CAUSE: DUPED

BY EXPECTATIONS

This Photo by Unknown Author is licensed under CC BY-NC-ND

• Coca Cola company has established since 1886 and never change it recipe for almost a
century
• However, in 1985, Coca Cola decided to change its recipe and introduced it as New Coke
• In a blind taste test, the New Coke is preferred by the respondents. However, when the
New Coke introduced to the public, it turned into a complete disaster

12 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business THE CAUSE: LOSS AVERSION
6

5
5

4
4
• Let’s toss a coin
3 • If you lose you must pay
3
me IDR 100.000
2 • What is the minimum
2
amount that you would
need to win to make this
1
1 bet attractive to you?

0
IDR 100 K IDR 150 K IDR 200 K IDR 250 K IDR 300 K

From: Griffiths and Costi (2019) 13 Creating the great business leaders
 Fakultas Ekonomi dan Bisnis
School Economics and Business

THE CAUSE: LOSS

AVERSION
Which one will you choose? Discuss it with
a) Melempar koin dan your team about
memperoleh Rp.200.000,- bila what to choose?
tebakan anda BENAR dan
memperoleh Rp.0,- bila tebakan Why?
anda SALAH
b) Memperoleh uang sebesar
Rp.100.000,- TANPA melempar This Photo by Unknown Author is licensed under CC BY

koin

From: Kahneman (2013) 14 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business

THE CAUSE: LOSS

AVERSION
Which one will you choose? Discuss it with
a) Melempar koin dan harus your team about
memberikan uang sebesar what to choose?
Rp.200.000,- bila tebakan anda
SALAH dan TIDAK PERLU Why?
memberikan uang bila tebakan
anda BENAR
b) HARUS memberikan uang sebesar This Photo by Unknown Author is licensed under CC BY

Rp.100.000,- TANPA melempar

koin

From: Kahneman (2013) 15 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business TEAM EXERCISE: 30 MINUTES

1. Can you find fresh

ideas about how you
could use a clock?

2. Can you recognize how

selective thinking affect
your creative process?

Please report any

difficulties during the
process!
Thi s Photo by Unknown Author i s licensed under CC BY-SA

16 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business THANK YOU
Telkom University

QUESTIONS..?

17 Creating the great business leaders