Decision Making

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From the Editor: In Praise of Humility

The Winter 2014 issue of MIT Sloan Management Review highlights decision making, in “The Power of Asking Pivotal Questions” and “Using Simulated Experience to Make Sense of Big Data.” It also celebrates acknowledging when you don’t have all the answers, in “Embrace Your Ignorance.” Other articles look at “technostress,” why product category labels matter and why "benevolent" mobile apps may be best at brand-building.

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Why You Decide the Way You Do

Curiosity about the decision-making process has heated up, attracting academics from neuroscience, management, behavioral economics and psychology. Researchers have found, for instance, that a willingness to ask for advice on difficult problems can increase a person’s perceived competence, and that too many choices can cause people to make less-than-optimal choices. Here, we highlight six scholarly articles that have intriguing insights into the factors that can affect decision-making.

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The Power of Asking Pivotal Questions

Good strategic thinking and decision making often require a shift in perspective — particularly in environments characterized by significant uncertainty and change. Managers can make better decisions by examining both broad market trends and less visible undercurrents. But the questions leaders pose sometimes get in the way of solving the right problem or seeing more innovative solutions. Here, the authors present six questions that challenge executives to incorporate broader perspectives.

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Using Simulated Experience to Make Sense of Big Data

As data analyses get more complex, how can companies best communicate results to ensure that decision makers have a proper grasp of the data’s implications? Research has found that letting decision makers gain experience on the outcomes of different possible actions by interacting with simulations helps those executives make better decisions. Simulations narrow the often a large gap between what analysts want to share and what decision makers understand, and more clearly illustrate complex statistical information.

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Why Managers Still Matter

The role of managers needs to be redefined in today’s knowledge-based economy. Managerial authority remains essential in situations where decisions are time-sensitive, knowledge is concentrated and several decisions need to be coordinated. As well, an important task for today’s managers is to define the organizational goals and principles that they want employees to pursue. “From our perspective, the view that executive authority is increasingly passé is wrong,” write the authors.

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Elevating Data, Analytics to the C-Suite

The former senior vice president of vendor analytics at Bank of America is now chief analytics officer at Bank of America Merchant Services. While Merchant Services is technically a separate business, Douglas Hague’s ascension to the C-suite is notable in that it’s one of the first analytics roles to report directly to the CEO at Bank of America Merchant Services. That has some implications for strategy and for long-term planning.

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From the Editor: Decision Making in the Digital Age

Business executives today have access to far more data than any previous generation, and that transforms the way business decisions are made. The Winter 2014 issue of MIT Sloan Management Review features a special report investigating how, even with plenty of data, making wise decisions about topics like strategy can be challenging. No matter how much data we collect and analyze, our perspectives are still colored by human foibles.

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Social Business: Flat or Hierarchical? A Surprising Answer

The most effective social businesses of the future may start to look more like organizations that long predate modern corporations — so-called “loosely coupled” organizations such as military, education and religious institutions. These organizations remain deeply hierarchical, argues Gerald C. Kane, but these hierarchies operate differently than modern corporations, pushing decision-making capabilities down to people who can better deal with conditions on the ground.

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In Defense of Delay

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A new book, “Wait: The Art and Science of Delay,” argues that while snap decisions can be important in times of danger, our brains need time to assess other factors and resist what economists call “present bias.”

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You’ve Got Eight Words To Sell Yourself

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Do your opening sentences get people to pay attention? When pitching a start-up idea, you need to get to the core innovation right out of the gate. When making any kind of presentation, a counter-intuitive statement, surprising fact or arresting story can get people to put their phones down.

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What Really Happened to Toyota?

Consumers were surprised in October 2009 by the first of a series of highly publicized recalls of Toyota vehicles in the United States. Citing a potential problem in which poorly placed or incorrect floor mats under the driver’s seat could lead to uncontrolled acceleration in a range of models, Toyota announced that it was recalling 3.8 million U.S. vehicles. The article discusses two root causes for Toyota’s quality problems.

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