Alyssa s Study Guide Info 1 Evidence Based Management a A Way of Thinking i Attitude of Wisdom Knowing what you know and knowing what you don t know ii Being committed to fact based and evidence based action b Running Experiments and Learning from the Data c Knowing what the theory and evidence is and using it in formulating decisions and policies d Example Harrah s Casino Video i Conventional Wisdom in the Gaming Industry 1 High rollers are an importance source of profits 2 Free rooms are a great way of attracting customers 3 Building beautiful edifices with convention and meeting space is a good way to attract business 4 Make casinos and their hotels more family friendly to draw in business ii The Actual Facts 1 Free chips and meals are more important than free rooms most frequent gamblers live nearby 2 Family with young children have neither much discretionary income or time 3 Most profits come from regular players of slot machines not from high rollers 4 Investing in data bases and statistical packages to analyze experiments and in HR practices such as realistic job previews and more training to cut turnover and provide better service provides a much better return than building palaces e Types of Evidence Based Management i Scientific Management 1 Data driven 2 Rigorous analytic methods which are replicable ideally quantifiable 3 Application of technology ii Scientific Grounding 1 Scientific Method Basis for Prediction Management 2 Scientific Processes Iterative Empirical Theoretical Relevance 2 Mental Models a Mental Models Implicit generalizations simplifications or theories about the world i World People businesses environment customers organizations etc ii Models are powerful in influencing how we see decide act and thus conduct our behavior b Models can be problematic when they are i Outdated No longer match reality ii Left Unexamined Cannot be openly examined iii Widely and or Strongly Held Cannot examine alternate models 3 Stereotypes a Stereotypes Generalizations about a group of people i Improves the efficiency of our thinking ii Increase in strength when shared with and validated by others b Negatives i Result in Self Fulfilling Prophecy We become the stereotype ii Leads to Stereotype Threat We put effort into acting the opposite of the stereotype Perceptual Devices within NASA Challenger Incident 1 Prevalence of Perceptual Errors Among Leaders Managers a Three decades of research have found an astonishingly high prevalence of large perceptual errors among managers regarding their businesses and their environments b Managers tend to focus on what is happening right now in their specific jobs in their specific business units but lose sight of the big picture c Plus they make decisions based on unrealistic optimism i Over credit past successes under credit past failures ii Illusion of control over events iii Discount competitors capabilities and plans d Based on the recent studies conducted by Mezias and Sartbuck managers perceptions mismatch the reality very often and in a great degree i They found that managers across all levels in organizations have very distorted perceptions about their business and their business environments ii One of the major reasons is that they are so much focused on what is happening right now in their specific jobs in their specific business units but lose sight of the big picture iii They conclude Distorted perceptions are a fact of management 2 Misperceptions Consequences a Many Decision Failures in Organizations i Most large capital investments come in over budget and too late ii 70 of new manufacturing plants close within 10 years iii Over 50 of M As fail b Sometimes they cost human lives i The Challenger Accident 1986 ii The Columbia Accident 2003 iii The Hurricane Katrina 2005 lost at least 1 836 people plus 81 2 billion in damage 3 Ways to Improve our Perceptions Decision Making a Individual approaches to manage cognitive biases i Develop our own thinking processes that reduce the likelihood of making perceptual errors ii The Ladder of Inference In each step up the ladder there is a potential source of misrepresentation this potential source is called a leap of abstraction 1 Select the Data 2 Name the Data 3 Make an Inference 4 Decide what to Do b Interpersonal strategies c Group and organization strategies sharing and utilization i Develop communication skills that foster mutual learning and support effective decision making i Develop and maintain effective organizational communication process to promote effective knowledge ii Develop group decision making processes that work despite individuals inaccurate perceptions 4 Example of Misrepresentations a Linda Ham s MMT Perception Process i Select data Foam losses and strikes had occurred often to previous flights without causing serious problems Both Schomberg and the Crater analyses suggested that foam strikes can cause only minor impacts on TPS tiles ii Name the data In spite of some uncertainty remaining this foam strike seems unlikely to cause a iii Make an inference This is not a Safety of Flight issue Even if it is there is nothing we can do about iv Decide what to do We will not pursue this issue any more wait and see and move to more urgent catastrophic damage it issues 5 Conclusions a We live in a perceived world b Misrepresentations are common but we often have serious organizational consequences c Keys to Overcoming Common Misrepresentations i Leaders openness to admit the possible errors in their perceptions ii Active and continual efforts to seek valid information in their thinking conversation and decision making 1 Mt Everest Simulation Lessons Learned a Information Goal asymmetries exist within teams i Challenge in teams is to blend and optimize these b Leaders play a crucial role in determining how these asymmetries affect team performance i Set tone focus for what information is is not shared c How teams manage incomplete conflicting ambiguous information can determine their success i In real world settings often can t know all details yet still have to take action d Leaders teams learn to be effective through how they respond to challenges feedback i What s your personal response to failure e What you SHOULD HAVE LEARNED i Interpersonal Processes 1 Actively listening to others 2 Supporting others 3 Differing with others constructively when necessary 4 Participating Equally in discussions ii Rational Processes 1 Analyzing the situation 2 Identifying objectives or
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