BMGT 364 Session 4 Perception Perceptual Devices Application Agenda Prevalence of perceptual devices errors Discussion of Columbia Disaster case Some tools and strategies for overcoming potential problems Copyright 2012 Copyright 2012 Perceptual Errors How Prevalent Among Leaders and Managers Three decades of research have found an astonishingly high prevalence of large perceptual errors among managers regarding their businesses and their environments 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 Distorted perceptions are a fact of management Plus they make decisions based on unrealistic optimism Over credit past successes and under credit past failures Illusion of control over events Discount competitors capabilities and plans Mezias J M Starbuck W H 2003 What do managers know anyway Harvard Business Review May 16 17 Lovallo D Kahnaman D 2003 Delusions of Success Harvard Business Review July 45 53 Misperceptions and Consequences Many Decision Failures in Organizations Most large capital investments come in over budget and too late 70 of new manufacturing plants close within 10 years Over 50 of M As fail Sometimes they cost human lives The Challenger Accident 1986 The Columbia Accident 2003 The Hurricane Katrina 2005 lost at least 1 836 people plus 81 2 billion in damage Lovallo D Kahnaman D 2003 Delusions of Success Harvard Business Review July 45 53 Copyright 2012 Copyright 2012 10 16 12 1 Misperceptions and Consequences Columbia Disaster Case 2004 NASA History Environment Perceptions Mental Models Critical Actions Inactions Ways to Improve Our Perceptions and Decision Making Individual approaches to manage cognitive biases Develop our own thinking processes that reduce the likelihood of making perceptual errors Interpersonal strategies Develop communication skills that foster mutual learning and support effective decision making Group and organization strategies Develop and maintain effective organizational communication process to promote effective knowledge sharing and utilization Develop group decision making processes that work despite individuals inaccurate perceptions Columbia Disaster Copyright 2012 Copyright 2012 Managing Individual Cognitive Biases The Ladder of Inference Conclusion From Ladder of Inference In each step upward in the ladder there is a potential source of misperception leap of abstraction Let s look at Linda Any thoughts Copyright 2012 Copyright 2012 10 16 12 2 Example of Misperceptions Correcting the Problem Linda Ham s MMT perception process 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 Name the data In spite of some uncertainty remaining this foam strike seems unlikely to cause a catastrophic damage Make an inference This is not a Safety of Flight issue Even if it is there is nothing we can do about it Decide what to do We will not pursue this issue any more wait and see and move to more urgent issues What could NASA do to prevent future problems of this kind from occurring Copyright 2012 Copyright 2012 Conclusions We live in a perceived world Misperceptions are common but often have serious organizational consequences The keys to overcoming misperceptions are Leaders openness to admit the possible errors in their perceptions Active and continual efforts to seek valid information in their thinking conversation and decision making Copyright 2012 10 16 12 3
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