Core 10: The Change Makers' Manual


other than explaining exactly how to maximise performance, there was little more to tell participants. Yet, even armed with this information, participants only chose the best approach (always blue, except near the end of the task) 68 per cent of the time, some way below the optimal 100 per cent. Furthermore, providing participants with full information and then asking them to think analytically about the problem and suggest a solution (without being distracted by any button pressing), produced worse long-term results. How can managers make better strategic decisions? It seems that, when faced with a complex dynamic problem – even the comparatively simple version in the experiment – the most common decision-making strategy is what can be described as ‘muddling through’. Managers try on different actions for size, assessing current and past performance, and select the approach that seems to work best. This non-systemic thinking approach is far from optimal, especially when there are many possible combinations to try, and it is unlikely to result in the best solution other than through luck. An alternative and potentially more promising approach would be, for example, to evaluate actions depending on the values they are likely to produce in the short and long term and assess the trade-offs involved. But this does not seem to be the method commonly adopted. Even when participants were given help in understanding how their choices would affect future outcomes, they still performed relatively poorly. This suggests individuals may need more than a simple explanation of the consequences of their choices to improve their

complex organisational challenges can help to sensitise managers to the structure and dynamics of these types of problems. However, there have also been studies that show how managers can struggle to take lessons from one specific problem- solving situation and apply them effectively to other circumstances. There is potentially some benefit in placing a value on possible outcomes that are not easy to gauge – in a similar manner to classic strategy tools such as the balanced scorecard – and embedding them in the metric systems used by the organisation. This may make it easier to evaluate both intermediate choices and long-term pay-offs. It may also help with setting out the structure and dynamics of a particular dynamic task in its simplest, most easily understandable format. The challenge presented by these dynamic decision-making tasks should not be underestimated. This type of thinking is far from intuitive. That said, adopting some of these suggestions may benefit managers. Furthermore, it was clear from the findings that, while some luck is involved in achieving good long term results, and although most people struggle, some managers are likely to be better at evaluating these types of problems than others. Given the importance of these decisions, organisations with managers who understand and perform well on these tasks – something that can be assessed – may well have a competitive advantage over their rivals.

tasks and the basic principles involved may prove useful. For example, it is easy to understand why managers fail to continue with a particular option if early results provide a pay-off that is less rewarding than the alternatives. However, appreciating the nature of dynamic decision- making tasks may encourage the persistence necessary to obtain a better long term outcome. There is some evidence that managers who have had the opportunity to learn by exploring

a range of different actions at length, rather than being under pressure to produce immediate results, can learn more about the best strategy. This route to improving understanding, which is likely to encompass poor outcomes along the way, is costly. However, organisations and managers could tap into the experience of others who have already been through this process. Similarly, some research shows that computer-based business simulation exercises involving

“The challenge presented by these dynamic decision-making tasks should not be underestimated. This type of thinking is far from intuitive”

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dynamic decision-making. The findings may not seem that encouraging for managers engaged in dynamic decision-making tasks, but it may still be possible

for managers to improve their long-term performance on these tasks, even if only marginally. A better understanding of the nature of dynamic decision-making

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