The Art and Science of Decision-Making February 10, 2014 Robert S. Duboff...

The Art and Science of Decision-Making

February 10, 2014

Robert S. Duboff

[email protected]

617-576-4701

mailto:[email protected]

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Course Slides

Week 1

Introduction of individual students and their reasons for taking the courseo Finalize syllabus as/if needed

Organization of course: address specific issues each week Is decision-making primarily rational or emotional? Attributes of a “good decision”Assignment: Short essay on whether study of decision-making is an art or a science View Super Bowl Ads Week 2 – Perspectives on Decision-Making Is the study of decision-making more an art or science? Discuss the noteworthy Super Bowl ads

o Implications about how consumers make decisionsAssignment: Take MBTI

The Art and Science of Decision-Making – Spring 2014 – MGMT-5750

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Course Slides

Week 3 – Individual Differences Contexts for thinking about decisions

o Rational vs. emotionalo Prospective vs. retrospectiveo Individual vs. group decisionso Advising vs. making decisionso Personal vs. business vs. government contexts

Discuss MBTI and implications on decision-making How can understanding personal differences help in explaining decisions?Assignment: Read Blink by Gladwell (Chapters 1-4; Conclusion) Week 4 – Self-Awareness Discuss Blink and implications for decision-making Does self-awareness help or hurt decision-making? How does knowing yourself help in making decisions about moving or a career change;

about leading a team?Assignment: Select essay topic Read Thinking, Fast and Slow by Kahneman (Chapters 1-4, 10-13, 19-21, 27)

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Course Slides

Week 5 – What Impacts Decisions – When and How to Make Timing of decisions (and how to influence) What does science (in terms of type 1 and type 2 delineation) tell us about making

decisions?Assignment: Essay due applying MBTI and reading to a past decision Read Deciding How to Decide, HBS, Nov. 2013 (from web site) Week 6 – The Scientific Approach Decision trees Reprise – is decision-making art or science? Process vs. the decision itselfAssignment: Read legal case from course web site

Week 7 – Individual vs. Group Decisions

When are group decisions better/worse than individual decisions?o In businesso In families

Are juries rational or emotional? Voters?Assignment: Decide on an advocacy role

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Course Slides

Week 8 – Influencing Decisions

Students present their arguments for what they advocate Role of influencer(s)

o Art or science?Assignment: Write a short paper on takeaways from the advocacies Week 9 – Decision-Making Debrief and Decision-Making Process What have we learned about decisions?

o Best process(es)o Use of group (or not)o Role of information/ “facts”

What are the right metrics for decisions?Assignment: Select final paper topic (3-5 pages) Read Competing on Analytics and The Ultimate Measure (from web site)

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Course Slides

Week 10 – Supporting Decisions Developing the information you/someone else needs Market research How to make decisions with imperfect knowledge

o “Big data” vs. “insights” How should we measure/post-audit decisions?Assignment: Select final paper topic

Week 11 – Positioning and Communicating Decisions The importance of words The impact of implementation on how the decision is viewedAssignment: Read Complexity Theory and Negotiation, HBS, June 2002 (from web site) Week 12 – Negotiation Negotiation within a as well as between parties Are explicit negotiation agreements (e.g., arbitration) a good model for all decisions?Assignment: Complete final paperRead Being Wrong by Schulz: Chapters 1-3, 13-15

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Course Slides

Week 13 – The Decision-Making Process What have we learned about decisions?

o Best process(es)o Use of group (or not)o Role of information/ “facts”

How do you ensure there is learning; improving one’s decision-making?Assignment: Complete final paper on a decision to be made in the future

Week 14 – How Can We Make the Process and Substance of Decisions Better?

Summary of course Is decision-making a puzzle or a mystery?

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Issues to Discuss

Art or scienceo Process vs. the moment of truth

For your considerationo Replicability; predictabilityo The role of risko The role of facts

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Quotes

“Artists take as central what scientists (and the rest of us) usually sideline as much as we can: that reality as we know it is inevitably askew, refracted through an individual and idiosyncratic mind.”

- Kathryn Schultz, Being Wrong

“We all know that Art is not truth. Art is a lie that makes us real.”- Picasso

“Advertising is fundamentally persuasion and persuasion happens to be not a science, but an art.”

- Bill Bernbach

“Advertising is based on fixed principles and is reasonably exact. We know what is most effective and we act on basic laws.”

- Claude Hopkins

MBTI: Understanding Communications Preferences in Yourself and Others

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Common Uses of the Myers-Briggs Type Indicator

• Understand self

• Explore implications for communication– Understand that others are different from you – Understand others’ preferences and how to speak their

“language”

There are several important uses for MBTI theory:

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It is important to remember what MBTI theory is and what it is not

• A theory describing observable personality distinctions

• A measure of individuals’ preferences in communication

• A framework to explain some aspects of perception and decision-making

What It Is

• Based on actual empirical data or “provable” experiments

• A statement about who someone is or even how they commonly act

• An all-encompassing explanation of personality, thought process, and individual psychology

What It Is Not

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Cognitive Functions & Functional Development

S, N, T, and F are called the cognitive functions in MBTI theory. Humans use all 4 cognitive functions, but naturally we develop the ones that we prefer first.

Test-Retest Reliability:<9 mos >9 mos

Same on 1 or more ~100% 99%

Same on 2 or more 98% 94%

Same on 3 or more 87% 72%

Same on all 4 51% 36%

<9 mos >9 mos

E-I 82% 75%

S-N 87% 76%

T-F 82% 75%

J-P 83% 77%

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The Four Scales

EExtravert

IIntrovert

Where do you get energy?

SSensing Intuition

How do you take in information? N

TThinking

FFeeling

How do you make decisions?

Judging Perceiving

How do you deal with the outside world?J P

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Extraversion vs. Introversion

Learn best through doing or discussing

Characteristics:

Focused on outer world of people and external events

Prefer to communicate by talking

Tend to speak first, reflect later

Sociable and expressive

Learn best by reflection

Characteristics:

Drawn to their inner world of ideas and thoughts

Prefer to communicate in writing

Tend to reflect before acting or speaking

Private and reserved

Where do you get energy?

E I

Extravert Introvert

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Extraverts/Introverts within the U.S. Population

49%

51%

Extraverts

Introverts

Source: Center for Applications of Psychological Type (capt.org)

Men: 48% E 52% IWomen: 50% E 50% IClass ‘13: 62.5% E 37.5% IThis Class: 61% E 39% I

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Sensing and Intuition

• Take in information through five senses• Focus on what is real and concrete• Value practical applications, common

sense• Want information step-by-step• Trust experience and facts over gut

instinct• Use details to build up a big picture• Oriented to the present

• Take in information through “sixth sense”

• Focus on possibilities• Value innovation and imaginative

insight• Jump around, leap in anywhere• Trust inspiration, “gut feel”• Start big picture, don’t want details• Oriented to the future

Characteristics: Characteristics:

Sensing

NIntuition

How do you take in information?

S

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Sensors/Intuitives within the U.S. Population

30%

70%

Intuitives

Sensors


Men: 68% S 32% NWomen: 72% S 28% NClass ‘13: 52% S 48% NThis Class: 25% S 75% N

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Thinking and Feeling

• Use cause-and-effect reasoning• Focus on content and analysis• Look for outcome that “makes sense”• Strive for impersonal, objective truth• Reasonable• Can sometimes be too critical

• Guided by values and feelings• Focus on affect and emotions• Look for outcome that “feels right”• Strive for personal harmony• Compassionate• Can sometimes be illogical


TThinking

FFeeling

How do you make decisions?

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Thinkers/Feelers within the U.S. Population

55%45%Thinkers Feelers


Men: 61% T 39% FWomen: 29% T 71% FClass ‘13: 55% T 45% FThis Class: 29% T 71% F

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Judging and Perceiving

• Systematic, organized, structured• Plan – and stick to it• Like closure – to have things decided• Like to make lists – and want to get

everything crossed off• Create agendas – and stick to them• On time

• Spontaneous, open-ended, flexible• Adapt – strive for quality• Like things loose and open to

change• Avoid lists, or at least completing

everything on them• Don’t always stick to agendas• Casual about time


JJudging

PPerceiving

How do you make decisions overall and about your time?

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Judgers and Perceivers within the U.S. Population

43%

57%

Judgers

Perceivers


Men: 58% J 42% PWomen: 56% J 44% PClass ‘13: 68% J 32% PThis Class: 82% J 18% P

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Each of our cognitive functions also have a preferred “attitude”

• Introverted Sensing (Si) reviews prior facts, instructions, and details in one’s mind

• Extraverted Sensing (Se) gathers facts and details from the outside world

“Attitude” refers to whether a function is used in an introverted manner or in an extraverted manner. For example:

• Introverted Thinking (Ti) analyzes things logically before taking action

• Extraverted Thinking (Te) organizes things logically while taking action

An ESTJ or ISTJ will typically practice Si and Te, while an ESTP or ISTP will typically practice Se and Ti.

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Tips for Communicating with…

Es

• “Rope-a-dope”

• Voicemail

• Meetings

• Respond quickly

Is

• Materials in advance

• Email

• Breaks from meetings

• Respect personal space

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Ns Ss• Start with the headline,

conclusions, big pictures

• Ask before giving details

• Use analogies

• Focus on possibilities

• Start with the data..let them play with it

• Exhaust all questions

• Be specific

• Focus on process

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Ts Fs• Appeal to logic; “I think…”

• State criteria first

Include human issues as a criteria if appropriate

• Deal with logic, structure

• Appear organized

• Appeal to emotions

“I feel…”

• Focus on the human implication

Can include the need for people to think the decision is a good one

• Deal with values, impact on others

• Appear friendly

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Js Ps• Expect, respect

schedules, deadlines, etc.

Come to a conclusion

• Provide a time for a decision to be made

• Set expectations for outcome

• Don’t (appear to) force a decision

Allow questions

Provide choices, outcomes

• Provide a threshold for a decision to be made

• Do not appear to expect a particular outcome

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The 16 Types – General Population (Class)

ISTJ ISFJ INFJ INTJ

Sensing Types Intuitive Types

Ext

rave

rts

Intr

ove

rts

ISTP ISFP INFP INTP

ESTP ESFP ENFP ENTP

ESTJ ESFJ ENFJ ENTJ

5%(0%)

7%(0%)

4%(7%)

5%(0%)

13%(5%)

12%(7%)

2%(11%)

3%(11%)

4%(0%)

7%(0%)

7%(11%)

3%(0%)

11%(7%)

11%(7%)

4%(28%)

2%(7%)

The Art and Science of Decision-Making February 10, 2014 Robert S. Duboff...

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