Understanding complex managerial decisions

Inside the lively headquarters of TeknoSolutions, a Nairobi-based software giant, Muli guides a critical management meeting with his teammates, Amani and Otieno. The company faces fierce competition and declining consumer engagement. 

"We must redefine our strategy," insists Muli. Amani recommends focusing on customer retention while Otieno advocates for new client acquisition through robust marketing. 

Amid the intense discussions, a revelation strikes Muli, "Why not merge both ideas? Let us construct a loyalty programme and market it as an exclusive experience." 

Amani and Otieno nod in agreement. Thus, a fresh heuristic at TeknoSolutions emerges that will last several years involving integrating customer service with marketing flair to rejuvenate consumer enthusiasm.

New research by Radu Atanasiu, Riku Ruotsalainen and Svetlana Khapova delves into how such managerial heuristics form within organisations.

They present a four-step model that includes dissonancing, realising, crystallising and organising that outlines the cognitive journey managers undertake in developing these mental shortcuts for decision making. 

Contrary to what many academics and consulting firms accuse organisational leaders of doing out of laziness or lack of depth, the study portrays heuristics, not as quick unrefined mental shortcuts, but as evolved functional tools that aid in strategy, innovation, organisational learning and even the longevity of a firm.

Managers benefit from understanding the role of emotional and environmental elements in heuristic formation, leading to more inventive decision-making processes.

Organisations, on the other hand too, should see the value of cultivating an environment conducive to such cognitive evolution, thereby enriching strategy and potentially ensuring prolonged survival.

The recent findings offer a tool for scrutinising existing managerial practices and also pave way for the development of richer, more nuanced decision-making frameworks. 

Just-published research by Jing Liu, Eric Tsang and Weilei Shi goes a step further and introduces the concept of superstitious heuristic into the realm of strategic decision-making.

The research team defines a superstitious heuristic as a decision-making shortcut fueled by superstitious beliefs. Unlike more conventional heuristics such as expert intuition and simple rules, the superstitious heuristic often gains prominence under conditions of high uncertainty.

Researchers noted that it can result in strategically significant and sometimes puzzling decisions.

Employees should be aware that decisions, especially those made under uncertainty, may not always follow logic but might instead lean on cultural or superstitious principles.

Perhaps their supervisors may superstitiously assume that the worst may never happen and therefore crucial advanced planning never takes place. Managers and C-suite executives should scrutinise their decision-making processes to discern any underlying superstitious influences that could lead to adverse strategic outcomes.

Perhaps executives wrongly keep strategic decisions to a small team due to a superstitious fear of information leaks despite internal controls. Understanding the implications of superstitious heuristics could be crucial in diversifying decision-making tools, particularly when operating in multicultural environments where superstitious beliefs might hold sway. 

Both pieces of research shed light on the complexity of managerial decision-making processes and the variety of heuristics that could influence them.

From the structured, emotionally guided cognitive schemata of managerial heuristics to the culturally embedded superstitious heuristic, such shortcuts shape strategic decisions in profound ways. 

Organisations, managers, and employees must therefore extend their understanding beyond conventional wisdom, facts and logic. Sometimes to win a professional argument, you must understand the underlying heuristic for a team. 

Recognising the array of heuristic tools at play, whether rooted in experience, emotional cognition or even cultural superstitions could hold the key to crafting decisions that prove both swift and efficacious. 

As business landscapes continually evolve, embracing a nuanced understanding could very well become the linchpin for professional success.

Beginning with a flawed assumption or question, managers navigate through cognitive schemata to produce heuristics that often appear in pairs.

The schemata then mature and circulate within the organisation. The researchers identify emotions and environmental factors as key elements in initiating, guiding and fortifying the birth of these heuristics.

Superstitions impacting heuristics include the avoidance of the number thirteen in team sizes or strategies in some Western cultures, or focusing on eight participants or eight strategic objectives because the number eight is considered lucky in several Eastern cultures.

Have a management or leadership issue, question, or challenge? Reach out to Dr Scott through @ScottProfessor on Twitter or on email at [email protected].