April 16, 2013

RDM: Correlation vs Causation

When making a decision, we should always ensure that we are not confusing correlation with causation. This happens more often that we think it does, and even some newspapers are susceptible to interchanging the two in their articles. This, in some cases, can be extremely controversial, as we don't know their underlying motives. For example, many newspapers have written about studies that apparently show people who eat breakfast are less obese. This essentially points towards causation, however, it is more likely that in the given sample, this was just a mere correlation between the two things. Informed readers always think critically, and they might identify this as a deliberate ploy from the breakfast cereal companies in getting more people to buy their product.

The most that such articles can do is state that they found a correlation between eating breakfast and less obesity. And that even though, they APPEAR to be related, we cannot be sure. Hence, the statement that "people who eat breakfast are less obese" might be true or it might not be. We simply don't have enough information to be able to confidently support or reject that assertion.

The significance of this is that we should always be careful in judging whether there is a causal relationship between two things or whether its just simple correlation before making a decision based on it. In the case of a confirmation bias, this becomes even more important. We have to resist from blindly using data that confirms our idea, as it may only be showing the correlation between two completely unrelated things.


RDM: Confirmation Bias

In my last blog, I wrote about some of the biases that affect decision-making. In addition, I stated that improved self-awareness can minimize the effects of different biases. However, it is also important to note that a well thought out decision-making process can equally have a positive effect of reducing the overall bias.

From my experience of the presentation, I have learnt that we should always have strategies in place that help us avoid any bias in the future. These, in most cases, need not be complicated. For example, in order to avoid availability bias, we should consciously check that we are not solely relying on memory and try to get any data that could be relevant. Similarly, to counter anchoring bias, I have learnt that we should always try to examine the problem from a number of perspectives. By analyzing the differences, we will become relatively more objective in our decision making.

However, there is one bias that I would like to highlight specifically. That is the confirmation bias. As students, we can recall falling in this trap a number of times. For example, we often think of something really clever to write in our assignments. Then, as soon as we find studies that even partly supports our proposition..we use it and portray it as solid evidence that proves or justifies our point. Whilst this sort of practice has a comparatively low risk attached to it in our academic lifes, I strongly believe that this sort of behaviour can lead to drastic consequences in the professional world. Companies can really end up making huge losses and it could lead to many employees losing their jobs. Hence, we should be particularly careful about our motives. We should always use data or any other evidence to better inform us rather than justify what we believe. We should also not stop gathering information that may or may not support our plan. This would ensure that we don't fall victim to the confirmation bias.


April 15, 2013

RDM: Bias

There is one common phrase we hear all the time when decisions go wrong. It goes something along the lines of "I'm only human". The implication being that humans are prone to making mistakes. I don't want to debate this point as it is not this statement per se that is important. What's more important is the understanding of biases and how they can affect our judgement. And this was another great learning point from the RDM module.

There are many different types of biases present in any given decision making process. By their very nature, they can be very hard to identify as they directly relate to a person's feelings and perception. Groups and organizations try their utmost to eliminate any such bias (e.g. from the recruitment process) but sometimes, it can be near impossible to eradicate all bias from a decision. Hence, when things go wrong, we resort to phrases such as "we're only human".

During the in-module work, we came across a number of biases, for example, overconfidence bias, hindsight bias, social (group) bias, availability bias (where we recall things that are easy for us and make decisions that we are already familiar with) and anchoring bias (where we limit our analysis of the information and base our decision on an irrelevant information).

I hope to use this information that I have learnt in any future decision making. Whilst it will not get rid of every possible bias, the increased awareness will certainly help me be as objective as possible and make a more robust choice.


April 13, 2013

RDM: some very bad decisions II

Another poor decision that is closely related to the marketing aspect that we covered in our presentation is the decision by the owners of M&M's and Mars to not let Steven Spielberg use their product in his famous film "ET The Extra-Terrestrial". By doing so, they missed out on a major marketing coup and instead the universal studios went to a competing candy manufacturer (Hershey's), who benefited significantly from having their product in the then top-grossing movie. Hershey's not only generated publicity but also tripled their sales. I don't know the particular reasons why the mars brothers rejected spielberg's approach, but they would have increased their chances of making the right call if only they had used some of the tools that we covered in RDM.

Other notable bad decisions include: Henry Ford's decision to stick with the Model T and not introducing a new car for years; and Ross Perot's decision to not agree to Bill gates pretty modest demand of 40 million dollars in return for Microsoft.

If nothing else, this indicates the huge importance of making robust decisions in the professional world. I have only used business examples, but it is clear that there are also other life decisions that we can certainly improve by minimizing our biases; by recognizing the presence of uncertainty; and by having a thorough decision-making process with appropriate tools.


RDM: some very bad decisions

The module on robust decision making has certainly increased my awareness, in terms of reflecting on some of the major decisions that are taken in this country and across the world. I now appreciate much more how one can increase the robustness of their decision. It is also very interesting to notice how people have made some bad decisions over the years and then work out what could I have done differently with the knowledge I have gained from RDM.

For example, let's consider Apple's decision to replace google maps(which had been very reliable). I think we can safely say that it was one of the worst decisions Apple has made in recent years. It probably indicates a case of egocentrism and ego based bias that we came across in the lectures. They could have made a better decision by having a well constructed decision process with tools such as trade off analysis and plus minus implications analysis.


April 12, 2013

RDM: Is there actually such a thing as a right decision?

Throughout our academic lifes, we have essentially been trying to find the right answer. This is particularly true for me, since my first degree was in mathematics, where there most definitely is one right solution. However, it was interesting that for our RDM presentation, we were told that that there is no right answer (in other words, there is no right decision). I know that all the groups went for lymington, but this was probably due to an over reliance on financial figures.

Strangely enough, even in many life experiences, there aren't many right answers. For example, deciding which car to purchase or which house to buy. These are important decisions. Nonetheless, it can be argued that there is no one right answer. For example, you can't say (in a matter of fact sort of way that) mercedez is the best car or this house will be the best to live in. The best you can do is make a good decision. This is where the decision making criteria comes in. By deciding which factors are the most important to you, you can make the most suitable decision. However, there is no reason why these factors that are used to evaluate the potential solutions can't change or evolve over time. A decision that was made some time back may not be the most apt choice now.

This is the essence of making a robust decision- i.e. the one that has the greatest chance of standing the test of time. We should remember that there will always be an element of uncertainty in any decision. In many cases (such as the in module work), we will have incomplete information. We have to manage that appropriately. Finally, we can only truly determine whether the decision we made was good after it has been implemented. Sadly, there is no way of ever really knowing if lymington or the chosen marketing mediums were the right choice. Nonetheless, we can definitely learn from our decision making process and next time make the most of any information we get.


April 02, 2013

Leadership: It's all about people

In order to give real meaning to leadership, we have to examine what it really is. In essence, leadership is all about people. No matter how we choose to define it and regardless of which approach we use, it is about getting the most out of people. This is what successful leaders have known for years. They are successful because they are effective at influencing the thoughts and activities of their followers towards the achievement of shared goals (Roberts, 2013). We can have our own vision and convey it to our team..but any effective leader will say that their job is to help make their followers' job easier. So, as prospective leaders, we must always ensure that our team has the right tools and training required to do their job in the most optimal way.

The more I read about servant leadership, the more I agree with it. However, I also believe that servant leadership has just taken transformational leadership and coated it with morality. In that sense, a transformational leaders who already possesses high morals is practically not too dissimilar to a servant leader. The important thing is being selfless (I personally believe you can be charismatic and selfless as long as your objectives are not to gain personal fame but instead, to drive organizal performance and improve employee satisfaction).

Finally, leaders should never show fear or anger. If they show fear, others can take it as a sign of weakness and an emerging leader might take over. On the other hand, if they show anger, they can be viewed as an autocratic leader and that would most likely have a negative impact on employee motivation.


March 30, 2013

Transformational theory: the perils of oversimplification

Some studies on transformational leadership have mentioned four components, while others have used three main parts of Bass' theory.

They all describe intellectual stimulation (encouraging followers to challenge the status quo) and Individualised consideration (being supportive, mentoring, etc). The difference, however, lies in the fact that some have further broken down charisma into Idealised influence and Inspirational motivation.

Idealised influence refers to the admiration and respect transformational leaders get. On the other hand, inspirational motivation is about inspiring and instilling enthusiasm.

Personally, I prefer keeping them together and branched under charisma, as they are both interlinked to a large extent. For example, if a leader is admired and respected, he/she can better inspire the team.

There are many cases, where further elaboration can lead to confusion and in some cases, the meaning can be lost. I have learnt to be critical and now I am always suspicious when I see a theory or a model that constitutes more facets than absolutely necessary.


March 29, 2013

Transformational leadership vs Servant leadership

After reading about transformational theory and servant theory, I can't help but notice how similar they are. For example, they share many attributes such as:

Influence, Vision, Trust, Integrity, Individualized consideration, mentoring, empowerment, etc.

In essence, the only real difference between the two is their slight variation in focus. Servant leadership emphasises more on followers, while transformational leadership focuses on organizational goals.

However, one must question whether this is a strong enough reason to make a distinction between the two approaches. Why can't organizations have both objectives, i.e. to improve performance and develop employees? Indeed, many progressive companies try to simultaneously do both. In my opinion, that is probably the only real way an organization can achieve and sustain success.


March 28, 2013

Leadership: Enabler or a Driver?

During the module week, Paul said something that has stayed in my mind ever since. He pointed out that GE was successful in spite of Jack Welch rather than because of him.

This suggests that leadership is only an "enabler" and not a "driver" of increasing performance at an organization. This is in contrast to the Malcolm Baldrige Award which assumes that leadership "causes" an increase in performance and quality of processes.

Personally, I would go along with the former. I think that while having an effective leader certainly helps the cause, it is by no mean a direct indicator for organizational performance. As we know, there are many different factors that have a say, e.g. characteristics of followers, environment and just pure simple luck.

People nowadays, are quick at pointing to the leader when an organization performs well. It is the easy option..and humans want to develop simple explanations for complex organizational performance. Hence, they all come to the conclusion that "the leader must be doing something right".

Hopefully, the critical analysis skills that we are learning at MBE will help us to steer away from such errors. We should always analyze all the possible variables before attributing the success or failure of a process/ organization to any one factor.


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