Learning from poor decisions

Résumé du document

Although there are different decision making processes, we will focus on the model of Bounded rationality. Making a decision implies going through the decision-making process which is divided into different steps. We have identified four steps which will be illustrated with concrete and clear examples.

The first step identified is the definition of the problem. When people are faced with a problem, they first have to analyze it clearly so as to find the appropriate solutions. This is no doubt the most important step, since a wrong perception at this stage will have repercussions on all the subsequent steps of the decision-making process. One example would be the heat wave in the summer of 2003 in France.

The French authorities had not properly identified the problem and had not realized the full extent of the problem; this considerably slowed down the decision-making process, i.e. measures to assist the most vulnerable people.

The second step concerns the collection of information. The aim is to make sure that people who make decisions have all the relevant data to guide them. In industry for instance, competitors may go beyond the legal threshold to get as much information as possible. One example would be Renault's alleged espionage case based on allegations that information had leaked and that an executive had been paid 250,000 € to spy; he was dismissed, but these allegations later proved to be wrong. This just shows that organizations need to get as much information as possible

Extraits

[...] Lessons that may be drawn from poor decisions Once the decision has been made, it will be judged. And the decision will no more be just a decision, since it will be considered to be good or bad. If it is a poor decision, it needs to be analyzed so as to draw lessons from mistakes made and avoid repeating the same mistakes. We can say that to avoid making poor decisions, one should carefully study all the parameters upstream, and then double check them, and take into account the opinions of all those who have a say in this problem-solving exercise. [...]

[...] The medical management authorities processed all the different information collected and discovered that the drug was dangerous, and also that it was not effective against diabetes. It took 30 years of analyses to reach this conclusion. Then comes the last step: the actual decision. It will be decisive for the actors. It will come with consequences which will positively or negatively impact the project. One of the most striking examples is the decision to launch the space shuttle Challenger in 1986, although the engineers knew suspected that the seals would create problems during take-off. [...]

[...] Hard decisions, bad decisions: On decision quality and decision aiding. In S. Schneider, & J. Shanteau (Eds.), Emerging Perspectives in Judgment and Decision Research (pp. 13-63). New York: Cambridge University Press. http://works.bepress.com/andrea_patalano/18/ Article: Learning to Make Bad Choices - Published on October by William R. Klemm, D.V.M, Ph.D., available at http://www.psychologytoday.com/blog/memory-medic/201210/learning-make-bad- choices New York Times. (2001). Philip Morris issues an apology for Czech study on smoking. [...]

[...] II) The consequences of these decisions a. Indicators which help assess the value of a decision Decision-making is a fragile and even unstable process; each component, each detail is important and must be thoroughly studied to make sure it is successful. It is therefore important to use indicators which will help assess the value of the decision. There are two types of indicators used to assess the value of a decision: a priori indicators and a posteriori indicators. The main a priori indicator is linked to the decision-making process itself. [...]

[...] What can management learn from poor decisions? We will first analyze what influences people when they make decisions, and then we will look at the consequences of such decisions to try to understand them and make sure we do not reproduce the inappropriate ones. Influences leading people to their final decision a. The different steps of the decision-making process Although there are different decision making processes, we will focus on the model of Bounded rationality. Making a decision implies going through the decision-making process which is divided into different steps. [...]