How to make better decisions

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Presentation by Prof. Francesca Gino of Harvard Business School at Planning-ness 2013

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  • Title
  • Title
  • How to make better decisions

    1. 1. Copyright © President & Fellows of Harvard CollegeSidetracked:Why Our Decisions Get Derailed, and HowWe Can Stick to the PlanFrancesca GinoHarvard Business SchoolEmail: fgino@hbs.eduTwitter: @francescagino
    2. 2. Not According to PlanForces we donot perceiveare going tomatter
    3. 3. In 2004: case study on Ducati Motorcycleracing team (Ducati Corse)• Long (and successful) history of racing• Until 2003: never raced in the Grand Prix circuit (“MotoGP”)• Being a newcomer: set low expectations• Team director: 2003 would be a learning season for the team• Very specific measures designed to facilitate learning (e.g., detailedtracking of bike performance, creating a group focused specifically onanalyzing race data, post-race debriefs, etc.)Surprisingly, Ducati Corse performed much better thanthey (or anyone else) expected during the 2003 season• Finished season 2nd overall in the team standingsAn Example
    4. 4. Learning took a distinct back seat to winning• Copious amount of data collected, little of it analyzed• One team member noted, “(…) Our 2003 season was, in some way,too successful. So, our strategy was we ride, we go home, and we donot need to analyze the data. It was not important to have informationat that point.”• 2004 bike completely redesigned• More than 60% of the 915 individual components of the new bike weretotally different and could not be interchanged with the previousversionResult? Worse performance in the 2004 season and manystruggles in the races, especially at firstAn Example (cont’ed)
    5. 5. FORCES FROM WITHIN• Factors that reside in both our mindsand our hearts, and exist because ofour very nature of being humanFORCES FROM OURRELATIONSHIPS• Factors that characterize ourrelationships and interactions withothersFORCES FROM THE OUTSIDE• Factors that characterize the contextin which we operateFactorsDerailing OurDecisions
    6. 6. Copyright © President & Fellows of Harvard CollegeForces From Within
    7. 7. Rate YourselfUsing PERCENTILES, compare yourself relative toother people in this room on the followingdimensions:1. My ability to make good decisions2. My ability to get along well with other people3. My ability to listen to the perspective of other people4. My intelligence5. My ability to negotiate effectively6. My ethicality
    8. 8. Respondents asked who’s likely to get to heaven?• Bill Clinton 52%• Michael Jordan 62%• Mother Teresa 79%• Themselves 87%US News Survey
    9. 9. There are certainly benefits to having a positive view of who weare and what we can accomplish thanks to our knowledge and IQBut having inflated beliefs can also lead to problems• E.g., in many types of competitive decision-making contexts:• If entrepreneurs believe they are savvier than the competition,they are likely to make overly risky business decisions.• If CEOs believe they’re smarter than other executives at theirlevel, they will plunge ahead with ill-advised mergers andacquisitions.• Implications for advice taking.Force #1: Inflated Self-Views
    10. 10. Raise your awarenessBecause our views of how capable and competent we areas individuals are often overly positive, we rely too muchon our own information. By raising your awareness, youcan keep your self-views in check and recognize whenthey may be taking you off track.Principle to Counteract Inflated Self-views
    11. 11. FORCES FROM WITHIN• Inaccurate Self-Views• Infectious Emotions• An Overly Narrow FocusFORCES FROM OURRELATIONSHIPS• Lack of Perspective Taking• Insidious Social Bonds• Salient Social ComparisonsFORCES FROM THE OUTSIDE• Irrelevant Information• Subtle Changes in Framing• Ambiance and OpportunityFactorsDerailing OurDecisions
    12. 12. FORCES FROM WITHIN• Inaccurate Self-Views• Infectious Emotions• An Overly Narrow FocusFORCES FROM OURRELATIONSHIPS• Lack of Perspective Taking• Insidious Social Bonds• Salient Social ComparisonsFORCES FROM THE OUTSIDE• Irrelevant Information• Subtle Changes in Framing• Ambience and OpportunityFactorsDerailing OurDecisions
    13. 13. Example #1
    14. 14. A Field Study
    15. 15. Signature at thebottom:Signature at the top:~23,671 miles~26,098 milesA Field StudyDifference:~2,500 miles per car
    16. 16. Example #2
    17. 17. Working At Disney
    18. 18. Process by which an individual acquires the values, expectedbehaviors, and social knowledge essential for assuming anorganizational role and for participating as a member (Louis,1980; Van Maanen and Schein, 1979)When joining an organization:• Anxiety about the job and the need to fit in• Negotiation of personal identityResearch to date:• Ways in which organizations can enculturate employees(understanding of norms and culture)Socialization Process
    19. 19. Relative absence of structurethat creates ambiguity andencourages newcomers toquestion the status quoHighlight and leveragenewcomers’ new perspectiveand skills2Socialization PracticesStrategic, structured programof socialization designed toreduce ambiguity andencourage newcomers toaccept preset organizationalnorms and valuesInstitutionalizedtacticsIndividualizedtactics
    20. 20. Individual identity is madesalientSocialization PracticesOrganizational identity is madesalientInstitutionalizedtacticsIndividualizedtacticsReduces possibility of self-expression and authenticityIncreases possibility of self-expression and authenticity
    21. 21. Individual identity is madesalientSocialization PracticesOrganizational identity is madesalientInstitutionalizedtacticsIndividualizedtacticsReduces possibility of self-expression and authenticityIncreases possibility of self-expression and authenticityTo be authentic one must align his/her internal experiences (e.g.,values, feelings, perspectives) with external expressions• Key component of self-esteem
    22. 22. Field ExperimentNovember 2010 – July 2011Wipro BPO• Provides phone and chat supportfor its global customers• Like other call centers, highturnover rates• Job is stressful
    23. 23. We randomly assigned incoming batches of agentsinto three groups:1. Individual identity2. Organizational identity3. Control group (Wipro’s traditional onboarding process)IndividualidentityOrganizationalidentityControl96 101 408Participants and Conditions
    24. 24. Agents in the identity treatments received same trainingand material as control group with three more parts:1. One hour presentation during the first day’sorientation session2. Two fleece sweatshirts, customized by condition3. One badge, customized by conditionExperimental Conditions
    25. 25. One hour session:1. Senior leader spends 15 min discussing how working atWipro would give agents the opportunity to expressthemselves and create individual opportunities2. 15 min lost at sea exercise (individually)3. 15 min reflection on decision made in the exercise• Your personal highlights reel applied to job, etc.4. 15 min introducing themselves and their decisions to thegroupFleece sweatshirts with individual names, and badgeIndividual Identity Condition
    26. 26. One hour session:1. Senior leader spends 15 min discussing Wipro’s valuesand why Wipro is an outstanding organization2. Same from star performer (15 min)3. 15 min reflection on what they heard about Wipro• What did you hear about Wipro that makes you proudto be part of the organization?4. 15 min discussing answers within their groupFleece sweatshirts with company name, and badgeOrganizational Identity Condition
    27. 27. Summary of FindingsWhen the organization focused its initial socialization processeson newcomers’ personal identities rather than on theorganizational identity, it fostered stronger employmentrelationships• lower employee turnover• greater customer satisfaction• greater job satisfaction• greater work engagement• greater feelings of authentic self-expression
    28. 28. YOUR TASK…
    29. 29. In Groups of 4-5 membersIdentify one or two problems your organizations is experiencing orexperienced in the past (“Not According to Plan”)If you were to design an experiment to tackle this problem…• What would you manipulate• What would you measure• Why you think it would work
    30. 30. DiscussionProblem areaDesign principles…
    31. 31. Copyright © President & Fellows of Harvard CollegeSticking to the Plan…
    32. 32. Recognize we are human• Subtle forces influence ourdecisions and behaviorApply principles systematicallyDevelop plans of actions thatconsider and counteract theforces that sidetrack usCheck on progressSticking to the Plan
    33. 33. Thank You!Email: fgino@hbs.eduTwitter: @francescagino

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