The document discusses the importance of setting an agenda and how it bounds rational decision making. Setting an agenda determines the problems that will be addressed and can cause other problems or opportunities to be ignored if not deemed urgent or a priority. Managers must carefully choose what to include on the agenda to ensure the right decisions are made and the best choices are considered without overlooking important issues or limiting options.
2. Bounded
Rationality
Managers
Decisions?
• Choosing the problems to spend time on. Whether
to Act on or to Defer
• If unaddressed, problems that require action
become more urgent.
• As the number of crisis decisions increases, those
that are not urgent enough simply drop off or do
not even make it onto the active agenda.
• Problems or opportunities: If problems are not
addressed, they will cause trouble, but if the
opportunities are not addressed there is probably
little immediate impact.
• Opportunities merely represent chances to increase
profits or enhance the future. Opportunities can
wait, while problems usually take priority.
3. Why set the
agenda?
• Consumers face so many choices—should they buy
one of the many new products theyhave never tried
before, or stick to the ones they purchase by habit?
Often there is so much product variety on store
shelves that it is difficult to identify the global best
choice from the entire universe of possibilities.
• There is a flood of information, ranging from
product reviews or what a friend said to
promotional signage and price information.
• Many new graduates face the challenge ofgetting
potential employers to even consider them—to put
them on their short list. Faced with huge pools of
candidates, corporate human resources
organizations increasingly resort to computerized
screening of resumes, hoping that a wider field of
search will produce the optimum candidate
4. Nuances..
• What a manager puts on the menu of choices scopes
the field of decision. Do we choose to develop only
products that fit our sales model or distribution
channels? Why would we develop a service that is
not compatible with our delivery infrastructure?
One of the reasons Oracle Corporation has struggled
with cloud computing is because its commission-
based selling model is tied to the sale of software
licenses and maintenance
• Executive recruiters often draw from a limited pool
of candidates at companies that they are familiar
with. They don’t readily stretch their boundaries
and look beyond an often-limited set of “target
companies.” When looking for the CEO of a start-
up, many recruiters limit their field of search to
CEOs who have successfully led a start-up through
some critical stage.
5. Need of the
hour
• How often do we hear exhortations to “stick to the
agenda” or “stay on topic” in a meeting? And don’t
we feel a sense of accomplishment when a meeting
covers all the agenda items and finishes on time?
• Obviously, setting the agenda for a meeting has a
powerful way of bounding the discussion. Ona
recent conversation with a colleague, we wondered
why the board of directors of a well-known public
company (formerly one of the 30 Dow Jones
Industrials) did not intervene as the CEO led his
firm into bankruptcy with the destruction of billions
of dollars of shareholder value.
• Setting a narrow agenda for boards severely bounds
abilities to provide oversight and good counsel to
the CEO. Good board members are very conscious
of the power of setting the agenda, and they work
hard to probe beyond what the CEO puts on the
agenda.
