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Kalfafell Iceland. Photo by Gian Reto Tarntzer on Unsplash

How Linear Thinking in a Non-Linear World Leads to Wrong Decisions

Idea posted: December 2017
  • Learning & Behaviour
  • Marketing

Our brains prefer to think in straight lines: if one bag of oranges costs $5, then two bags cost $10 and three cost $15. However, this bias toward linear thinking often traps unwary business decision-makers who fail to recognize the non-linear relationships they are dealing with (e.g. increasing retention rates from 10% to 30% or from 60% to 80% does not have an equal 20% impact on customer lifetime value).

Idea #685
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An umpire: Australia v World XI, Sydney Cricket Ground, 2005 (Source: Wikimedia Commons)

How People React to the Fairness of Decisions: Trust Makes a Difference

Idea posted: February 2016
  • Leadership & Change
  • Learning & Behaviour

Perceived fairness, whether of the outcome or procedural fairness, impacts on how people react to decisions. New research shows that the level of trust in decision makers sets expectations that significantly influence this interaction of outcome and procedural fairness.

Idea #583
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Jean Charles de Menezes, memorial plaque at Stockwell Station, London (Source: Wikimedia Commons)

Bad Framing Leads to Bad Decisions and Bad (Even Fatal) Actions

Idea posted: October 2015
  • Strategy
  • Leadership & Change
  • Learning & Behaviour

Decision makers must frame or ‘make sense’ of events and situations, and then make their decisions accordingly. A groundbreaking analysis of an innocent civilian’s tragic shooting by anti-terrorist police reveals how groups of individuals commit, through the interaction of communication, emotions and material cues, to a single, common frame — in this case an erroneous frame. It is a cautionary tale for leaders and other decision makers, exposing how errors or assumptions can cascade into a complete misunderstanding of situations.

Idea #563
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Decision Support Systems: Under-rated and Under-used?

Idea posted: June 2014
  • Strategy
  • Learning & Behaviour
  • Marketing

Technology now provides a range of decision support systems to interrogate, process and analyse data on markets and customers and help companies answer ‘what-if’ questions. The best ones, however, could be being neglected by organizations. Recent empirical research finds a clear discrepancy between users’ perceptions of decision support systems and how these systems actually perform. 

Idea #387
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How Employees Win ‘Voice’ and Influence Decisions

Idea posted: June 2014
  • CSR & Governance
  • Leadership & Change
  • Learning & Behaviour

High levels of engagement and commitment in the workplace could be both a cause and an effect of involving employees in decision-making processes. Research suggests that leaders ‘grant voice’ to followers who combine a need to influence the organization with a need to belong and take part — and that followers work better for leaders when they do.

Idea #391
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The Creation of Adam, Sistine Chapel, fresco detail, 1509, by Michelangelo

Digit Ratio Predicts Men's Product Choices

Idea posted: April 2014
  • CSR & Governance
  • Learning & Behaviour
  • Marketing

Marketers have long known that product choice cannot be predicted reliably by knowing someone’s sex. Multiple factors — ranging from age and income to lifestyle and family preferences — influence purchasing decisions. Now, there’s another variable to add to the list. Recent empirical research suggests that digit ratio — the relative lengths of the fore and third fingers — is linked to the product choices of men.

Idea #366
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Luggage tag for Japan Air Transport, 1937 (Source: Wikimedia Commons)

Relocating Leaders Abroad: Pros and Cons

Idea posted: April 2014
  • Strategy
  • CSR & Governance
  • Learning & Behaviour
  • Operations

The internationalization of markets and industries means executive offices and core functions are being moved abroad. Relocating top managers, however, can be risky. Organizations should explore the alternatives before making a decision. There are arguments for and against leaders crossing borders.

Idea #368
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Officer cadets from Serbia's Military Academy, Belgrade, Serbia, 2010 (Source: Wikimedia Commons)

Social Influences on Decision-Making: Neuroscience Insights

Idea posted: July 2013
  • CSR & Governance
  • Finance
  • Learning & Behaviour

Decision-making is often strongly influenced by social factors, and research in the nascent field of neuroeconomics (which crosses the disciplines of psychology, marketing, economics and neuroscience) is helping to explain why. ‘In-group conformity’ is mediated by signals in the brain associated with emotion and reward and can be stimulated by the so-called ‘love hormone’, oxytocin. Neurobiological insights like these raise important questions for strategy design — in both the private and public sectors. 

Idea #184
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