During one of our decision-making classes, we had a face-off with a case study exercise, and it was hot. Hands here and there. Voices up and down. Okay, okay, maybe I am exaggerating this a little bit. There was no wrestling or confrontation OH. What really happened was that we were asked to read a case and make recommendations in two groups. Each group will then counter the other with relevant points.
In that exercise I saw how diverse the human brain can be. Through my classmates, a physical demonstration of how the brain thinks and the different routes in which it can make decisions was displayed.
The Case Study
Allow me to give you a brief overview of the case that displayed the diversity of the human brain. Okoye Food Packaging Limited manufactured and sold meat products. They had five main product lines: corned beef, pork chops, chicken parts, turkey and smoked meats. However, smoked meat was not manufactured in-house. It was purchased from another manufacturer and sold under the Okoye Food Packaging (OFP) brand name. For some reasons, the executives of OFP were contemplating the manufacture of smoked meat in their own plant. Based on the information provided in the case, we were asked to help the executives make a decision on whether to manufacture in-house or continue to outsource.
My observations and the minds of my classmates
The OFP case study exercise was a perfect scenario of the ways in which the human brain can think. I observed two decision-making methods and was intrigued by each group’s recommendation. Group 1, which was my group, recommended that OFP be manufactured in-house. Our recommendation was based on reducing costs, improving quality, price control, increasing market confidence, accessing the global market and a few more. Our reasons were mostly qualitative.
Group 2 recommended that OFP continue to outsource. They gave reasons like errors in cost calculation by the OFP accountant, calculated increased costs in maintenance, calculated increased costs in rent, calculated depreciation rate and so on. Their reasons were majorly quantitative.
After that class, I reviewed all the recommendations and found that both groups deployed the two different routes of decision-making in the human brain: a reflective system and a reactive system. Group one made their recommendation with great swiftness. We went with both our “guts” and the information provided in the case. The opposite was the case for Group 2. Group 2 processed the information logically, analytically, and deliberately. They didn’t go with the fast, “gut” reaction. They went with the numbers.
What I realized is that both minds are not wrong, and to be a successful manager, one has to apply a mix of both methods of decision making. The reflective system is logical, analytical, deliberate, and methodical, while the reactive system is quick, impulsive, and intuitive, relying on habits to provide decisions for what to do next. We tend to assume that the logical, analytical route leads to superior decisions, but whether this is accurate depends on the situation.
Reactive decision-making
The quick, intuitive route can be the best way to think when we suddenly need to make a decision without methodically weighing all possible options and their consequences. It is a way of making a decision that does not involve deep contemplative thought.
Reflective Decision-making
When faced with a novel or highly complex situation, the quick route is not always the best decision-making path to take. it is better to process the available information logically, analytically, and methodically.
The expected of as a manager is to think whether a situation requires a fast, “gut” reaction or some serious thought prior to making a decision.
We have these two decision-making systems with separate functions and we can derive great benefits from allowing them to perform those functions for our purposes. The best way to engage both systems in solving a problem is by following the below steps:
- Determine the context
- Ascertain the objective.
- Identify the problem.
- Explore possible strategies or routes to meet the objective.
- Determine the decision criteria.
- Make a decision.
- Create an action plan.
- Act on it.
- Look back and learn.
Both systems of decision making are useful but a balance is required
THE LBS ENTREE