Middle of the Week Thought: basics of rational decision taking. But how is it rational?

Yevhen Pentsak (50) 21 August'09

Tags: Yevhen Pentsak, risk

Be aware of «scientific» principles of decision-making, especially during elections! Do not allow to be manipulated! Be the first, as Philip Knight, and people will respect you.

People of my age still remember the jogging craze of the 70-s. That was a real good way to keep fit. Due to the market researches 30 mln people were practicing this type of physical exercise then and another 10 mln just liked wearing the jogging shoes in their leisure time. About 40% of US citizens and approximately 37% of potential customers around the world prefer Nike shoes. As a matter of fact, the company was founded by a runner and a famous one: Phillip Knight was #1 runner at the University of Ohio. The year of 1975 just marked the breakthrough on the company schedule when “wafer”-shaped design of soles was invented. The soles with tiny rubber spikes were making the walk extremely dynamic and the shoes very comfortable to wear. In full concordance with Moore’s Law Nike is doing its best to enter a brand new item (or freshly distinctive design) into the market and the company marketing team are highly sensitive as to catering each and every taste, age or cultural preference. We also should keep in mind that Philipp Knight utilized a simple rule as the basis for personal decision taking: once you’ve made it an N 1 all the rest are just destined to follow you.

As any other manager, Knight is taking decisions galore, either routine or important ones. The “added value” of all of them influences the outcome at the end of the day, that is to say, they decide the actual success of the company. What exactly the management science recommendations are as regards the decision making? It all starts with the actual problem being pinpointed (which is a subjective process in itself). As it appears the manager who is successful at solving the “wrong” problem will most likely end up at having the same “sticker” that his “idling” colleague, who is distanced from tackling that very problem. Once the problem’s been located, manager gets to focusing on discerning the criteria for relevant decision to be taken. And the latter criteria have to be duly prioritized, in first place, according to their “weight”, e.g. on a 1-10 scale, with 10 as the best: price -10, comfort – 8, wear performance – 5, footwear care requirements – 6. Then, manager will get down to counting the alternative options and evaluating their characteristics with use of the same 1-10 scale method. Eventually, the classical model of rational decision making recommends multiplying the results of the above evaluation and the “weight” together, and having all the characteristics (criteria) totaled in the end. The max value obtained is sure to designate the best option we are seeking. It looks like defining the best hospital ward due to the best average temperature regime, doesnt’t it. Therefore, the “book-learned”, business-laboratory decisions are deemed to be optimally rational ones. Real-time situations though require totally different managerial behavior which is based on pure psychology and makes the desire to favorably impress the boss to be the key motivation factor. How do managers behave to inform the boss that the steps are being taken sensibly? The only way to succeed in it is to second-guess boss’s reaction and choose the appropriate course of action! It’s the last but not least precondition in the row, for the boss is supposed has to choose to share the responsibility with the manager at the end of the day. The science of management has generated a fair number of rational models of decision taking. Come, pick up the decision and you’re sure to find the reasons to support it later (cf. the Archimedes’s “Give me somewhere to stand and I will move the earth!”).

Let’s consider a small example: 15 Ukrainian citizens decided to “play democracy” on presidential elections eve. V.Yanukovich, J. Timoshenko and A. Yatseniuk are to be considered as most prospective candidates.

A: 6 voters out of the 15 got more liking to V. Yanukovich than to J. Timoshenko. The latter at the same time appeared to be a more favorable candidate to them than A. Yatseniuk. For the sake of convenience, their selection will be exhibited in order of priority gradation:

V.Yanukovich > J.Timoshenko > A.Yatseniuk

B: 5 of the 15 prioritized their selection in the following way:

J.Timoshenko > A.Yatseniuk > V.Yanukovich

C: another four pollers stuck to the selection:

A.Yatseniuk > J.Timoshenko > V.Yanukovich

And one last thing left to be defined is the rules of totaling the votes!

If it happens that simple majority voting be implied, Yanukovich is sure to win with 6 extra votes. Should the two-round runoff be held, Yanukovich and Timoshenko will hit the second round (6 and 5 vote respectively) in which case Timoshenko wins by 9 votes vs 6 of Yanukovich’s. There are types of votes that could facilitate A. Yatseniuk winning, too…

It’s amazing, after all, that there’s a fact (that was proved by 1972 Nobel prize winner, Kenneth J. Arrow and published in his “Social Choice and Individual Values” (Wiley, New York. 2nd ed. 1963) that denied democracy as blank impossibility. Arrow has postulated 5 key democracy premises and then rationalized their mutual incompatibility in his impossibility theorem. Arguments bottomed on his conclusions prove, therefore, that democracy is but a comfortable and implicit way of exploiting public sentiment by establishment and the political elite.

Hence, we ought to be cautious when dealing with the “scientific” principles of decision making, particularly when the electoral process is in issue. Don’t let vented interests in home politics manipulate your vote! Be a part of Philipp Knight’s team of N 1 individuals and the rest will sure be following you. It’s the only way we can build Ukraine from the ground up!


See also:

Мысли среди недели:путь к спасению мировой экономики

Последние события на мировых фондовых рынках заставили задуматься, как близко мы стоим к краю мировой экономической пропасти. События 11 марта 2011 года, 4 августа 2011 уверенно указывают на то, что депрессивное десятилетия начала третьего тысячелетия будет иметь еще более депрессивное продолжение. Движется ли мир в хорошем направлении во всех смыслах слова «добрый»? Может долго держаться макияж, если наносить один слой пудры за другим?


Barakuda 21/08/2009 15:56

Актуальна стаття, дякую.

ML 21/08/2009 17:06

Це холодний душ для ідеалістів та мрійників.
Обов"язково прочитати ідеологам PR-штабу п.Тигіпко.
Чи він продає ТАС , щоб "вмити ноги"?

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