Breaking the frame: an analysis of strategic cognition and decision making under uncertainty

This paper reports the findings of two experimental investigations into the efficacy of a causal cognitive mapping procedure as a means for overcoming cognitive biases arising from the framing of strategic decision problems. In Study 1, final year management studies undergraduate students were presented with an elaborated strategic decision scenario, under one of four experimental conditions: positively vs. negatively framed decision scenarios, with prechoice vs. postchoice mapping task orders (i.e., participants were required to engage in cognitive mapping before or after making a decision). As predicted, participants in the postchoice mapping conditions succumbed to the framing bias whereas those in the prechoice mapping conditions did not. Study 2 replicated and extended these findings in a field setting, on a sample of senior managers, using a decision scenario that closely mirrored a strategic dilemma currently facing their organization. Taken together, the findings of these studies indicate that the framing bias is likely to be an important factor in strategic decision making, and suggest that cognitive mapping provides an effective means of limiting the damage accruing from this bias. Copyright © 1999 John Wiley & Sons, Ltd.     

Railway innovation and uncertainty

This paper outlines two innovative projects carried out within the same organisation, but with markedly differing results. One has been satisfactorily completed while the other, although having run for much longer, is still experiencing technical problems. The two projects, British Rail's Advanced Passenger Train, and High Speed Train, are examined in relation to the concept of uncertainty. It is suggested that many of the points upon which the projects are differentiated can be attributed to the degree of uncertainty to which they were subject. It is concluded that one means of handling the uncertainty associated with development programmes is to adopt a flexible approach. It is noted, however, that flexibility may not be simply a question of personnel or organisational disposition, but can be influenced by the characteristics of particular projects.     

Decision making at the front end of innovation: the hidden influence of knowledge and decision criteria

Decision making at the front end of innovation is critical for the success of companies. This paper presents a method, called decision making based on knowledge (DeBK), which was created to analyze the decision‐making process at the front end. The method evaluates the knowledge of project information and the importance of decision criteria, compiling a measure that indicates whether decisions are founded on available knowledge and what criteria are in fact being considered to delineate them. The potential contribution of DeBK is corroborated through two projects that faced decision‐making issues at the front end of innovation.     

Micro-computers and decision making

The micro-computer is claimed to have lost its designation "Hobbyist" and to provide a real computing facility for professionals at low cost and high convenience. The authors have taken a number of decision-making and forecasting systems and "translated" them to operate on a variety of micro-computers including the Texas TI 59, the Sinclair ZX 81, the Commodore PET and VIC and the Apple II. Experience in operating the "translated" programs on the small machines has shown perhaps surprising advantages over the main-frame versions from which they were devised.
The paper is in two parts. In the first part the use of micro-computers is discussed in the light of our experience and in the second part the operation of the programs is explained. The use of standard software packages in R & D is not discussed. The programs which are discussed with examples of their use are:
MAUDE derived from the main-frame decision analysis program AIDA
RELEVANCE a resource allocation ANALYSIS algorithm
MARKOV CHAIN a stochastic ANALYSIS approach to forecasting
CROSS IMPACT a policy analysis tool based on KISM Cross-impact language
LINKAGE an extension to ANALYSIS Cross Impact     

Business model innovation processes of average market players: a qualitative-empirical analysis

Business model innovation is by now mainly understood as a strategic option for firms to enhance competitiveness. As a result, business model innovation research usually focuses on outperforming firms that deliberately innovate their business models. We enhance this rather narrow perspective by analysing business model innovation processes of average market players against the background of a multiple-case study. Our findings show that average market players do at least initially not deliberately pursue business model innovation. Instead, they experience business model innovation as a highly emergent and very often unintended process. We identify four phases of this process and describe them in detail. Furthermore, we highlight factors that determine whether a firm is able to complete the process step or not. The results of our study are reflected in a newly developed process model that considerably enhances the understanding of business model innovation processes with regard to average market players and may serve as framework for future research.     

Modularity in making: simplifying solution space for user innovation

An increasingly popular form of open innovation in the digital age is ‘making,’ where users innovate across multiple disciplines and make products that meet their needs, using mechanical, electronic, and digital components. These users have at their disposal, a wide solution space for innovation through various modular toolkits enabled by digital‐age technologies. This study explores and outlines how these users simplify this wide solution space to innovate and make tangible products. Following a modularity theory perspective, it draws on case studies of users and their innovations: (1) Users with initial prototype product designs based on the Internet of things (IoT) from a maker event and (2) users with established product designs from the online community platform Thingiverse. The studies found that users reused the design in the form of existing off‐the‐shelf products and utilized digital fabrication and low‐cost electronics hardware as a ‘glue’ to create physical and informational interfaces wherever needed, enabling bottom‐up modularity. They iteratively refined their innovations, gradually replacing re‐used designs with own integrated designs, reducing modularity, and reducing wastage. The study contributes to open innovation and modularity with implications on the design of products and toolkits enabled by the digital age.     

Business model innovation in strategic alliances: a multi‐layer perspective

Business model innovation (BMI) has recently become a topic of interest for research as well as corporate practice. However, we lack specific insights into actors, drivers, and different forms of BMI as the concept is by now mainly addressed in a very general way. In this paper, we analyze how BMI takes place in strategic alliances with the focus of enhancing the recent knowledge about BMI by developing a concept that links firm‐level BMI with alliance‐driven innovation of business models. Against the background of an in‐depth explorative qualitative study, we shed light on the basic nature business model innovation alliances (BMIA) and their effects on both, alliance level and firm level. We develop a process model of BMIA that is the first model providing a holistic picture of this particular type of BMI. Our findings allow for deep insights into BMI processes in incumbent companies and uncover in detail the importance of boundary spanning activities in this realm. By providing these insights, we pave the ground for a new stream of BMI research that focuses on the in‐depth understanding of the role of collaboration and network effects in recent BMI processes. In addition, we show practical benefits for partners in BMI alliances. These insights may help to overcome the traditional fear of negative effects that is still very often prevalent in companies when it comes to issues of partnering with firm external players in strategic issues.     

Structuring innovation funnels for R&D projects under uncertainty

An innovative R&D project that creates a great business opportunity usually involves high technological and market uncertainty. It is easy to see that developing only one solution approach in the R&D project is too risky. The selectionism or the parallel development strategy can be applied to construct an innovation funnel that increases the flexibility to hedge against the uncertainty. However, little research has been devoted to selection of which alternative solution approaches should be included for the innovation funnel. This research aims to develop a simulation-based methodology that can help R&D managers evaluate and construct an innovation funnel containing promising alternative approaches for a novel R&D project to maximize project profit, while minimizing downside risk within an allowable loss. A new risk measure based on the concept of conditional value-at-risk from the finance literature is defined to evaluate the project downside risk. An example of drug development project is used to illustrate the proposed methodology. We recommend that firms should improve their capabilities on market research, concept screening, and R&D efficiency for taking full advantages of selectionism.     

Business model innovation and competitive imitation: The case of sponsor‐based business models

This paper provides the first formal model of business model innovation. Our analysis focuses on sponsor‐based business model innovations where a firm monetizes its product through sponsors rather than setting prices to its customer base. We analyze strategic interactions between an innovative entrant and an incumbent where the incumbent may imitate the entrant's business model innovation once it is revealed. The results suggest that an entrant needs to strategically choose whether to reveal its innovation by competing through the new business model, or conceal it by adopting a traditional business model. We also show that the value of business model innovation may be so substantial that an incumbent may prefer to compete in a duopoly rather than to remain a monopolist. Copyright © 2012 John Wiley & Sons, Ltd.     

Data networks for business and government: Effective decision making with shared information — the Canadian approach

The author describes a hierarchical computer communications network designed, implemented, operated and controlled by an organization which is itself structured as a levelized network. The network design facilitates dissemination of decision making material collected at the point of action as a by product of transaction processing.     

Neural network application for fuzzy multi-criteria decision making problems

In this paper, a fuzzy multi-criteria decision making model is presented based on a feed forward artificial neural network. This model is used to capture and represent the decision makers' preferences. The topology of the neural network model is developed to train the model. The proposed model can use historical data and update the database information for alternatives over time for future decisions. Basically, multi-criteria decision making problems are formulated, and neural network is used to learn the relation among criteria and alternatives and rank the alternatives. We do not use any utility function for the modeling; however, a unique method is proposed for eliciting the information from decision makers. The proposed model is applicable for a wide variety of multi-attribute decision making problems and can be used for future ranking or selection without managers' judgment effort. Simulation of the managers' decisions is demonstrated in detail and the design and implementation of the model are illustrated by a case study.     

Business partnering—a driving force for innovation

Win-Win situations are used and also created by companies which cooperate with each other, complement each other on a synergy basis and work together fairly and competently. Today, business partnering has therefore become a key qualification for companies. This should not depend alone on the commitment of individual persons.This article describes how Siemens has organized its company, services and products using partnering solutions and how it has installed this concept as an intrinsically dynamic process. Thanks to institutionalized partnering, B2B interfaces have been established to form a rational alliance, offering benefits to all involved, and can be used regardless of the size of the company. These offerings generate Win-Win situations themselves—and provide individual employees in large companies with a structural framework for a personal partnering initiative.     

Organisational culture and decision making: a case of consensus management

Abstract
This paper explores how a state-of-the-art concept, organization culture, shapes decision making and consensus generating strategies used in the successful management of product development activities in high technology companies. Engineering development groups interact with many individuals and groups on a wide variety of very comples engineering, manufacturing, marketing and business issues Much uncertainty exists around these issues because information that would allow for a decision to be made is often unknow or unknowable. Trade-offs are made continually resulting in a high degree of interdependence among development groups and others with whom they interact. Achieving a balance between controlling development activities on the on hand, and encouraging creativity and initiative on the other, is a complicated process.
this paper illustrates the role of organizational culture in product development using case material from a very successful US high case material from a very successful US high technology company. 'Consensus management', a major cultural theme at 'DW Enterprises', is a decision making style that involves everyone in the decision making process who might have relevant input. A cultural analysis reveals that the engineers developed specific techniques for generating consensus, and that these related as much to control over participation in product development as to decision making.     

Towards value-based pricing—An integrative framework for decision making

Despite a recent surge of interest, the subject of pricing in general and value-based pricing in particular has received little academic investigation. Yet, pricing has a huge impact on financial results, both in absolute terms and relative to other instruments of the marketing mix. The objective of this paper is to present a comprehensive framework for pricing decisions which considers all relevant dimensions and elements for profitable and sustainable pricing decisions. The theoretical framework is useful for guiding new product pricing decisions as well as for implementing price-repositioning strategies for existing products. The practical application of this framework is illustrated by a case study involving the pricing decision for a major product launch at a global chemical company.     

Remanufacturing decision and sustainability under product life cycle uncertainty

Abstract

For a single type of product, we study a firm's remanufacturing decisions for the product under demand uncertainty from a real options approach. Specifically, we assume that the product life cycle consists of a growth regime with the expected product demand and volatility increasing with respect to time and a decay regime with the expected product demand and volatility decreasing with respect to time while the timing of regime change itself is uncertain as well. Under this framework, this study aims to derive and analyze the demand threshold above which the firm establishes a remanufacturing process in its production system. Moreover, the number of products being remanufactured throughout the life cycle is numerically studied to assess the degree of sustainability due to remanufacturing.     

The contrary forces of innovation: A conceptual model for studying networked innovation processes

In this paper, we argue that industrial innovation processes can productively be analysed as consisting of two sub-processes that over time create and mobilise contrary forces within both internal and external interactions of the innovation project. One of these forces emerges from the process of mobilising resources, activities, and actors in ensuring commitments to the project over time. The other is the process of explorative learning, which continues to create revised or even new propositions about the realities of the project and its opportunities. We argue that this analytical distinction permits us to expand our understanding of how friction forces develop over time in business networks (Håkansson & Waluszewski, 2001a,b), the patterns of divergence and convergence in innovation processes as identified by Van de Ven et al. (1999) and the processes of “path creation through mindful deviation” as argued by Garud and Karnøe (2001).     

FCC policy on CB radio: Impact on consumer decision making

A consumer decision making model was created and tested in research sponsored by the Federal Communications Commission. The FCC was considering a series of policy changes with regard to equipment and rules of operation. Discriminant and regression statistical results were combined into a simulation model which projected the impact of the proposed policy changes.     

Revisiting the Miles and Snow strategic framework: uncovering interrelationships between strategic types,capabilities, environmental uncertainty,and firm performance

The Miles and Snow strategic type framework is re‐examined with respect to interrelationships with several theoretically relevant batteries of variables, including SBU strategic capabilities, environmental uncertainty, and performance. A newly developed constrained, multi‐objective, classification methodology is modified to empirically derive an alternative quantitative typology using survey data obtained from 709 firms in three countries (China, Japan, United States). We compare the Miles and Snow typology to the classification empirically derived utilizing this combinatorial optimization clustering procedure. With respect to both variable battery associations and objective statistical criteria, we show that the empirically derived solution clearly dominates the traditional P‐A‐D‐R typology of Miles and Snow. Implications and directions for future research are provided. Copyright © 2004 John Wiley & Sons, Ltd.