An analysis of decision processes

AbstractThis paper outlines three ways of looking at decision processes, and relates them to problems of research management. A classification of decisions is suggested, based on three dimensions of complexity. On each dimension, innovative decisions are normally more complex than operating decisions, but since the latter are more common, there is a danger that the former will be inadequately treated, as shown in an example. These dangers may be mitigated, first, by regarding complex decision-making as an explicitly cyclical process, and, second, by recognizing the significance of reference standards. Four types of reference standard—historical, external, planning, and imaginative—are noted, and brief consideration is given to their origins and to their influence on the perception not only of problems but also of solutions. It is argued that the range and quality of the reference standards used are likely to be significant factors in the success of research management.     

New Product Portfolio Management Decisions: Antecedents and Consequences

This research employs organizational information processing theory to propose and examine the antecedents and consequences of new product portfolio management (NPPM) decisions. Understanding NPPM decisions is an important research area because these decisions affect firm profitability but are difficult to make because of limited reliable information. Recent survey results of Product Development and Management Association members and other NPPM professionals suggest nearly half of initial new product ideas are chosen to advance through the new product development (NPD) pipeline via informal processes. Thus, managers wield considerable influence in NPPM. Yet only limited research quantitatively examines how NPPM decisions impact performance and the role of manager dispositions. Using as the research context a marketing simulation exercise conducted with mid‐level managers, this research reveals important insights into the impact of the three NPPM dimensions—value maximization, balance, and strategic fit—on NPD and firm performance. The analysis suggests a critical role for the NPPM dimension of balance as it is the single dimension impacting performance. However, value maximization is relevant as a criterion for competing because, overall, managers see this dimension as important. At the same time, managers are cautioned in their use of strategic fit as it appears this dimension may constrain innovative choices. Furthermore, three manager dispositions proposed from organizational information processing theory—directive leadership style, need for cognition, and risk perceptions—all influence NPPM dimensions. Managers are recommended to consider the personality traits of managers involved in NPPM decisions to ensure thorough consideration of all dimensions.     

Strategies of Innovation and Imitation of Product Languages*

Nowadays, design is recognized as a strategic resource. Customers are increasingly paying attention to the aesthetic, symbolic, and emotional value of products, a value that is conveyed by the design language—that is, the combination of signs (e.g., form, colors, materials) that gives meaning to a product. As a consequence firms are devoting increasing efforts to define a proper strategy for the design language of their products. An empirical analysis was conducted on the product language strategies in the Italian furniture industry; in particular, the present article explores the relationship between innovation and variety of product languages. Companies are usually faced by two major strategic decisions. The first one concerns the innovation of product languages: To what extent should a firm proactively propose new design languages or, rather, should adopt a reactive strategy by rapidly adopting new languages as they emerge in the market? The second decision concerns the variety and heterogeneity of languages in their product range. Should a firm propose a single product language to communicate a precise identity, or should it explore different product languages? Of course, the two strategic decisions—innovativeness and variety of product languages—are closed connected. Analyzing more than 2.000 products launched by 210 firms, the present article explores how the variety of product languages is approached in the strategy of innovators and imitators. The empirical results illustrate an inverse relationship between innovativeness and heterogeneity of product signs and languages. Contrary to what is expected, innovators have lower heterogeneity of product languages. They tend to be strongly proactive and limit experimentations of new languages in the market. Imitators, instead—which would be expected to have low variety since they can invest only in languages that have been proven successful in the market—tend on the contrary to have higher product variety. Eventually, by having lower investments in research on trends of sociocultural models, they miss the capability to interpret the complex evolution of products signs and languages in the market. Strategic decisions on innovativeness and variety of product languages are therefore interrelated; counterintuitively companies should carefully analyze these decisions jointly.     

Improving Screening Decision Making through Transactive Memory Systems: A Field Study

In screening decisions, senior managers from various disciplines need to collaborate to evaluate innovation project proposals and decide about the allocation of scarce resources to selected projects. Screening decisions are complex and made under high levels of uncertainty, and are considered to be one of senior management's most challenging tasks. In the present field study, screening decision making is investigated from the perspective of a Transactive Memory System (TMS). TMS theory explains how cross‐disciplinary groups of people in interdependent relationships gain, store, combine, and utilize their knowledge in solving complex problems. According to this theory, a TMS emerges to the extent that team members manage to synchronize three core socio‐cognitive processes—specialization, building credibility, and coordination—to achieve team objectives. A theoretical model summarizing antecedents and consequences of the emergence of a TMS in a screening context is proposed and investigated using structural equation modeling. Data from 136 screening committees were used. Results show that the degree to which a committee acts as a TMS is positively related to decision‐making effectiveness as well as efficiency in a screening context. Transformational leadership and an open organizational climate are shown to act as antecedents of TMS emergence. Theoretical and managerial implications of these findings are discussed.     

岗位操作类标准视频化的探讨

分析了目前标准宣贯中存在的问题,提出运用现代化的管理模式,以信息化为载体,探索寓教于乐的标准宣贯新方法——岗位操作类标准视频化,并以此进行岗位练兵,培养高技能人才。     

The Fuzzy Front End of New Product Development for Discontinuous Innovations: A Theoretical Model

The fuzzy front end of the new product development (NPD) process, the time and activity prior to an organization's first screen of a new product idea, is the root of success for firms involved with discontinuous new product innovation. Yet understanding the fuzzy front‐end process has been a challenge for academics and organizations alike. While approaches to handling the fuzzy front end have been suggested in the literature, these tend to be relevant largely for incremental new product situations where organizations are aware of and are involved in the NPD process from the project's beginning. For incremental new products, structured problems or opportunities typically are laid out at the organizational level and are directed to individuals for information gathering. In the case of discontinuous innovations, however, we propose that the process works in the opposite direction—that is, that the timing and likelihood of organizational‐level involvement is more likely to be at the discretion of individuals. Such individuals perform a boundary‐spanning function by identifying and by understanding emerging patterns in the environment, with little or no direction from the organization. Often, these same individuals also act as gatekeepers by deciding on the value to the organization of externally derived information, as well as whether such information will be shared. Consequently for discontinuous innovations, information search and related problems/opportunities are unstructured and are at the individual level during the fuzzy front end. As such, the direction of initial decisions about new environmental information tends to be inward, toward the corporate decision‐making level, rather than the other way around. In order to cope with the special and complex nature of decisions made at the fuzzy front end of NPD for discontinuous innovations, this process is detailed as a series of decisions occurring over three proposed interfaces: boundary, gatekeeping, and project. The difference between each interface lies in the nature of the decisions made: At the boundary and gatekeeping interfaces, the primary impetus is individual‐level decision‐making; at the project interface, decisions occur at the organizational level. By articulating these processes in the form of a model, we achieve two objectives: (1) We outline a more detailed and comprehensive approach to understanding the nature of the front‐end decision making process for discontinuous innovations; and (2) we detail specific propositions for future research on each stage of the process.     

Passion for Work,Nonwork‐Related Excitement,and Innovation Managers’ Decision to Exploit New Product Opportunities

This article investigates the role of affect in innovation managers’ decision to exploit new product opportunities—a decision central to the innovation process. The model proposes that different types of passion can trigger managers’ exploitation decisions but that this effect is contingent on experiencing excitement from events outside their work environment. A field experiment with 90 owner–managers of young firms located in an innovation context (business incubators) shows that passion for work and nonwork‐related excitement levels interdependently impact innovation managers’ decision to exploit new product opportunities. Specifically, harmonious passion has a general positive effect on managers’ propensity to exploit. In contrast, the effect of obsessive passion is more complex and contingent on the additional excitement managers experience such that the positive relationship between obsessive passion and the decision to exploit is more positive with higher levels of excitement. These findings extend the product innovation management literature by acknowledging that decision‐makers’ affective experiences influence innovation decisions and provide a first step toward understanding the role of affect and passion in the product innovation context. Second, the finding that obsessive passion and nonwork‐related excitement interact in explaining opportunity exploitation decisions highlights the need to incorporate contingency relationships in models of innovation decision‐making. Third, in drawing on a field experiment and the experimental manipulation of managerial affect during the decision‐making task, this article answers a recent call in the project management literature to pursue less common methodological approaches and develop “broader theoretical schema” in order to enhance our understanding of innovation management. Finally, this study also has implications for practitioners because it can help innovation managers understand their own decision policies. To the extent that innovation managers are able to regulate their affective experiences, this improved understanding might prevent them from premature and faulty decision‐making.     

Design and application of task administration protocols for collaborative production and service systems

This research investigates the design of Task Administration Protocols (TAPs) for effective task allocation and administration in collaborative production/service systems. Customer-focused and concurrent engineering service systems process tasks more effectively as a result of the power of collaboration among multiple participants. In such environments, however, complex situations might arise that require decisions that cannot be handled by simple Coordination Protocols (CPs). To design an effective control mechanism to manage complex situations, this research identifies basic problems in collaborative task administration and proposes the design framework of protocols to solve the problems. In the framework, TAPs consist of three component-protocols: (1) Task Requirement Analysis Protocol, (2) Shared Resource Allocation Protocol, and (3) Synchronization and Time-Out Protocol. Each component protocol is activated to address priority-based allocation, resource-aware allocation, and task re-allocation at a different task administration context, ranging from task initialization, task allocation, to task monitoring, respectively. To analyze feasibility and effectiveness of the proposed design, TAPs are applied to two collaborative production/service systems. Simulations are conducted to evaluate the performance achieved by different TAPs and non-TAP CPs under various load conditions. The results show that there is a significant performance improvement by TAPs over CPs in most cases, e.g., 84% vs. 64% in terms of task completion ratio. The advantage of TAPs can be explained by their design with relatively higher level of collaborative intelligence, addressing more complex control logic than non-TAP CPs.     

Stacking the deck: the effects of top management backgrounds on investor decisions

Young firms going public are dependent upon the decisions of investors for a successful public offering. Yet convincing investors to invest is not easy, as young firms have limited track records and, thus, face challenges associated with gaining legitimacy in their respective industries. This paper examines ways in which select information about firms undertaking an initial public offering (IPO) can affect investor decisions. Building upon recent research on upper echelons and signaling theory, we propose that the composition of a firm's top management team can signal organizational legitimacy that in turn affects investor decisions. In the context of young firms undertaking an IPO, such signals are critical, especially when objective measures of firm quality are not easily available. We introduce a typology of signals of organizational legitimacy to elaborate on our hypotheses. Analyses of a comprehensive set of data on the career histories of the top management teams of young biotechnology firms show that investor decisions are affected by the extent to which a firm's top management team has employment affiliations with prominent downstream organizations (e.g., pharmaceutical companies), with a diverse range of organizations, and upon the role experience of one key member of the top management team—the Chief Scientific Officer. We assess and find that these effects are not mediated by the prestige of a firm's lead underwriter. We conclude with a discussion of the implications of our study for strategy research on upper echelons and organizational legitimacy. Copyright © 2006 John Wiley & Sons, Ltd.     

成品油销售网络投资项目后评价工作效果与问题评析

中国石油成品油销售网络投资项目后评价（简称＂销售项目后评价＂）工作促进了投资决策科学化、民主化、规范化管理水平的提高,促进了投资管理基础工作上台阶和后评价队伍整体素质的提高,丰富和发展了销售项目后评价的理论和实践。但是,由于开展销售项目后评价的历史较短,这一工作还处于起步阶段,不可避免仍存在一些问题——对后评价工作重要性的认识有待进一步提高;后评价方法体系需要不断完善;后评价成果信息的反馈与应用机制需要进一步健全;销售项目后评价专业人员比较缺乏,整体队伍素质需要进一步提高等。建议创新＂销售项目后评价＂方法体系,完善后评价管理制度,增强其实践指导作用;明确典型和单体项目选择依据和后评价工作经费来源及标准,保证该项工作的有效开展;进一步健全销售项目后评价成果的反馈和扩散机制,充分发挥后评价的作用;加强销售项目后评价专业队伍建设,规范咨询服务。     

Increase your divestment effectiveness

In many large diversified corporations there is a largely prevalent habit to consider divestment decisions as ‘top secret’: information concerning potential divestitures is restricted to top management and only a handful of senior managers are involved in the decision making process. The major assumption underlying such behaviour is the fear of failure; that is, top management is concerned about involving line—generally divisional—managers in the process of making up one's mind to divest (a time consuming process as will be seen later) and searching a potential acquirer, in the fear that such involvement might work in counteractive ways and perhaps cause the abortion of the project. As a result, information is most often withheld, decisions in progress are kept secret; an ‘underground’ strategy is developed. The purpose of this article is to show that the most successful divestments are precisely those where line management's co-operation has been elicited at very early stages and to suggest that such a participative management mode is likely to produce better results. Our research, based on the study of 14 divestments in the US and Europe (see Appendix), thus shows that the division manager is a key person on the divestment chess-board and accomplishes varied missions.     

Analytical techniques for focussing software research

For all the advances in the management of software research and development over the last few years, it is never easy to ensure that complex programmes of research are efficiently directed and assessed. There are a number of inherent difficulties that contribute to this, for instance—the complexity of modern technology, the abstract nature of research and the need to work in an area which is, by definition, largely unexplored. This paper discusses two techniques aimed at easing the evaluation of complex projects. Both techniques are designed to ensure that critical decisions and their dependencies are explicitly addressed. The effectiveness of the techniques is illustrated by their application to research in software engineering.     

Learning to let go: Social influence,learning, and the abandonment of corporate venture capital practices

Research summary: This study examines the abandonment of organizational practices. We argue that firm choices in implementing practices affect how firms experience a practice and their subsequent likelihood of abandonment. We focus on utilization of the practice and staffing (i.e. career backgrounds of managers), as two important implementation choices that firms make. The findings demonstrate that practice utilization and staffing choices not only affect abandonment likelihood directly but also condition firms' susceptibility to pressures to abandon when social referents do. Our study contributes to diffusion research by examining practice abandonment—a relatively unexplored area in diffusion research—and by incorporating specific aspects of firms' post‐adoption choices into diffusion theory. Managerial summary: When do firms shut down practices? Prior research has shown that firms learn from the actions of other firms, both adopting and abandoning practices when their peers do. But unlike adoption decisions, abandonment decisions need to account for firms' own experiences with the practice. We study the abandonment of corporate venture capital (CVC) practices in the U.S. IT industry, which has experienced waves of adoption and abandonment. We find that firms that make more CVC investments are less likely to abandon the practice, and are less likely to learn vicariously from other firms' abandonment decisions, such that they are less likely to exit CVC when other firms do. Staffing choices also matter: hiring former venture capitalists makes firms less likely to abandon CVC practices, while hiring internally makes abandonment more likely. Plus, staffing choices affect how firms learn from the environment, as CVC managers pay attention to and learn more from the actions of firms that match their work backgrounds; i.e., firms that staff CVC units with former venture capitalists are more likely to follow exit decisions of VC firms, while those that staff with internal hires are more likely to follow their industry peers. Our results suggest that firms wanting to retain CVC practices should think carefully about the implementation choices they make, as they may be inadvertently sowing seeds of abandonment. Copyright © 2015 John Wiley & Sons, Ltd.     

Exploring Portfolio Decision‐Making Processes*

Portfolio management is the set of activities that allows a firm to select, develop, and commercialize a pipeline of new products aligned with the firm's strategy that will enable it to continue to grow profitably over the long term. To appropriately manage the firm's new product portfolio, decisions must be made about which projects to fund, to what levels, at what point in time. Previous research has investigated portfolio management decisions as individually discrete decisions. Significant streams of research have investigated both project selection and project termination decisions. This research project shows, however, that portfolio decision making may be better understood if it is considered as an integrated system of processes that considers these decisions simultaneously, along with other decisions such as those to continue a project with reduced funding. Using in‐depth data from four diverse case studies, we use a grounded theory approach to develop a general model of how firms make new product portfolio decisions. According to the findings from these cases, effective portfolio decision‐making processes produce a portfolio mindset, focus effort on the right projects, and allow agile decision making across the portfolio's set of projects. Effective portfolio decision making is the result of the interaction between three types of decision‐making processes that managers use in making decisions: evidence‐, power‐, and opinion‐based. Being able to use each of these types of processes to make decisions depends upon having the data inputs that they require. Three domain‐based decision input‐generating processes (i.e., cross‐functional collaboration, practices of critical thinking, and practices of market immersion) are associated with making evidence‐based portfolio decisions. In addition, organizational politics produces the inputs that are associated with power‐based portfolio decision making, while managerial intuition is associated with opinion‐based portfolio decision making. Firm cultural factors, including trust, collective ambition, and leadership style, are associated with how these evidence‐, power‐ and opinion‐based processes are combined into an overall portfolio decision making process, and whether the firm's processes are more rational and objectively made, or more politically and intuitively made. The article presents propositions for how the decision‐making processes interact in their associations with decision‐making effectiveness.     

Robust analogizing and the outside view: two empirical tests of case‐based decision making

Executives use analogies to improve strategic decisions. However, existing research provides little guidance on the types and number of analogies that produce the best decisions. We examine models of analogy and present findings from two empirical tests. The first test, a study of private‐equity investment decisions, finds that an ‘outside view’—forming a reference class of analogies—performs better than a few analogies familiar to the decision maker. The second test, a study of film revenue forecasts, compares a new model we call similarity‐based forecasting (SBF) with existing methods. The study finds that SBF, which combines elements of reference class forecasting and case‐based decision making, produces better forecasts than regression models. We discuss the consequences of our findings for research and practice. Copyright © 2012 John Wiley & Sons, Ltd.     

Behavioral Reasons for New Product Failure: Does Overconfidence Induce Overforecasts?

Efforts to organize and integrate research findings on new product performance determinants have lagged since the last significant overview paper appeared over a decade ago. Importantly, this literature has not considered entire categories of factors that are known to affect managerial decisions and behavior, namely those that pertain to decision‐makers' cognitive limitations and incentive structures. This research empirically investigates one specific cognitive distortion heretofore neglected in studies of new product commercialization—overconfidence, commonly defined in the literature as excessive belief in one's own abilities to generate superior performance. To lay the groundwork for subsequent exploration, the paper first introduces a behavioral model that both organizes well‐understood new product performance determinants and illuminates others heretofore not studied, namely incentive alignment and cognitive limitations and biases. The model summarizes extant research and allows development of research hypotheses related to overconfidence. The hypotheses and empirical investigation motivated by the model address two questions about the impact of overconfidence on new product commercialization activities. First, the study explores whether overconfidence is associated with overforecasting new product demand. Second, it evaluates two complementary mechanisms that may account for overconfidence‐induced overforecasts. The empirical findings are based on data generated in the course of management simulation workshops conducted among graduate students at three leading business schools in India. Three hundred thirty participants played individually four rounds of a computer‐based simulation game that involved decisions pertaining to new product development (including product formulation) and commercialization strategies. The decisions were captured and analyzed using statistical techniques. The results reveal that decision‐makers' overconfidence is associated with a higher likelihood of overforecasting new product sales. The observed effect is fully mediated by flawed tactical decisions that dampen demand, namely elevated product pricing. Sensitivity analyses show that these results are robust to a number of alternative explanations. However, the study finds no evidence implicating overconfident individuals as poor “innovators”—overconfident and nonoverconfident decision‐makers experienced comparable market demand for their new products. The paper concludes with a discussion of the results and provides specific recommendations for practice.     

New Product Portfolio Management: Practices and Performance

Effective portfolio management is vital to successful product innovation. Portfolio management is about making strategic choices—which markets, products, and technologies our business will invest in. It is about resource allocation—how you will spend your scarce engineering, R&D, and marketing resources. It focuses on project selection—on which new product or development projects you choose from the many opportunities you face. And it deals with balance—having the right balance between numbers of projects you do and the resources or capabilities you have available. In this article, the authors reveal the findings of their extensive study of portfolio management in industry. This study, the first of its kind, reports the portfolio management practices and performance of 205 U.S. companies. Its overall objective was to gain insights into what portfolio methods companies use, whether they are satisfied with them, the performance results they achieve with the different approaches, and suggestions for others who are considering implementing portfolio management. The research first assesses management's satisfaction with portfolio methods they employ and notes that some firms face major problems in portfolio management. Next, businesses are grouped or clustered into four groups according to management's view of portfolio management: Cowboys, Crossroads, Duds, and Benchmark businesses. The research first assesses management's satisfaction with portfolio methods they employ and notes that some firms face major problems in portfolio management. Next, businesses are grouped or clustered into four groups according to management's view of portfolio management: Cowboys, Crossroads, Duds, and Benchmark businesses. Various performance metrics are used to gauge the performance of the business's portfolio. The results reveal major differences between the best and the worst. Benchmark businesses are the top performers. Their new product portfolios consistently score the best in terms of performance—high-value projects, aligned with the business's strategy, the right balance of projects, and the right number of projects. The authors take a closer look at these benchmark businesses to determine what distinguishes their projects from the rest. Benchmark businesses employ a much more formal, explicit method to managing their portfolio of projects. They rely on clear, well-defined portfolio procedures, they consistently apply their portfolio method to all projects, and management buys into the approach. The relative popularity of various portfolio methods—from financial methods to strategic approaches, bubble diagrams, and scoring approaches—are investigated. Not surprisingly, financial approaches are the most popular and dominate the portfolio decision. But what is surprising is the dubious results achieved via financial approaches. Again, benchmark businesses stand out from the rest: they place less emphasis on financial approaches and more on strategic methods, and they tend to use multiple methods more so than the rest. Strategic methods, along with scoring approaches, yield the best portfolios; financial methods yield poorer portfolio results. The authors provide a number of recommendations and suggestions for anyone setting out to implement portfolio management in their business.     

Interfirm Modularity and Its Implications for Product Development*

Industries characterized by interfirm modularity, in which the component products of different firms work together to create a system, are becoming increasingly widespread. In such industries, the existence of a common architecture enables consumers to mix and match the products of different firms. Industries ranging from stereos, cameras, and bicycles to computers, printing, and wireless services are now characterized by interfirm modularity. While the increasing presence of this context has been documented, the implications for the product development process remain underdeveloped. For the present study, in‐depth field‐based case studies of seven firms experiencing an environment of interfirm modularity were conducted in order to deepen understanding of this important phenomenon. What unique challenges did this context pose and why? What solutions did firms experiment with, and which seemed to work? Based on an inductive process of data analysis from these case studies, three primary categories of challenges raised by this environment were identified. First, firms were frustrated at their lack of control over the definition of their own products. The set of features and functions in products were constrained to a great extent by an architecture that the firm did not control. Second, while an environment of interfirm modularity should in theory eliminate interdependencies among firms since interfaces between products are defined ex‐ante, the present study found, ironically, that interdependencies were ubiquitous. Interdependencies continually emerged throughout the product development process, despite efforts to limit them. Third, firms found that the quantity and variegated nature of external relationships made their management exceedingly difficult. The sheer complexity was daunting, given both the size of the external network as well as the number of ties per external collaborator. Partners with whom control over the architecture was shared often had divergent interests—or at least not fully convergent interests. The solutions to these challenges were creative and in many cases counter to established wisdom. For instance, research has suggested many ways for a firm to influence architectural standards. While the firms in the present sample followed some of this advice, they also focused on a more neglected aspect of architecture—the compliance and testing standards that accompany modules and interfaces. By concentrating their efforts in a different area, even smaller firms in this sample were able to have some influence. Instead of focusing on the elimination of interdependencies, it was found that firms benefited from concentrating on the management of interdependencies as they emerged. Finally, while layers of management and “bureaucracy” are often viewed as unproductive, these firms found that adding structure, through positions such as Relationship Manager, was highly beneficial in handling the coordination and control of a wide range of external relationships.     

Top executive commitment to the status quo: Some tests of its determinants

Some top executives are more committed to the status quo—particularly to their organization's current strategy and leadership profile—than are others. Most empirical research on upper echelons treats psychological phenomena as a ‘black box’—the unobserved intervening mechanisms—that causes associations between more observable executive characteristics and organizational outcomes. In contrast, this paper attempts to directly examine the determinants of an important element of an executive's psychological orientation—commitment to the status quo (CSQ). We focus on a select set of variables which have been posited in prior research as determinants of executive CSQ, but which have not been directly tested for such a relationship. Based on a large-scale survey methodology, results suggest that an executive's tenure in an industry is a pronounced determinant of CSQ, and has significantly more impact than organizational tenure. As expected, the firm's current performance was found to be positively related to CSQ; this relationship was stronger in high-discretion than in low-discretion industries. Finally, the project reaffirms a well known human tendency: incumbent CEOs tend to believe that their eventual successors should be just like them.