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Decision Making Reading Brief

Francesca Napolitano

MGMT 401-02

November 13, 2012

1.The phenomenon of bounded awareness occurs when cognitive blinders prevent an individual from seeing, seeking, using, or sharing highly significant, easily accessible, and readily perceivable information during the decision-making process. It is different from information overload, however, because even when given sufficient time to make decisions, most people still fail to bring the correct information into their cognitive awareness at the right time.

Bounded awareness occurs at three major points in the decision-making process. First, executives may fail to see or seek out vital information needed to make a sound decision. Second, they may fail to use the information that they do not see because they are unaware of its relevance. Last, executives may fail to share information with others, resulting in the overall bounding of an organization’s awareness.

The failure of executives to see information is caused by maintaining focus on solely one task, for focus limits awareness. Oftentimes executives fail to keep alert of peripheral threats and opportunities because they concentrate completely on the job at hand. Failure to notice changes in the environment (regulatory, political, or market-oriented) keeps executives from adapting new strategies so that their organizations can thrive.

Executives may fail to seek information when they are motivated to favor a particular outcome. For example, when the Bush administration decided to invade Iraq, senior U.S. government officials were caught up in their own bounded awareness and did not search for information that would argue against an invasion. Because of this, these officials failed to notice indicators that their evaluation of the situation in Iraq was wrong, particularly regarding the existence of weapons of mass destruction.

Many executives fail to use accessible and valuable information when they are making important decisions due to success. Success in a given area of a firm may cause a firm to abstain from using new practices, even when they are available. As well, executives may fail to use information about competitors because they focus on how well they can perform a task, but tend to ignore how well the competition can do the same task.

Last, executive teams frequently discuss information that they are aware of and typically fail to share unique information with one another because: (1) it is much easier to discuss common information; (2) common information is more positively rewarded when others add in. Cognitively, individual executives do not recognize the significance of sharing their own unique information and fail to seek unique information from others. This phenomenon can be explained by how people too often take the status quo as given. In order to locate useful information outside their own bounds of awareness, executives must learn to ask: Why not? 2.There are several ways that executives can increase their awareness. In order to see vital information, executives should know what they are looking for and train their eyes. For example, they should ask questions like “What if our strategy is wrong?” As well, executives should develop, or even pay for, an outsider’s perspective so that they may learn different assessments of the situation from a perspective other than their own.

In seeking critical information in decision making, executives should challenge the absence of disconfirming evidence, for receiving recommendations without contradictory data indicates that employees are falling prey to bounded awareness. Someone in the company should play the role of “devil’s inquisitor,” a person who asks questions, as well. Along with this, executives should under search in most contexts, but over search in important contexts. If error could stem from a decision that would be extremely difficult to recover from, then over-searching should occur.

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