Business Decision Analytics

MGT 602 BDA Business Decision Analytics: MODULE 2 summary Dr Fleur Fallon,

Senior learning Facilitator- Co-ordinator BDA

March 2019

• Assessment 1 –STUDIOSITY; ACADEMIC SKILLS: INTEGRITY

• Module 2: Weeks 3-4 Decision-making models

• W3. Rationality; bounded rationality; System 1-System 2

Module 4: Bias, heuristics, blind spots

• W4. Dual processing; recognition primed decision model;

neuromythology

• Activities- related to Assessment 1

• STUDY TEAMS for Assessment 1; TEAM for Assessment 2

MGT 602 BDA 2019 T1

Level 1 – Intro copy Level 2 – Body text • Level 3 – Bullet 1

• Level 4 – Bullet 2 • Level 5 – Bullet 3

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Learning outcomes- through examining decision-making at individual, team and organisational level, you will be able to:

a) Select and evaluate the usefulness of a range of decision making tools and reflect on your decision-making styles and contrast with other styles to determine the respective levels of rationality and intuition utilised

b) Compare, contrast and critically evaluate sources of data as influences for decision making in a range of business contexts

c) Examine and evaluate decision-making systems and techniques to engage group decisions and analyse how these can enhance sustainable outcomes

d) Critically examine emerging tools and technologies for decision making

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Your study team: by now you should be reflecting and discussing with your study team. Your draft assignment should be ready.

MGT602-BDA-T1 2019

Learning strategy: go to learning resources in each subject module- select some readings, and videos. Note, reflect, share key learnings with your study team. Select more from within the Library Business databases, https://library.torrens.edu.au/business. Try Emerald Insight as a user-friendly site. Try also PROQUEST. MIT SLOAN MANAGEMENT REVIEW Select some relevant readings and add to your range of references. Go! You can do it!

Studiosity is your free, 24/7 online study help service.

Available via Blackboard.

Free online study help, right when you need it

Feeling overwhelmed, stuck on a study question or not sure where to even start with an assignment?

Studiosity is study help, anywhere.

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MGT602-BDA T1 2019 Free study help, anywhere

Avvailable for higher education, nursing, and Blue Mountains students via Blackboard.

Studiosity has two services:

1. Writing Feedback: Students upload their assessment draft for feedback on their writing – structure, grammar, language, and APA 6th Edition referencing conventions. This service is available 24/7 with feedback usually returned to students within 24 hours.

2. Connect Live: Studiosity Subject Specialists are on-demand for students’ academic literacy enquiries, with a one-to-one chat and live whiteboard connection 3pm – midnight, Sunday to Friday. Please note that any questions regarding course specific content will be referred back to the Learning Facilitator.

Please note that students have ten free interactions with Studiosity each trimester, in any combination. This for example can be 5 Writing Feedback and 5 Connect Live interactions or 10 Writing Feedback and 0 Connect Live interactions.

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Studiosity is now up and running for 2019

MGT602-BDA-T1 2019

Writing Feedback: Studiosity

For when you want to say: “Here’s my file, I’ll just come back later.”

This option in Studiosity offers constructive writing feedback, usually in less than 24 hours. Upload your written draft any time, 24/7 and an English subject specialist will send it back to you with comments, suggestions and encouragement for how you can improve your own work.

“The feedback provided was really helpful and clear. All of the feedback given will put me on the right track to improve my essay. Wonderful service!” - First year university student, 2018

Connect Live

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MGT602-T1-2019

For when you’re thinking: “I need help right now!”

This option offers one-to-one, personal help in real time. Friendly Subject Specialists are available afternoons and evenings, Sunday to Friday, to help you with tricky study questions in maths, stats, English, assignment research, referencing and more.

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Assessment

MGT602-BDA T1 2019

Assessment 1: due week 4, Friday 22 March before midnight –penalty for late submission applies from 9.00am Monday 25 March

• 1,000 words individual reflective report- structure with headings

• Word count does not include list of contents; executive summary, references, appendices, tables, graphs (for all work)

• WEIGHTING: 20% X/20

• FEEDBACK FROM YOUR CLASSMATES: • Discuss, summarise in a table- this will not be

included in your word count. You do need to write your reflection about insights from the feedback within the main part of your report.

1. Rational decision-making model - claims of objective analysis; cause-effect

See Gallagher (2014). Rational Decision-Making Model. YouTube. 2 mins. Retrieved

from https://www.youtube.com/watch?v=zqaFoZcMoKg

Linear programming, choice modelling, choice analytics, predictive analytics, econometric modelling, distribution system

optimisation. May not be useful where hard data are lacking or are highly ambiguous

2. Bounded rationality model -limited information (data input), time, capacity- ‘satisficing’ decisions

See Economics is Everywhere. (2016). Bounded Rationality. YouTube.3 mins. Retrieved from

https://www.youtube.com/watch?v=BebxSRBxQDw

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MODULE 2: Decision-making models (week 3)

MGT602-BDA T1 2019

3. Thinking Fast- thinking slow model

(System 1- System 2- Kahneman, 2013) Thinking Fast vs Thinking Slow. Retrieved from

https://www.youtube.com/watch?v=PirFrDVRBo4

The discussion takes account of experience-based intuition and the rational or slower mode and adopts a balanced

view of use of the two modes of information processing, System One, considered fast and automatic and System Two,

requiring greater effort in being more analytical and therefore slower.

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MODULE 2: Decision-making models (week 3)

MGT602-BDA T1 2019

McGregor, Jenna, 2019, 3 March. Nobel Prize-winning psychologist to CEOs: Don’t be so quick to go with your gut. Retrieved from

https://www.washingtonpost.com/business/2019/03/04/nobel-prize-winning-psychologist- ceos-dont-be-so-quick-go-with-your-gut/?noredirect=on&utm_term=.69dc06d0cc64

In this article, if you click on paper or article, you can see the abstract:

Kahneman, D., Lovallo, D., & Sibony, O. (2019, 4 March). A structured approach to strategic decisions. Research Feature, MIT Sloan Management Review, Spring.

Thanks to Brian- well spotted!

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Hot off the press: new article from Daniel Kahneman and others

MGT602-BDA-T1 2019

Via Laureate library link

https://search-proquest-com.ezproxy.laureate.net.au/publication/26142.

However, the Spring 2019 edition is not available yet.

You can find lots of articles related to Daniel Kahneman- written by him, or citing his work.

You can also find other relevant articles for assessment 2, such as:

Hogarth, R.M. & Soyer, E. (2015, Winter). Using simulated experience to make sense of big data. MIT Sloan Management Review 56(2),49-54.

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Check the library: You can access MIT Sloan Management Review

MGT602-BDA-T1 2019

• What are heuristics? • What is bias? See Mike Pinder’s poster on types of cognitive bias from • https://www.boardofinnovation.com/blog/16-cognitive-biases-that-kill-

innovative-thinking/ • You may want to access some of the references listed at the end of this article. • System 1 and System 2 thinking; fast and slow thinking (Daniel Kahneman) • What are blind spots? What blind spots might you have? Discuss in your

team.

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WEEK 3: GO TO MODULE 4 BIAS

MGT602-BDA T1 2019

Bandwagon

Self-serving

Strategic misrepresentation

Pro-innovation

Optimism

Feature positive effect

Status quo

Anchoring

False causality. Can you refer to at least 3 of these in your assessment1?

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COGNITIVE BIAS (see poster)

Ambiguity

Confirmation

Authority

Action

Loss aversion

Conformity

Framing

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READ: Akinici, C., & Sadler-Smith, E. (2012). Intuition in Management Research: A historical Review. International Journal of

Management Review, 14, 1-54. Esp. pp.6-9; 16-23; 24-32; 33-48.

4. Dual processing model –flexibility, balanced, practical. Neurological research confirms two forms of intuition at work:

One emotion –based; the other learned experience-based

See: A brief comparison of two forms of analysis: Logic and intuition. Adapted from Dhami, M.K & Thomson, M.E. (2012). On

the relevance of cognitive continuum theory and quasi rationality for understanding management judgement and decision

making. European Management Journal, 30, 316-326.

5. Recognition Primed Decision Model (RPD) – naturalistic; crisis situations; real world; high quality matched to task

(Gary Klein)

Lootok. (2017). Recognition Primed Decision Model-Gary Klein and Fresh Perspectives. YouTube. 9 mins. Retrieved

from https://www.youtube.com/watch?v=_BIMU8zPcrM

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MODULE 2: Decision-making models (week 4) MGT602-BDA T1 2019

Logical-Intuitive Continuum of Decision Making

Logic Intuitive

LOGIC INTUITIVE

Awareness of Cognitive Activity

High Low

Metaphors Verbal, Quantitative Pictorial; qualitative

Speed of Cognitive Processing

Slow High

Confidence in Judgements:

High Low

• 6. Neuromythology right brain-left brain Metaphor (Sperry) Roger Sperry was awarded Nobel Prize for

Physiology & Medicine in 1981 for work on split-brain research and functions of brain hemispheres.Left-

analytical-Right-intuitive. Now contested.

• NOTE: In your assessment 1, have you made mention of decision-making models?

• If so, which ones? Check the marking rubrics.

• How about decision-making tools? Show evidence of application of a DM tool, eg scenario planning; cost-

benefit (-/+) analysis (even if you did not use this in your big decision, does the application of the tool

confirm your decision. Or suggest you should have done something different?

• You should have your draft assignment prepared. Make use of Studiosity/ on-line Academic Skills

Facilitator (Caroline is not available weeks 4-5)

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MODULE 2: Decision-making models (week 4)

PMGT602-BDA-T1 2019

Decision Theory/Model Development-Timelines

Timelines Authors Decision Theories/ Decision Models 1940-1960 Simon, H. (1955) Bounded Rationality

1961-1980 Kahneman, D. & Tversky, A . (1973)

Hammond , K. (1978)

Biases and Heuristics: Behavioural Decision Theory Cognitive Continuum Theory

1981-1990 Klein, G. and colleagues Naturalistic Decision Making (NDM)

1991-2000 Stanovich, K. & West, R. (2000)

Klein, G.(2003)

Gigerenzer, G.(2001)

System One –System Two Processing

Recognition Primed Decision Model (RPD)

Fast and Frugal Processing 2001-2010 Hodgkinson, G. & Sadler-Smith, E. (2003)

Kahneman, D. and Klein, G. (2009)

Dual Model of Cognitive Styles

Intuitive Expertise

Adapted from: Akinici, C., & Sadler-Smith, E. (2012). Intuition in Management Research: A historical review. International Journal of Management

Review, 14, 104-122.

Study team Discussion and Revision Review readings and videos covered in Module 2; + Module 4 bias, heuristics, blind spots Discuss relevance and importance of reflection and, getting-giving feedback on learning and personal development Action plan: Apply at least two decision models Spend some time on personal study management Discuss: How to prepare an argument, with special attention to logical coherence; sentence and paragraph structure Discuss: Importance of academic integrity in own research, working with others

EXPECTATIONS: Turn up, tune it, commit – learn with, and from, each other PLAY: participate, listen, act, ask ‘why?’

MGT602 T1 2019