Recommending Books for Purchase (Bulletin 7 - January 2018) - Choice Review: Decision Making

Moldoveanu (business economics, Univ. of Toronto) and Leclerc (senior partner, McKinsey & Company) introduce business students and faculty to a personal problem-solving platform, an integrative approach toward thinking about complex problem solving as well as innovative ways of generating solutions. As the authors carefully explain, to address day-to-day challenges and create meaningful change, integrative thinking managers use intuition, reason, and imagination along with a holistic view of strategy, tactics, action, review, and evaluation to solve problems. These integrative thinking managers build complex models that include numerous critical variables: customers, competitors, capabilities, cost structures, employees, industry evolution, and regulatory environment. These models supposedly capture the complicated relationships among the critical variables in most business problems. Considering all aspects of a problem, integrative thinking managers strive to resolve tensions and turn challenges into opportunities. The authors intended this brief, 146-page text as an introduction to the integrative thinking approach to problem solving, a complex decision-making construct that demonstrates the extent to which theorists strive to integrate decision-making theory with cognitive concepts. The authors' approach may work well in theory, but unfortunately, most managers are not willing to devote the time and effort demanded by such a complex approach to solving problems.

It is a conundrum: many people struggle to understand game theory while claiming to comprehend the meaning of prisoner’s dilemma. They do not appear to understand how the prisoner’s dilemma is the best known and most original game theory application. In their course work, most undergraduates get only a sprinkling of game theory; as a result, they do not grasp its power to improve decision making. McAdams (Duke Univ. Fuqua School of Business) provides readers with a rich understanding of game theory. Like other game theory books in the marketplace, this one begins with definitions of several key terms (e.g., commitment, dominant strategy, payoff matrix). However, this work differs by also describing five distinct applications that individuals might not at first recognize as being applicable to game theory. The author dedicates a chapter to each: regulation, collusion, retaliation, trust, and leverage. In addition, McAdams includes five chapters of mini case studies that enliven the narrative with colorful characters and examples from the worlds of business, medicine, finance, military history, crime, and sports. The author provides a service by clarifying a complex economics topic for general readers.

Adopting the systems approach to management and decision-making developed in 1965 by Charles Kepner & William Tregoe in The Rational Manager; successful managers have relied on their insight and experience to guide concrete and elusive managerial issues in the knowledge economy for 30 years. Nason reinterprets these established concepts for millennial managers, who became the largest generational group in the US workforce in 2015. He differentiates between a complicated problem that consists of known factors and a complex problem that consists of known and unknown factors that are evolving simultaneously. In our knowledge economy, mangers can control, or solve, complicated issues; however, mangers must intuit or guide complex issues rather than default to trying to solve them in a purely rational manner. Successful managers develop a mindset capable of managing the unknown spontaneously. Using numerous examples, Nason clearly articulates how accurate answers to uncertain issues are solved by trusting one’s intuition, which stems from experience. Managing complexity implies a steady guidance rather than complete control. Managers who abhor ambiguity and uncertainty are incapable of managing complex issues with unknown and uncertain factors. Nason addresses critical perceptual concepts managers must adopt to function successfully in a rapid economic environment.

A call to return to reason in decision making and implementing strategy is a refreshing turn, especially in light of recent studies of the pervasive and harmful impact of impulsive, narcissistic leaders on institutions. A measured approach promoted by Rosenzweig (International Institute for Management Development, Switzerland) involves what is a bit too simplistically characterized as "left brain vs. right brain" functioning, but is more nuanced in its definition and application of a metaphor that combines critical analysis and morally courageous action by organizational leaders. With the exception of a hackneyed description of a golf swing (the literary equivalent of a secret handshake hailing his executive readership), the deconstruction of conventional decision making is incisive and reminds readers to consider the current overreliance on overconfidence, modeling, and emotion. Rosenzweig also reminds readers that an element of competition is ever-present in the current economic climate, and bold action is still necessary, drawing leaders toward behavioral decision theory as an antidote to reckless, conventional management fads. The book draws on numerous examples in order to propose a new paradigm for decision making in synch with the way people have to operate in the real world. The book includes extensive notes and recommendations for further reading.

The terms "big data," "digital dashboards," and "data analytics" are all used to describe data-driven decision making. The interpretation and resulting information gleaned from real time data is a competitive advantage for organizations. The influence of data-driven decision making spans the academic disciplines of statistics, marketing, and computer science. Danner approaches this issue from the computer science point of view, specifically software modeling as told through the lens of the scientific method. He explains the differences in data, statistical procedures, and computing methods that are used to convert data into visual media (the dashboard) that can be easily understood by non-technical decision makers.

The science and methodology underlying analytics has existed in the field of medicine for at least 20 years, but Michael Lewis's Moneyball (CH, Apr'04, 41-4733) brought this notion to the fore. Smart Decisions provides an exemplary framework and logical process for using those meaningful patterns. Martin (Univ. of Nebraska, Omaha) honed his approach, based on 18 years of teaching, to the strategic, creative decision-making process that applies to managers as well as anyone who needs to make a decision. Chapter 1 characterizes the implications of today's volatile, uncertain, complex, ambiguous business environment and then overviews each of the three decision-making components. The following five chapters probe each component—situational analysis, the decision-making process, and Martin's seven thinking elements framework. Throughout, Martin provides numerous decision-making frameworks, models, and techniques that amplify the text and provide practical examples. He also provides exhaustive chapter-by-chapter notes and a bibliography that includes contemporary and classic decision-making books. Smart Decisions is a must read and can serve as a primary or supplemental text for undergraduate and graduate strategy, analytics, decision science, and quality/organizational improvement courses. Instructors will find this book of value and interest.