A Fresh Look at Strategy

Topic: Decision Making, Judgement

Publication: Harvard Business Review (MAR 2010)

Article: Finding your strategy in the new landscape

Authors: P. Ghemawat

Reviewed By: Liz Brashier


Continents_map_sm In light of the continuing recession – an aftermath of the still recent 2008 crash – it seems appropriate to discuss corporate strategy. Companies have a lot to prepare for, rather than look forward to, in the coming decade. Some will react to weak growth and rising capital by retreating to the home market, using the word “global” to reference “economic slowdown” rather than true globalization. This reaction, however, could be a poor decision for firms that are based outside of the developed world. With low per capita incomes in developing countries, there is room for significant growth. Regardless of company location, it is imperative for managers to reevaluate strategy if they are to pursue a global strategy.

The first element of the global strategy described in Pankaj Ghemawat’s article is competition. While views on global strategies have centered around an idea of integrating markets, a shift to managing differences and adapting to local conditions is key. Resource allocation processes must change; companies cannot afford to invest in long-term payoffs on investments, and need to be more selective in making investments.

The second element is markets and products. A shift in customer targeting would allow companies to reach a broader market, and move to an economy that was previously unreached (i.e., moving a company that typically markets to the suburbs into urban areas could prove successful in expanding customer base).

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Do Optimistic Predictions Lead to Quicker Completion Times?

Topic: Goals, Job Performance, Judgment
Publication: Organizational Behavior and Human Decision Processes (JAN 2010)
Article: Finishing on time: When do predictions influence completion times?
Authors: R. Buehler, J. Peetz, and D. Griffin
Reviewed By: Benjamin Granger

Clock  Past research has shown that human beings often underestimate the amount of time necessary for task completion (“I can finish this project by...”).  This optimistic bias has been consistently demonstrated in many work-related settings and most of the research has focused on why this happens.  However, a recent series of studies by Buehler, Peetz and Griffin (2010) investigated whether optimistic prediction times have the ability to improve actual completion times and if so, for what kinds of tasks?

Buehler et al. found that optimistic completion time predictions can have a positive impact on actual completion times, but it depends largely on the type of task/project.  For instance, the effect of optimistic predictions on completion times appears to be more favorable when tasks can be completed in a single session (e.g., short computer tutorial, writing a memo) vs. when tasks require multiple steps to be completed at different time points (e.g., launching an employee engagement survey, filing a federal tax return – ugh!).  Interestingly, Buehler et al. also found that the tendency to underestimate completion times was more prevalent for tasks that require multiple sessions. 

Ultimately, Buehler et al. concluded that optimistic completion time predictions can be useful for tasks/projects that require one shot.  However, optimistic completion time predictions appear to have little power for tasks that require multiple sessions over multiple time points.  Additionally, although predictions don’t always have a positive impact on completion times, they do to have a positive influence on task/project start times.  Thus, Buehler and colleagues conclude that completion time predictions initiate action early on, but apparently lose their power over time, especially for longer tasks/projects that require many sessions or steps.

Buehler, R., Peetz, J., & Griffin, D. (2010). Finishing on time: When do predictions influence completion times? Organizational Behavior and Human Decision Processes, 111, 23-32.

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I Think, Therefore You Act

Topic:  Decision MakingJudgement
Publication:  Academy of Management Journal
ArticleCognition, capabilities, and incentives: Assessing firm response to the fiber-optic revolution.
Blogger:  Katie Bachman

I think therefore you act Well, it’s sometimes good to confirm what we already know (lucky for this article).  In this case the learning is that he (or she) who is in charge makes the rules.  Looking at CEOs from 71 communications firms, Kaplan makes a link between the interest of these CEOs in new technology, and the likelihood of putting the new technology into place. Add to that a couple of mundane (and as one I/O AT WORK reviewer commented, obvious) hypotheses that firms with experience in the new technology will be more likely to adopt it and that positive incentives are important.  

Any kid who has ever sold lemonade knows that to be successful you need a willing market and the ability to actually make lemonade (or at least know where to buy it).  The force that could keep this article from collapsing in on itself is around the interactions between CEOs and investment moderated by incentives and experience, but instead the author flopped around a little before proposing competing hypotheses.  Don’t get me wrong, I’m all for exploration, but saying that it could be a positive or negative relationship is about as useful a hypothesis as saying it might rain or it might be sunny today.  

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Watch Your Head! Ceteris Paribus is Falling!

TopicDecision MakingJudgement
Publication: Academy of Management

ArticleResolving the commitment versus flexibility tradeoff: The role of resource accumulation lags.
Blogger: Katie Bachman    

Watch your head Ceteris paribus—all else equal—is the economist’s favorite term. It covers all manner of sins because, as we know in psychology, nothing is ever equal or same or whatever.  It is the assumption of no variance and it is the mark of an economics article, which is what I have to share with you today.  When I first read the title of the article, “Resolving the Commitment Versus Flexibility Tradeoff…,” I was hoping for a spiffy little article on personality traits perhaps, or maybe managerial interventions.  Instead, I read a paper on the economic principles of uncertainty and resource accumulation.  Don’t get me wrong, as a former economics major, I was thrilled, but as a person writing for a psychology blog, I was a bit put out.  

I think the bottom line of the article applies to us psychologists anyway, so I will share what for you would be a very dull piece of research.  Through empirical data from 1979-1995, the researchers found that in any investment situation, financial in this case, if there is a little bit of lag between investment and payoff, people will be more likely to invest.  However, if the lag time becomes too great, people pull back.  Interestingly, if there is greater uncertainty about future rewards, people are willing to put up with more of a lag than when payoff is certain.  In all cases, this probability of investment/time-lag relationship is curved.  Perhaps we’re all gamblers at heart, but this article does a really nice job of explaining why people, particularly those in capital-heavy fields, invest even when the outcome is unclear.  Ceteris paribus, people like a little risk in their lives.

Pacheco-de-Almeida, G., Henderson, J. E., & Cool, K. O. (2008). Resolving the commitment versus flexibility tradeoff: The role of resource accumulation lags. Academy of Management Journal, 51(3), 517-536.

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