Scientific Learning Fosters Strategic Decision-Making Skills

Permission to Use D.S.

Socio-scientific answers are rarely specific enough to concrete. The complexity of making determinations in this field helps in highlighting which methods of strategic decision-making people are using. Research by Eggert & Bogeholz delves into the complex processes students use to make socio-scientific decisions based upon competing information and ambiguous direction (2010). Their results show that scientific thinking improves complexity of thought and strategy making.

The process of making decisions that border between scientific research and sociological concepts is difficult. In scientific research it is necessary to answer ambiguous and specific questions like the potential societal benefits of research or the exact measurements used in instrumentation. It is hard for people to make cognitive models that can handle such widely dispersed information effectively. 

Understanding science requires the ability to look at data, be open to new data, and understand its implications on people. It is a higher skill set that not everyone can develop and those who do have spend years learning. It uses analytical thinking, creativity, systematic approaches, and sociological perspectives all meshed together to come to conclusions. 

 Science can enhance skills in argumentation, decision-making, and problem-solving.  Strategy can be developed when people learn about trade-offs which is seen as the ability to weigh and balance certain factors. Where a loss occurs in one set of options there can be gain in another set of options. Most people are limited to only a few factors and simply cut off the rest. As intelligence and knowledge increases more factors can be incorporated into the systematic thinking process without having to automatically limit oneself to a few simple possibilities.

In science it is possible to make decisions on key pieces of data. Each one has their own weight of influence. To come to better conclusions a level of meta-reflection on the decision making process is necessary to ensure that thinking patterns are appropriate and not biasing the outcome. To do this well requires the integration of multiple pieces of information, seeing how they interact, determining trade-offs of different factors, and reflecting on the whole process. 

Complexity of thinking ranges from spontaneous thinking with no reflection to high levels of tradeoffs with meta-reflection. Intermediate thinkers use both cut offs and tradeoffs with some level of reflection on the thinking process. The highest level scientific thinkers use tradeoffs with relative weighting to think through possibilities.  The far majority of people use cut-offs because it is easier to work with limited data.

The researchers Eggert & Bogeholz used the Rasch partial credit model to determine the competencies German science students were using to make decisions. A total of 436 students were engaged within the study and assessed based upon their decision-making skills. Their work helps highlight that even with a scientific education the skill can be increased but is not developed by everyone. 

The results showed that science education raised non-compensatory decision-making strategies to mixed strategies and then to tradeoff strategies as people developed. Participants had difficulty weighing many different criteria to make appropriate decisions. Meta-reflection changed thinking from a content specific analysis to a strategic analysis that is based on an analysis of multiple options. 

The majority of participants used the cut off method that focused on looking at a single or few aspects of the overall problem. They had difficulty weighing and balancing a greater amount of information, points, and criteria to get a more concrete picture. Yet as a person’s education rises from six to twelve years their ability to manage more pieces of information grew tremendously. 

The cognitive structure and complexity of thought are important aspects of making decisions and developing a strategy. It is a skill that increases as one spends more time in school or learning about science. Generally, the more one is capable of balancing multiple pieces of information the more able they are to build progressive strategies that achieve goals. Seeing information through varying possibilities and weighing and balancing the likelihood of each outcome is a higher order skill. Quickly discarding options without thorough analysis limits how well one can respond to environmental challenges. The report helps to show how leaders decision-making ability can be enhanced by focusing on evidence based strategic management and then reflecting on those decisions to ensure they are accurate. 

Effert, S. & Bogeholz, S. (2010). Student’s use of decision-making strategies with regard to socioscientific issues: an application of Rasch partial credit model. Science Education, 94 (2)

The Development of Strategy in Small and Medium Organizations

Strategy formation may be one of the most important aspects of managing a company. Without a proper strategy the ship bounces around the sea in hopes of finding fruitful land. How that strategy is formed is often a difficult question to answer. Research by Pop and Borza, (2013) helps to determine how strategy works within small and medium organizations (SME). This helps further solidify the concept that strategy is based   upon the environment and resources available that help to make companies more competitive.

In developing strategic decisions it is important for managers to interpret the signals coming from the internal and external environment appropriately. Doing so creates an opportunity to formulate strategies not only for their daily operations but also for long term corporate interests. It is this strategy that will act as a guide to regeneration and renewal that leads to corporate achievement. 

Successful strategies are developed, implemented and then re-evaluated. Companies that are static and unable to change are the ones that will eventually suffer economic decline.  Renewing products, procedures, marketing campaigns, distribution methods, financial resources, and human capital components are just some of the overall process that should be revisited and improved on a continual basis. 

To help determine how strategy is evaluated, formulated and implemented at Romanian SMEs the researchers conducted a number of case studies. They utilized five companies and formulated their approaches into concepts such as the definition of strategy, implementation, development, references, evaluation, and information in the strategic process.  The study helps highlight the process of strategic development as well as the thought processes that are applied. 

Understanding the environment and moving through a systematic evaluation of strengths and weaknesses was beneficial. The process of environmental and competitive understanding was seen as “keeping an eye on the market”. The decision makers used exact data to make their strategies but maintained a level of flexibility to mitigate risk. They adjusted their strategy when the market called for it. 

When companies were developing the mission and the management team’s personal values were extremely important in developing appropriate statements and policies. Missions and processes have changed overtime making strategy a fluid endeavor. There wasn’t a specific point at which the companies made changes but they did so based upon their understanding of their environment. 

When change was needed it was typically the manager or the executive that made the decision. They focused on changing processes in order to adjust the internal workings of the organization to the newly adopted strategies. At times these changes created a positive or negative chain reaction throughout an organization. When these changes were dysfunctional they changed the strategy or processes again. 

Since many new companies within their market went bankrupt the managers tried to maintain an entrepreneurial stance and use strategy to ensure they are meeting their longer term objectives. This included trying new products and services when they create an opportunity. Yet despite their interest, the new opportunities needed to fit within their strategic needs to be considered relevant. 

Each company used their own specific approaches to formulating a strategy. The report doesn’t go into these concepts in depth but it is possible to see some trends that include 1.) understanding environmental needs, 2.) understanding internal resources, 3.) developing the strategy, 4.) changing processes to match the strategy, 5.) being open to new opportunities within the strategy and, 6.) changing the strategy when the market changes.  As such, strategy is a constant fluid evaluation of one’s internal and environmental factors. It is a process of seeing the trends and meeting those trends in ways that maximize financial growth and organizational sustainability. 

Pop, Z. & Borza, A. (2013). Summarizing the crucial steps of the strategic management process through the eyes of Romanian managers of SMES. Review of Economic Studies & Research Virgil Madgearu, 6 (1).

The Strategy of Level-K Decisions-Outside Bounded Rationality

Art Dr. Murad Abel

Reviewing a number of game theory results the authors Crawford, Costa-Gomes, and Iriberri (2013) discuss why people often deviate systematically from equilibrium in game theory. By understanding why some choices appear irrational (level-k) it is possible to better determine under what circumstances such behavior is prevalent. Their paper reviews and analyzes a large swath of game theory results to make some conclusions. 

Strategic thinking is a natural part of everyone’s life and influences everything from school choice to business decisions. In game theory each person seeks to maximize their payoffs based upon predicting the choices of others by assuming the rationality of the other players. This is called bounded rationality as all players work under the same assumptions. 

There is also something called level-k responses. It is an assumption that all players actions will improve in an attempt to take the dominant stance that eventually leads to equilibrium. A level-k response would indicate that a person is making decisions outside of shared understandings of “rational” choice. This indicates the person’s cognitive model and assumptions of the game may be different than other players. 

Because there is a lack of information when a game starts, some players recognize this ambiguity and avoid dominant positions that often fit within the equilibrium model. Each person responds to the game with a personality type that impacts the types of decisions they make. It is their personal beliefs that help them develop a strategy for dealing with the components of a game and choosing certain patterns. 

Equilibrium is seen as rationality with a common belief among players. The more evidence a person obtains from the game the more accurate and rational their decisions. Players often make larger and wilder maneuvers in the beginning of a game and then move to define choices toward the later part of the game as they begin to understand the rules. 

Using a concept called level-k models it is possible to see how certain behaviors move away from equilibrium choices and under what circumstances such behavior can be expected. Many poor decisions may be made from a lack of time, information, or cognitive deficiencies.  Yet it is possible to find that level-k decision-making may have some advantages in resolving games and conflict. 

In a level–k decision it is believed that the player is making decisions regardless of the other players within the game. Level-1 players have higher cognitive hierarchies than Level-0 players and believe others are playing at a lower level. So and so forth up the chain of complexity. Higher level thinkers (i.e. L3 players) may come to the conclusion that the game takes into account many different levels of strategic thinkers and their actions are based upon the aspects of their complex environment.

Expanding on the concepts within the paper it is important to make a distinction between irrational behavior and perceived irrational behavior. In small games with clearly defined rules the rational choices are obvious. In larger games without restrictions, what is seen by one as irrational choice may yet be the most rational choice. These choices may depend on objective, environmental testing behavior, countering limited thinking of other players, or even drawing in the behavior of other players. 

Strategic thinking is important as organizations seek to move from local to global marketplaces where the environment has many more options and choices. The perception of rationality is based upon the abilities of those who are doing the judging and their ability to understand the environment or the behavior.  As cognitive complexity rises so does the ability of individuals to make choices where the strategic purpose of the decisions are not immediately apparent to lower level thinkers. This could be an advantage in and of itself.

Crawford, V., et. al. (2013) Structural models of nonequilibrium strategic thinking: theory, evidence and applications. Journal of Economic Literature, 51 (1).

Book Review: Business Strategy by Jeremy Kourdi

The book Business Strategy-A Guide to Taking Your Business Forward by Jeremy Kourdi offers insight into understanding, developing and implementing strategy.  Each of these aspects is important for overcoming market difficulties that challenge and create difficulties for businesses. It is the ability of leaders to develop strategy and then implement that strategy in ways that are more likely to raise the success of an organization. 

The author provides a definition of strategy as it, “…is the plans, choices and decisions used to guide a company to greater profitability and success”. Strong strategies create higher levels of outputs while poor strategies often fail in their ability to meet defined goals. Such strategies should be well thought out and the alternatives should be weighed.

Henri Fayol, who established the classical school of management around 1910, developed some general management activities that fit within five sections: planning, organizing, commanding, co-coordinating and controlling:

-Planning: Understanding the organization and developing plans of action that leads to a stronger future.

-Organizing: Organizing includes the pulling together of resources to make the plan successful. 

-Commanding: Commanding can be seen as leading people through giving them appropriate direction to make the plan work. Leaders can make things happen.

-Coordinating: Coordinating involves ensuring that all people efforts, factors, and resources are put together in the most beneficial manner. 

-Controlling: Controlling entails ensuring that the process is moving along properly and is adjusted when necessary. It is possible to use feedback mechanisms, re-evaluation of strategy and other aspects in this area.

The book also discusses strategic innovation. According to the Talent foundation there are five catalysts for strategic innovation that include the following:

-Consciousness: Everyone knows the strategy and believes they can follow it. 

-Multiplicity: Groups have a wide varied of skills, backgrounds, experiences, and ideas.

-Connectivity: People have positive trusting relationships with each other. 

-Accessibility: People have access to each other and the resources they need to make their parts successful.

-Consistency:  There is a strong commitment to innovation regardless of the situation.

The book not only provides strong consideration of strategy and innovation but also provides a number of case examples for readers visualize this information. Business students and managers would find the book beneficial for their understanding. It can be a touch dry in its reading but that is what business books are by their nature. The author provides a number of references for those who are interested in additional information. 

Kourdi, J. (2009). Business strategy-a guide to taking your business forward. London, UK: Profile Books LTD. ISBN: 978 1 84668 124 0

Price: $22.00

Pages: 233

You purchase the book HERE