Cognitive Antecedents of Effective Decision-Making: An exploration Dr. Allard van Riel Université de Liège

Introduction: the problem Decision-making in marketing & innovation is challenging Decision-making in marketing & innovation is challenging Selection of new product proposals Selection of new product proposals New product development New product development Entering knowledge alliances Entering knowledge alliances Marketing strategy Marketing strategy Launch / distribution Launch / distribution

Challenges Rapid technological developments Rapid technological developments Unpredictable market trends Unpredictable market trends More demanding consumers More demanding consumers New distribution channels New distribution channels Rapid change in competitive environment Rapid change in competitive environment Mergers and acquisitions Mergers and acquisitions Alliances Alliances Rapid organizational change Rapid organizational change Reengineering Reengineering

Major consequences Decision task suffers from: Decision task suffers from: Time pressure Time pressure Complexity Complexity Ambiguity Ambiguity Uncertainty Uncertainty

Research questions How do decision-makers make decisions under these extreme circumstances? How do decision-makers make decisions under these extreme circumstances? Is their performance related to the decision style they use? Is their performance related to the decision style they use? Rational style? Rational style? Intuitive style? Intuitive style? Neither? Neither? A combination? A combination?

Exploratory research design Objectives Objectives Review what is known about relationships between task attributes, decision style and decision-making performance, summarize them in a model. Review what is known about relationships between task attributes, decision style and decision-making performance, summarize them in a model. Method: Literature review Method: Literature review Interdisciplinary Interdisciplinary Psychology Psychology Neurology Neurology Management decision-making Management decision-making Intuition Intuition Anecdotal accounts Anecdotal accounts

Decision-making performance Effective decisions Effective decisions Leading to desired process outcome Leading to desired process outcome Fast Fast Efficient use of resources Efficient use of resources Minimizing chances of process failure Minimizing chances of process failure Maximizing chances of process success Maximizing chances of process success

Theory 1 (about decision style – task adaptation) Theory: Theory: Decision style is adapted to conditions encountered in task environment Decision style is adapted to conditions encountered in task environment Best decision-making performance when best adapted to task conditions Best decision-making performance when best adapted to task conditions

Theory 2 (the relationship between decision styles) Decision styles are considered to exist on a one-dimensional continuum Decision styles are considered to exist on a one-dimensional continuum One extreme: perfectly rational One extreme: perfectly rational Other extreme: entirely intuitive Other extreme: entirely intuitive Center: mixed style Center: mixed style

General problems & contradictions Existing theories Existing theories Do not give a plausible and complete explanation of anecdotal evidence (use of intuition in decision-making) Do not give a plausible and complete explanation of anecdotal evidence (use of intuition in decision-making) Do not help to solve conceptual confusions between intuition, common sense and heuristics Do not help to solve conceptual confusions between intuition, common sense and heuristics Conceptual confusion between intuitive/rational decision styles, cognitive systems and personality traits Conceptual confusion between intuitive/rational decision styles, cognitive systems and personality traits

Specific problems ● Do not help to explain decision style adaptation to environments and task conditions varying in multiple dimensions: ● Ambiguity ● Uncertainty ● Rapid change ● Information (lack/overload)

Solution Posit the existence of two independent cognitive systems that can be used in combination, each to a different extent depending on task characteristics Posit the existence of two independent cognitive systems that can be used in combination, each to a different extent depending on task characteristics

Old cognitive style model Shanteau (1992) Shanteau (1992) Intuitive rational semi-rational

Proposed cognitive style model more rational less rational less intuition more intuition Heuristics Rational Intuitive Active sensemaking

Advantages of new model Allows independent variation of use of two cognitive systems Allows independent variation of use of two cognitive systems Better potential explanation of adaptation to multiple dimensions of complex environments Better potential explanation of adaptation to multiple dimensions of complex environments Ambiguity Ambiguity Uncertainty Uncertainty Dynamics Dynamics Information shortage/overload Information shortage/overload

Simulation of the new model

Remaining issues Research into the different task conditions Research into the different task conditions Empirical validation of the model Empirical validation of the model Generalization Generalization......