1. Learning and decision making
Dynamics of Organizational Behavior
Virginia Tech MBA Program
Andrew Watson

2. Agenda Learning and Creativity: Ch. 5 Decision Making: Handout Break
Including Learning Organization
Decision Making: Handout
Break
Decision Making: Ch. 15
Looking ahead

3. Learning Defined as: Are universities good places to learn?
relatively permanent change in knowledge or behavior
that results from practice or experience
Are universities good places to learn?
Based on above (textbook) definition
Perhaps we should get more specific:
Undergrad vs. grad?
Virginia Tech?
This program?
This course?

4. Learning Through Consequences
Encourage behaviors using reinforcement
Positive
Negative
Not to be confused with punishment
Schedule: continuous or partial?
Often depends on organizational reality, rather than on learning theory
Discourage behaviors using
Extinction
Punishment

5. Debate About Using Consequences
It sounds like what Taylor called “Scientific Management”
Isn’t that demeaning to workers?
Not if it helps them perform better and earn more
Isn’t this what B.F. Skinner did with rats?
In a way, yes: it is a sort of operant conditioning
But let’s call it OB MOD
which has improved performance in many organizational settings
It sounds rather controlling…

6. Learning… From others On your own By doing
Social learning theory (Bandura), aka social cognitive theory
Cognitive processes process information from the social environment
Vicarious learning: watching another person
On your own
Self-control, self-reinforcers, self-efficacy
By doing
Experiential learning
Simulations

7. Creativity Generation of useful and novel ideas (text definition)
Call it Invention, and it’ll be the first of three “I” words
Others are Innovation and Imitation
The Person/Employee
Openness to experience
The Situation/Workplace
Autonomy
Feedback, encouragement, reward…

8. The Learning Organization
Members of a learning organization:
Have the knowledge necessary to do their jobs
Are motivated to add to this knowledge, i.e. to learn
Know how to learn
Peter Senge identified five “disciplines” of such orgs
Personal mastery
Complex mental models, or schemas
Team learning
Shared vision
Systems thinking

9. Tacit Knowledge Two kinds of knowledge
Explicit: can be documented
Tacit: harder to capture
Tacit knowledge presents a learning challenge
G&J discuss tacit knowledge in Ch. 10 (Groups and Teams)
Learn by working with others who already possess valuable tacit knowledge

10. Decision Making Exercises in Decision Making
Do exercises from this first section of handout
Go on to next section if you have time
Thinking Fast and Slow (Kahneman, 2011)
Source of exercises
And of the rest of the handout
Also a source for the next slide

11. Expected Utility Theory
Still “the most important theory in the social sciences”
Decide based on answers to questions
What options to I have?
For each option, what outcomes are possible?
For each outcome:
What’s the utility to me?
What’s the probability?
Similar to expectancy theory of motivation
“Economists adopted expected utility theory in a dual role:
as a logic that prescribes how decisions should be made,
and as a description of how Econs make choices.”
Kahneman rejects the theory as a description of how Humans make choices

12. Decision Making: Ch. 15
GJ definition: process by which members or an organization choose a course of action to respond to:
Opportunities: choice likely to result in gain
Problems/threats: choice may not result in gain, since goal attainment is threatened
Ethical decisions: GJ again (p. 440):
“promote well-being and do not cause harm”
“sometimes it is difficult to determine the boundary between ethical and unethical decisions in an organization”

13. Programmed vs. Nonprogrammed
Some organizational issues are routine or recurring
e.g., stock running low, need to hire new engineer
Can develop a performance program (or standard operating procedure) for such issues
And execute it when the issue arises
Hence: programmed decisions
Other issues are new or novel
e.g., opportunity to expand into new market
Involve search for new information
No existing program to execute
Hence: nonprogrammed decisions

14. More on Decision Programs
If similar nonprogrammed decisions are made in similar ways, programs may emerge
True in organizations, and groups, and individuals?
If so, it sounds like a fractal
a shape that, when you look at a small part of it, has a similar… appearance to the full shape
Quote from fractalus.com/info/layman
Which includes an example

15. Classical Model of Decision Making
Prescriptive: how people should make decisions
Assumes that Decision makers:
Have access to all relevant information
Make optimal decision
In OB today, this model is a “straw man”
i.e. built to be demolished
In reality, decision makers often not know:
All relevant information
And getting new information often has a cost
All possible alternatives
Let alone the outcome of each alternative
Own preferences

16. Administrative Model Descriptive: how people actually make decisions?
Due to Herbert Simon and colleagues
Bounded rationality
Limited ability to process information
Even if all relevant information available
Satisficing
Choose acceptable, rather than optimal, decision
May actually be optimal when considering costs of searching for and processing information

17. Heuristics: Sources of Error and Speed
Heuristic: “rule of thumb” used in decision making
Faster to use heuristics than to process all information
Experts often use heuristics
But a real expert uses the right heuristics
Consider some heuristics, and errors associated with them
Availability
Representativeness: ignoring base rate
Anchoring and adjustment

18. Escalation of Commitment
A prior decision is consuming resources without producing hoped-for outcomes
Current decision: expend more resources in support of the original decision?
May well get escalation of commitment
Current decision: Yes
Why?
Don’t want to admit mistake (if it really was a mistake)
Want to win back the losses
Effect of negative frame
Description of how many decisions are made
Prescription: ignore sunk costs

19. Group Decision Making Advantages Disadvantages Other consequences
Diverse skills and knowledge
Error detection
Decision acceptance
Disadvantages
Time
Potential for groupthink
Other consequences
Diffusion of responsibility
Polarization: groups tend to make more extreme decisions than individuals
Availability of techniques such as brainstorming

20. Looking Ahead Feedback Next week On Paper 1 tomorrow
On Exam 1 by 8am on Sunday …
Next week
Exam 2
Bring laptop