1. The Art and Science of Decision-Making February 10, 2014 Robert S. Duboff Robert.Duboff@hawkpartners.com 617-576-4701

2. 2 Course Slides Week 1  Introduction of individual students and their reasons for taking the course o Finalize syllabus as/if needed  Organization of course: address specific issues each week  Is decision-making primarily rational or emotional?  Attributes of a “good decision” Assignment: Short essay on whether study of decision-making is an art or a science View Super Bowl Ads Week 2 – Perspectives on Decision-Making  Is the study of decision-making more an art or science?  Discuss the noteworthy Super Bowl ads o Implications about how consumers make decisions Assignment: Take MBTI The Art and Science of Decision-Making – Spring 2014 – MGMT-5750

3. 3 Course Slides Week 3 – Individual Differences  Contexts for thinking about decisions o Rational vs. emotional o Prospective vs. retrospective o Individual vs. group decisions o Advising vs. making decisions o Personal vs. business vs. government contexts  Discuss MBTI and implications on decision-making  How can understanding personal differences help in explaining decisions? Assignment: Read Blink by Gladwell (Chapters 1-4; Conclusion) Week 4 – Self-Awareness  Discuss Blink and implications for decision-making  Does self-awareness help or hurt decision-making?  How does knowing yourself help in making decisions about moving or a career change; about leading a team? Assignment: Select essay topic Read Thinking, Fast and Slow by Kahneman (Chapters 1-4, 10-13, 19-21, 27)

4. 4 Course Slides Week 5 – What Impacts Decisions – When and How to Make  Timing of decisions (and how to influence)  What does science (in terms of type 1 and type 2 delineation) tell us about making decisions? Assignment: Essay due applying MBTI and reading to a past decision Read Deciding How to Decide, HBS, Nov. 2013 (from web site) Week 6 – The Scientific Approach  Decision trees  Reprise – is decision-making art or science?  Process vs. the decision itself Assignment: Read legal case from course web site Week 7 – Individual vs. Group Decisions  When are group decisions better/worse than individual decisions? o In business o In families  Are juries rational or emotional? Voters? Assignment: Decide on an advocacy role

5. 5 Course Slides Week 8 – Influencing Decisions  Students present their arguments for what they advocate  Role of influencer(s) o Art or science? Assignment: Write a short paper on takeaways from the advocacies Week 9 – Decision-Making Debrief and Decision-Making Process  What have we learned about decisions? o Best process(es) o Use of group (or not) o Role of information/ “facts”  What are the right metrics for decisions? Assignment: Select final paper topic (3-5 pages) Read Competing on Analytics and The Ultimate Measure (from web site)

6. 6 Course Slides Week 10 – Supporting Decisions  Developing the information you/someone else needs  Market research  How to make decisions with imperfect knowledge o “Big data” vs. “insights”  How should we measure/post-audit decisions? Assignment: Select final paper topic Week 11 – Positioning and Communicating Decisions  The importance of words  The impact of implementation on how the decision is viewed Assignment: Read Complexity Theory and Negotiation, HBS, June 2002 (from web site) Week 12 – Negotiation  Negotiation within a as well as between parties  Are explicit negotiation agreements (e.g., arbitration) a good model for all decisions? Assignment: Complete final paper Read Being Wrong by Schulz: Chapters 1-3, 13-15

7. 7 Course Slides Week 13 – The Decision-Making Process  What have we learned about decisions? o Best process(es) o Use of group (or not) o Role of information/ “facts”  How do you ensure there is learning; improving one’s decision-making? Assignment: Complete final paper on a decision to be made in the future Week 14 – How Can We Make the Process and Substance of Decisions Better?  Summary of course  Is decision-making a puzzle or a mystery?

8. 8 Issues to Discuss  Art or science o Process vs. the moment of truth  For your consideration o Replicability; predictability o The role of risk o The role of facts

9. 9 Quotes “Artists take as central what scientists (and the rest of us) usually sideline as much as we can: that reality as we know it is inevitably askew, refracted through an individual and idiosyncratic mind.” - Kathryn Schultz, Being Wrong “We all know that Art is not truth. Art is a lie that makes us real.” - Picasso “Advertising is fundamentally persuasion and persuasion happens to be not a science, but an art.” - Bill Bernbach “Advertising is based on fixed principles and is reasonably exact. We know what is most effective and we act on basic laws.” - Claude Hopkins

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11. MBTI: Understanding Communications Preferences in Yourself and Others

12. 12 Common Uses of the Myers-Briggs Type Indicator Understand self Explore implications for communication –Understand that others are different from you –Understand others’ preferences and how to speak their “language” There are several important uses for MBTI theory:

13. 13 It is important to remember what MBTI theory is and what it is not A theory describing observable personality distinctions A measure of individuals’ preferences in communication A framework to explain some aspects of perception and decision- making What It Is Based on actual empirical data or “provable” experiments A statement about who someone is or even how they commonly act An all-encompassing explanation of personality, thought process, and individual psychology What It Is Not

14. 14 Cognitive Functions & Functional Development S, N, T, and F are called the cognitive functions in MBTI theory. Humans use all 4 cognitive functions, but naturally we develop the ones that we prefer first. Test-Retest Reliability: 9 mos Same on 1 or more~100% 99% Same on 2 or more 98% 94% Same on 3 or more 87% 72% Same on all 4 51% 36% 9 mos E-I 82% 75% S-N 87% 76% T-F 82% 75% J-P 83% 77%

15. 15 The Four Scales E Extravert I Introvert Where do you get energy? S SensingIntuition How do you take in information? N T Thinking F Feeling How do you make decisions? JudgingPerceiving How do you deal with the outside world? J P

16. 16 Extraversion vs. Introversion Learn best through doing or discussing Characteristics: Focused on outer world of people and external events Prefer to communicate by talking Tend to speak first, reflect later Sociable and expressive Learn best by reflection Characteristics: Drawn to their inner world of ideas and thoughts Prefer to communicate in writing Tend to reflect before acting or speaking Private and reserved Where do you get energy? EI ExtravertIntrovert

17. 17 Extraverts/Introverts within the U.S. Population 49% 51% Extraverts Introverts Source: Center for Applications of Psychological Type (capt.org) Men:48% E52% I Women:50% E50% I Class ‘13:62.5% E37.5% I This Class:61% E39% I

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19. 19 Sensing and Intuition Take in information through five senses Focus on what is real and concrete Value practical applications, common sense Want information step-by-step Trust experience and facts over gut instinct Use details to build up a big picture Oriented to the present Take in information through “sixth sense” Focus on possibilities Value innovation and imaginative insight Jump around, leap in anywhere Trust inspiration, “gut feel” Start big picture, don’t want details Oriented to the future Characteristics: Sensing N Intuition How do you take in information? S

20. 20 Sensors/Intuitives within the U.S. Population 30% 70% Intuitives Sensors Source: Center for Applications of Psychological Type (capt.org) Men:68% S32% N Women:72% S28% N Class ‘13:52% S48% N This Class:25% S75% N

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22. 22 Thinking and Feeling Use cause-and-effect reasoning Focus on content and analysis Look for outcome that “makes sense” Strive for impersonal, objective truth Reasonable Can sometimes be too critical Guided by values and feelings Focus on affect and emotions Look for outcome that “feels right” Strive for personal harmony Compassionate Can sometimes be illogical Characteristics: T Thinking F Feeling How do you make decisions?

23. 23 Thinkers/Feelers within the U.S. Population 55% 45% Thinkers Feelers Source: Center for Applications of Psychological Type (capt.org) Men:61% T39% F Women:29% T71% F Class ‘13:55% T45% F This Class:29% T71% F

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25. 25 Judging and Perceiving Systematic, organized, structured Plan – and stick to it Like closure – to have things decided Like to make lists – and want to get everything crossed off Create agendas – and stick to them On time Spontaneous, open-ended, flexible Adapt – strive for quality Like things loose and open to change Avoid lists, or at least completing everything on them Don’t always stick to agendas Casual about time Characteristics: J Judging P Perceiving How do you make decisions overall and about your time?

26. 26 Judgers and Perceivers within the U.S. Population 43% 57% Judgers Perceivers Source: Center for Applications of Psychological Type (capt.org) Men:58% J42% P Women:56% J44% P Class ‘13:68% J32% P This Class:82% J18% P

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28. 28 Each of our cognitive functions also have a preferred “attitude” Introverted Sensing (Si) reviews prior facts, instructions, and details in one’s mind Extraverted Sensing (Se) gathers facts and details from the outside world “Attitude” refers to whether a function is used in an introverted manner or in an extraverted manner. For example: Introverted Thinking (Ti) analyzes things logically before taking action Extraverted Thinking (Te) organizes things logically while taking action An ESTJ or ISTJ will typically practice Si and Te, while an ESTP or ISTP will typically practice Se and Ti.

29. 29 Tips for Communicating with… Es “Rope-a-dope” Voicemail Meetings Respond quickly Is Materials in advance Email Breaks from meetings Respect personal space

30. 30 Tips for Communicating with… NsSs Start with the headline, conclusions, big pictures Ask before giving details Use analogies Focus on possibilities Start with the data..let them play with it Exhaust all questions Be specific Focus on process

31. 31 Tips for Communicating with… TsFs Appeal to logic; “I think…” State criteria first  Include human issues as a criteria if appropriate Deal with logic, structure Appear organized Appeal to emotions  “I feel…” Focus on the human implication  Can include the need for people to think the decision is a good one Deal with values, impact on others Appear friendly

32. 32 Tips for Communicating with… JsPs Expect, respect schedules, deadlines, etc.  Come to a conclusion Provide a time for a decision to be made Set expectations for outcome Don’t (appear to) force a decision  Allow questions  Provide choices, outcomes Provide a threshold for a decision to be made Do not appear to expect a particular outcome

33. 33 The 16 Types – General Population (Class) ISTJISFJINFJINTJ Sensing Types Intuitive Types Extraverts Introverts ISTPISFPINFPINTP ESTPESFPENFPENTP ESTJESFJENFJENTJ 5% (0%) 7% (0%) 4% (7%) 5% (0%) 13% (5%) 12% (7%) 2% (11%) 3% (11%) 4% (0%) 7% (0%) 7% (11%) 3% (0%) 11% (7%) 11% (7%) 4% (28%) 2% (7%)