Transcript Document

Teams:
A Blessing or A Curse?
The Wisdom of Crowds
(James Surowiecki)
• Francis Galton and the poor Ox (1906)
– Crowd (median estimate) better at estimating
weight of slaughtered ox than separate
estimates by a number of cattle experts
• The elements of a wise crowd:
- Diversity of opinion
- Independence
- Decentralization (specialization and local
knowledge)
- Aggregation mechanism
A Terrible Group Decision
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Jan. 28 1986 Challenger Disaster
Hardware: “O” ring failure
Environmental factors:
– Operational demands from multiple users (political, commercial, military,
international and scientific communities)
– After spending billions to go to moon, Congress wanted to see financial
self-sufficiency: culture of conflict, stress, shortcuts.
Group Factors
– Thiokol engineers concerned about O ring failure at temps below 53 F
– NASA asked for a definitive recommendation given that this temp.
would not be reached for several days: “My God, do you want me to
launch next April?” Lawrence Molloy
– Thiokol went off line: asked chief engineer: “Take off engineering hat
and put on management hat”: decision was given to launch
Group Decision Making in
Shuttle Disaster
1. Thiokol had data on O ring failures but downplayed it as
goal was to stay on schedule
2. Polarization: decision to launch met with support from
group
3. Thiokol engineers wanted to live up to the norms of the
group
4. Thiokol decision to think privately created groupthink
pressures
5. Fear of public response if no launch
6. NASA dominated meetings; conflict suppressed–
agreed to cancel but only if Thiokol insisted.
Desert Exercise
• 15 minutes: Rank by yourself
• 30 minutes: Decide as a group
• 15 minutes: Discussion as a class
Desert Survival Debrief
• What processes did your team use in
coming up with the consensus decision?
• When you changed your ranking, what
factors caused you to change your
ranking?
• Did you like or resent the group?
Zimbardo on Asch Experiment
On the power of the group:
http://www.bing.com/videos/search?q=asch
+experiment&FORM=VIRE5#view=detail&m
id=3AB3CB61044FD4F74B2E3AB3CB6104
4FD4F74B2E
The Asch Effect
Standard Line Card
Comparison Lines
Card
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Asch Effect:
What are the implications of the Asch effect for managers?
– Strong social effects on what we see and do.
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How to organize meeting and debates:
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Find ways of getting people to express their views and opinions in ways that prevent those views
being swayed by perceived group opinions.
Emphasize that you are not interested in “yes men.”
– The importance of people who don’t get along with others–
Socrates was turned into an outcast… but should not have been.
– Crucially: Once one person dissents, the likelihood of others
speaking up goes up dramatically.
Zimbardo Prison Experiments
• http://www.bing.com/videos/search?q=Sta
nford+Experiment+Movie&Form=VQFRVP
#view=detail&mid=990458EF35D97489C5
1D990458EF35D97489C51D
Milgram: Obedience to authority
(1974)
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Ordinary people, simply doing their
jobs, and without any particular
hostility on their part, can become
agents in a terrible destructive
process. Moreover, even when the
destructive effects of their work
become patently clear, and they are
asked to carry out actions
incompatible with fundamental
standards of morality, relatively few
people have the resources needed to
resist authority
http://www.bing.com/videos/search?q=
Milgram+Shock+Experiment&Form=V
QFRVP#view=detail&mid=E49E9EE09
3CEC55FE564E49E9EE093CEC55FE
564
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What percentage of ordinary, lawabiding, Yale students would deliver
the maximum 450 volt shock?
< 10% < 50% > 50% > 60%
• "the essence of obedience consists in the
fact that a person comes to view
themselves as the instrument for carrying
out another person's wishes, and they
therefore no longer see themselves as
responsible for their actions. Once this
critical shift of viewpoint has occurred in
the person, all of the essential features of
obedience follow"
• [People] have learned that when experts
tell them something is all right, it probably
is, even if it does not seem so. (In fact, it is
worth noting that in this case the
experimenter was indeed correct: it was all
right to continue giving the "shocks" —
even though most of the subjects did not
suspect the reason.)
Robert Schiller writing about
Milgram’s experiments
Milgram’s experiments:
Implications for Managers
Theory of conformism: A subject who has neither the ability nor expertise to
make decisions will leave decision making to the group and its hierarchy. The
group becomes the person’s behavioral model
- Don’t mistake conformism for conformation
Agentic state theory: The essence of obedience consists in the fact that a
person comes to view himself as the instrument
for carrying out another’s wishes, and therefore no longer sees himself as
responsible for the action
- I’m just doing my job…
Groupthink
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Groupthink: When you feel a high pressure to conform and agree and
are unwilling to realistically view alternatives
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What are some of the reasons or factors that promote groupthink?
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What can be done to prevent groupthink?
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Figure 10-6
Symptoms of Groupthink and Decision Making
Symptoms of Groupthink
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Invulnerability
Inherent morality
Rationalization
Stereotyped views of
opposition
Self-censorship
Illusion of
unanimity
Peer pressure
Mindguards
Decision-making Defects
1) Few alternatives
2) No reexamination of
preferred alternatives
3) No reexamination of
rejected alternatives
4) Rejection of expert
opinions
5) Selective bias of new
information
6) No contingency plans
Groupthink: Implications for
Managers
• Assign to each member the role of critical evaluator– this
role involves playing “Devil’s Advocate” by actively
voicing doubt and objections.
• Use subgroups and bring in outside experts for exploring
the same policy decisions.
• Use different groups with different leaders to explore the
same question.
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Shoreham Nuclear Power Plant
• GE plant in NY, 60
miles from
Manhattan
• Designed to produce
540-820 megawatts
• Initial estimated cost:
$65 million
• Final cost: $6billion
• After 11 years (’73’84), never opened!
• Construction flaws
• Labor unions
• Public concerns over
safety
• Escalation of
commitment, or
failed persistence?
Escalation of Commitment: The
Flip Side of Persistence
Reducing Escalation of
Commitment
• Set minimum targets for performance, and force
decision makers to compare against these
targets
• Stimulate opposition using “devil’s advocacy”
• Rotate managers through roles
• Reduce ego-involvement
• Provide and study more frequent feedback
about project completion and costs
• Reduce risk and penalties for “failure”
• Make explicit the costs of persistence
Simple but Powerful Advice
• Give views in advance, in private.
• Pick who will speak first at random (US
Supreme Court Justices start with juniormost member)
• Encourage and reward disagreement.
Delusional Optimism
• Due to both cognitive biases and organizational
pressures:
- exaggerate own talents; downplay luck
- self-serving attributions: in annual reports
- scenario planning tends to reward most
optimistic appraisals.
- anchoring
- competitor neglect.
- pessimism often interpreted as disloyalty
How to Take The Outside View
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Select a reference class:
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Assess the distribution of outcomes:
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where you fall in the distribution– executive predicted $95 million
Estimate reliability of your prediction
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Identify the average and extremes in the refer- ence-class projects’ outcomes--the studio
executive’s reference-class movies sold $40 million in tickets on average. But 10% sold less
than $2 mil- lion and 5% sold more than $120 million.
Predict, intuitively:
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choose a class that is broad enough to be statistically meaningful but narrow enough to be
truly comparable to project at hand-- movies in same genres, similar actors
correlation between forecast and actual outcome expressed as a coefficient ranging from 0
to 1.
Correct the intuitive estimate for unreliability
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less reliable the prediction, more needs to be adjusted towards the mean.