Strategic Decision Making – Can MBA help?
Making decisions can be tough. Even for simple things like going to a restaurant and choosing a meal. The menu options are capable of sending the mind into a tizzy. Other than the food to choose from, many different factors complicate the decision making. One has to look at the food choices and correlate them with the existing meal budget, appetite (small meal or large), relative calories of food choices (if you’re a health freak), meal serving time (if in hurry) etc. Then one needs to fight the existing cognitive biases – those that define our tendency to take illogical decisions. So, in this particular example, a person, on a strict diet, might order a calorie-heavy dessert by reasoning about the nourishing properties of its ingredients and not weighing in the calorie part, thereby employing confirmation bias. A person, while employing confirmation bias, seeks only that information which supports their existing beliefs while ignoring other equally or more relevant factors, thus making an illogical decision. There are many such cognitive biases that impact making the right decisions, either small or big.
The above example involved decision making for a small task and demonstrated how even such simple decisions are influenced by cognitive biases. Now let us consider the job of a manager (or an entrepreneur). A manager is responsible for the smooth running of multiple functions in a company and developing successful strategies to enable the company’s growth. Her or his role is fraught with high stake decision making challenges, whether decisions pertain to recruitment, marketing, product launches or operational issues. A large part of a manager’s success is linked to her or his competency in making sound decisions. And not merely right decisions but quick decisions as well.
But most managers or people aspiring to be managers are unaware of the cognitive biases that affect the strategic decision-making process. It is, therefore, important for the managers to identify the most common distortions, pitfalls, and biases in the strategic decision-making process and avoid these in order to successfully meet business challenges. The best way to mitigate cognitive biases is to improve upon critical thinking skills, particularly “thinking” about how we think. This involves challenging and questioning the existing thought process in order to transcend the biases and make better decisions.
However, critical thinking is not an easy skill to gain and requires repeated training and testing. An MBA course comes in handy to managers or aspiring managers to ace critical reasoning since the course not only provides deep subject knowledge but also allows students to test their cognitive biases through debates and peer discussions. The course is not limited to business theories or presentation alone and enables the participants to apply the business knowledge gained to real-life situations and test their strategic decision-making skills. Here are various ways that an MBA can help the potential aspirant to sharpen their decision-making skills:
- Specific modules on strategic decision making:Inbuilt courses in the MBA programs allow participant to learn in-depth about decision making. The participants are taught to break down elements comprising the decision-making process and learn the use of forecasting tools and predictive models to reduce uncertainty while making decisions. Other tools like data optimization, quantitative analysis, consumer preferences, bargaining, and negotiation are taught to create frameworks that can be used for assessing future decisions.
- Case Studies:These allow course participants to dwell deep into the shoes of the management of the company on which case study is based. In order to answer the questions related to the case study, the course participants have to undergo multiple debates and discussions with their peers and critically analyze the case study. These discussions help the participants improve their critical reasoning skills.
- Presentations: Creating group or individual presentations on key business or theoretical topics enables participants to think deeply and critically in order to provide a sound analysis of the problems presented before them. This sharpens their critical reasoning and allows them to check their individual biases by comparing their presentations to other groups/individuals.
- Live Projects:Live Projects (internship) are mandatory during the MBA allowing participants to work with a company and help it solve one of its business challenges. This allows participants to use their theoretical knowledge, critical reasoning and strategic decision-making skills while delivering proposed solutions to their respective client’s business problems.
MBA, thus, creates a framework through which the participants can learn and practice critical reasoning and sound strategic decision-making skills. It also helps in mitigating cognitive biases among its participants by facilitating debates and discussions and allowing them to check and question their thinking. This creates confidence among the participants to allay their biases, groupthink and decision traps.