Experts develop deep domain knowledge that often allows them to exhibit a “sixth sense,” said James Schrager, clinical professor of entrepreneurship and strategic management during a lecture, “Strategy’s Sea Change,” at a Global Leadership Series event at Gleacher Center on June 10.
It is this “rapid cognition” that enables decisions in the blink of an eye, often with great success. While this phenomenon is noted in many professions such as physicians, airplane pilots, chess players, and others, is it a part of the necessary toolkit for executives as well?
Schrager says yes.
Strategy may be poised to be the next field revolutionized by the same concepts that have made behavioral economics and behavioral finance hotbeds of new ideas. It all flows from University of Chicago PhD and Nobel laureate Herb Simon, who introduced the concept of bounded rationality that states that people don’t consider all alternatives as they decide most things, only a subset. The way we choose that subset is often the secret to how well — or poorly — our decision will turn out.
Faculty colleague Albert Madansky, H.G.B. Alexander Professor Emeritus of Business Administration, and Schrager have probed deeply into Simon’s work to gain insights on how the experts Simon studied developed decision-making skills. Schrager and Madansky’s goal is to map what Simon described onto strategy.
Simon indicated it took about ten years to be really good at something. Once there, you develop an “intuition” about how to make decisions. Simon believed these intuitions, although seemingly appearing from nowhere and often without conscious thought, are patterns you've previously learned. It is these patterns that can be of most use to strategists. Just as great chess players recall powerful patterns of play, great strategists may do the same thing.
Schrager advised graduating students to find a boss who is very successful and then spend time observing his or her decisions. “Even if you are in a lousy industry, you'll learn a lot from a great decision maker,” he said. “Watch decisions all around you, discover how they were made, listen closely to the reasons."
He also advised students to throw their egos out the window when evaluating their own decisions. “Successful decision makers are the first ones to say ‘I screwed that up.’ They are totally honest with themselves so they can catalog that pattern — especially if it is a failed one — and learn from it. They never run away from being intellectually honest because they know to do so means they won't get the maximum benefit from their errors.”
— Mary J. Paleologos