Decision Making / 1 / 1.3

1.3 NEED TO UNDERSTAND MANAGERIAL COGNITION FIRST

Before we can become effective risk managers, we need deep insight into the problems we face. Because we are talking about working closely with other managers, we also need to have a comprehensive understanding of the way those managers might perceive problems. Here, we are managers ourselves and our views, perspectives and opinions may be at variance with other managers. We are also part of a management team and, from time to time, there will be executive managers overseeing what we do. We need to understand managerial cognition and how best to exploit what we know about the ways managers think so that we can develop our risk-management strategies and get on with the job of managing risks in the most effective ways. We need to be able to relate to other managers through being able to relate to the ways they think. We need to be able to elicit and analyse what they say they think with the aim of gaining insights into how they really think.

We need to access, and work with, the knowledge that other managers have about potential problem situations. It would be naïve to think we could simply have other managers and stakeholders divulge their operative knowledge. Extant operative knowledge is what managers know about the way things work. It would have been gained over a period of years and is highly valuable, both to those who have that knowledge and others who might like to use it for their own purposes. Unfortunately, even if we could easily and reliably access the operative knowledge of individual managers we must also contend with the fact that nobody’s knowledge is complete or completely accurate.

Operative knowledge is applied by managers within the areas in which they have authority, that is, within their domains of action (Laukkanen, 1998: 171). Each of us has operative knowledge that co-exists with knowledge on a wide range of subjects we have acquired throughout our lives. We gain that operative knowledge through education and training, our lifetime experiences and update it through actively interrogating our various sources of intelligence, or simply observing. As managers, we continually use knowledge within our domains of action as we monitor performance against those performance indicators we have chosen to gauge progress being made in our purposeful human activity system.

We, like all managers, have individual beliefs which are embodied in belief systems or systems of meaning. Systems of meaning are discussed at Section 1.5.11. Beliefs derive from our cultural background and the various environments in which we have grown up, or worked. Beliefs cannot be separated from emotions. We can be quite emotional or even passionate about what we believe. This impacts on how we behave under varying circumstances, particularly when our beliefs are questioned or challenged. Our cognitive behaviour derives partly from our experiences and our environment. Our emotions, our personality and our psychological make-up are also inextricably linked to our cognitive behaviours.

Defensive reasoning and defensive routines (Argyris, 1994) are part of our cognitive behaviour. Defensive reasoning and defensive routines are developed and enacted to protect against embarrassment arising from challenges made to our knowledge. For example, none of us wants to be embarrassed by not knowing something and having to admit this publicly or by expressing a view that might be ridiculed. When threat of such embarrassment arises, we invoke defensive routines and defensive reasoning.

We can all be called upon from time to time to explain what we think. Frequently our answers involve statements of what we say we believe, when what we actually believe can be something different. In simple terms, the former are our espoused theories and the latter are our theories-in-use (Argyris, 1993; 1994).

Managerial cognition is affected by each of these things; they impact on choice and decision-making mechanisms managers employ. These mechanisms include a range of specialised and deliberately applied formal methods as well as a grab-bag of mental shortcuts we apply under a variety of situations.

Before we can appreciate managerial cognition and how it operates, for example, we need to:

• be able to identify the nature and limits to operative knowledge and managerial domains of action;
• understand impediments to both individual learning, organisational learning and participatory management, created by the ways people think;
• understand that belief systems, personality, psychological make-up, emotions, environment and cognitive behaviour are inextricably linked; and
• know the differences between espoused theories and theories-in-use.

Before being able to elicit and interpret managerial cognition, we need to:

• develop skills in eliciting, reading and analysing constituent elements and structure of managerial cognition; that is, cognitive content;
• develop skills in analysing and comparing specific cognitive content, views, perspectives, underlying assumptions, or hidden agenda of those we might wish to engage in participatory management and the processes of risk management;
• understand which tools and techniques might be effective for analysing and comparing cognitive content; and
• overall, appreciate what might be done to improve managerial cognition, that is, to enable revision and validation of manager’s mental models, making them most relevant to the current context.

When it comes to ‘wicked’ problems² such as risk-management problems are there can be dispute among stakeholders about whether or not problems exist, and if there are problems what is the exact nature of those problems. So, we need ways of getting to the heart of the problem. This activity is described in this book as ‘finding out about a problem situation’. It involves a deliberate and systematic process.