Decision Making / 6 / 6.1

6.1 DISAPPOINTINGLY INEFFECTIVE IN MANAGING COMPLEXITY

An implicit and fundamental assumption behind the selection of business performance indicators in any business is that managers and decision makers can use them effectively to make appropriate adjustments to the way business is conducted. This presumes decision makers can judge, with reasonable accuracy, the consequences of their risk-management strategies decisions, both in the short and long terms. However, there is abundant research in the fields of system dynamics, cognitive psychology and decision making, which suggests that managers are disappointingly ineffective in managing dynamically complex tasks.

Managers could be well served by systems thinking skills and skills in the use of analytical tools to support the task of developing strategies for problem situations where delayed feedback is involved.

There is another fundamental issue here that of ensuring that the right problem is always addressed. This tutorial demonstrates how to systematically identify and define relevant issues affecting the problem. The aim is to identify where management effort is best directed to achieve greatest effect, that is, to solve the right problem This tutorial demonstrates practical application of Iterative and Interactive Strategy Development (IISD) which was described in Chapter 5. The tutorial explains, step-by-step, how IISD is applied. The tutorial also shows effective ways of defining, or conceptualising, a problem involving dynamic risks.