Cognitive Antecedents of Effective Decision-Making:

1. An exploration Dr. Allard van Riel Université de Liège Cognitive Antecedents of Effective Decision-Making:

2. Introduction: the problem Decision-making in marketing & innovation is challenging Selection of new product proposals New product development Entering knowledge alliances Marketing strategy Launch / distribution

3. Challenges Rapid technological developments Unpredictable market trends More demanding consumers New distribution channels Rapid change in competitive environment Mergers and acquisitions Alliances Rapid organizational change Reengineering

4. Major consequences Decision task suffers from: Time pressure Complexity Ambiguity Uncertainty

5. Research questions How do decision-makers make decisions under these extreme circumstances? Is their performance related to the decision style they use? Rational style? Intuitive style? Neither? A combination?

6. Exploratory research design Objectives Review what is known about relationships between task attributes, decision style and decision-making performance, summarize them in a model. Method: Literature review Interdisciplinary Psychology Neurology Management decision-making Intuition Anecdotal accounts

7. Decision-making performance Effective decisions Leading to desired process outcome Fast Efficient use of resources Minimizing chances of process failure Maximizing chances of process success

8. Theory 1 (about decision style – task adaptation) Theory: Decision style is adapted to conditions encountered in task environment Best decision-making performance when best adapted to task conditions

9. Theory 2 (the relationship between decision styles) Decision styles are considered to exist on a one-dimensional continuum One extreme: perfectly rational Other extreme: entirely intuitive Center: mixed style

10. General problems & contradictions Existing theories Do not give a plausible and complete explanation of anecdotal evidence (use of intuition in decision-making) Do not help to solve conceptual confusions between intuition, common sense and heuristics Conceptual confusion between intuitive/rational decision styles, cognitive systems and personality traits

11. Specific problems Do not help to explain decision style adaptation to environments and task conditions varying in multiple dimensions: Ambiguity Uncertainty Rapid change Information (lack/overload)

12. Solution Posit the existence of two independent cognitive systems that can be used in combination, each to a different extent depending on task characteristics

13. Old cognitive style model Shanteau (1992) semi-rational rational Intuitive

14. Proposed cognitive style model more rational Rational Active sensemaking more intuition less intuition Heuristics Intuitive less rational

15. Advantages of new model Allows independent variation of use of two cognitive systems Better potential explanation of adaptation to multiple dimensions of complex environments Ambiguity Uncertainty Dynamics Information shortage/overload

17. Simulation of the new model

18. Remaining issues Research into the different task conditions Empirical validation of the model Generalization ...