Make Better Strategic Decisions: How to Develop Robust Decision-making to Avoid Organisational Disasters

✍ Scribed by Jeremy N. White

• Publisher: Routledge
• Year: 2023
• Tongue: English
• Leaves: 201
• Edition: 1
• Category: Library

✦ Synopsis

Every day we hear of serious errors of judgement that result in organisational disaster. Why do seemingly successful businesses, NGOs, or even political parties fall prey to irrevocable governance breakdowns or, worse still, criminal malpractice? By prompting readers to think deeply about strategic decision-making, human behaviour, and cognitive biases, this book offers a disciplined, objective, and thoughtful approach to making better decisions.

Every strategic problem is fundamentally a journey into the unknown, which involves a unique combination of duration, scale, external and internal dynamics, and personal motivations. Rarely is a strategic decision solved by saying, ‘If a situation is A, then the solution is B.’ The book explores how to develop a strong foundation for problem resolving – rather than simplistic problem-solving – by strengthening competence so that decisions are made wisely. The case of Carillion plc, the second-largest construction group in the United Kingdom that went bankrupt in January 2018, is used to explore how a large and profitable company collapsed so dramatically when it was run by an experienced board and advised by three of the Big Four accounting firms. Professor Jeremy N. White presents a clear strategic toolkit for better strategic decision-making.

This book will appeal to senior managers who are interested in techniques for making better strategic decisions. The lessons from the failure of Carillion plc are applicable to corporate leaders in addition to politicians and those who run not-for-profit organisations.

✦ Table of Contents

Cover
Half Title
Endorsements
Title
Copyright
Dedication
Contents
Preface
Introduction
1 Core Questions
Strategy
What Do We Mean by Strategy?
Do We Need an Organisational Strategy?
Why Is Strategy So Challenging?
2 Strategic Thinking
The Rational Model Towards a Behavioural Approach
The Traditional Approach to Strategy Development
Limitations of the Traditional Approach to Strategy
Fundamental Uncertainty
Paradoxical Thinking
Paradox and Leadership
Impediments to Rational Thinking
Introduction to Behavioural Economics
Behaviourists: Richard Thaler and Others
3 Carillion plc
The Construction Sector
Carillion plc
Collapse
The Collapse and Broad Business Issues
Carillion Business Strategy
Growth Through Acquisition
Dividends
Market Capitalisation and Profit Warnings
Cabinet Office Evaluation of Risk
Profit Warning
Who Knew and Who Was Shorting the Stock
The Pension Deficit
Carillion Board, Corporate Governance, and Executive Responsibility
Richard Howson, Carillion CEO 2012–2017
Richard Adam, Carillion CFO 2007–2016
Philip Green, Carillion Chairman 2014–2018
Keith Cochrane, Interim CEO July 2017
The Consultant’s Report, Strategic Issues, and Risk for Carillion
4 Behavioural Management
Information Bottlenecks
The Behavioural Model
Case for the Behavioural Model
Cognitive Biases
Here Are a Few More Common Biases
Carillion and Behavioural Dynamics
Corporate Culture
Decision-making and Biases – Five Findings From Psychology
Carillion – Hubris and More
A Deeper Consideration of Bounded Rationality
Heuristics
Behavioural Factors – A Few Additional Points
5 Risk
Risk and Bernoulli
Risking Other People’s Money
Asymmetric Risk
Risk and a Few More Thoughts
6 Strategy as Paradox
Traditional Versus Paradoxical Thinking
The Innovation Paradox
How to Address Paradoxical Problems
7 Moral and Ethical Issues
Impact of an Unethical Culture
The Nolan Principles 1995
Bystander Inaction
8 Corporate Governance
Responsibilities of Directors
Carillion and the Auditors
Carillion and the Fallout for Auditors and Directors
Legal Governance and Political Pressure
9 Strategic Toolkit
Problem Solving and Puzzles Versus Mysteries
Big Picture Audit
Auditing the Organisation’s Culture
Warning Signs
Decision-making Models
Gary Klein on Decision-making
Rational Thinking Process
Dealing With Thinking and Reasoning Errors
Importance of Narrative
Decision Analysis Models
Herbert Simon and Administrative Behaviour
Stacy Landscape Model
Risk and Signal Detection Theory With Type 1 and Type 2 Errors
Kahneman’s Decision Models
Group Decision-making
Impact of Decision and Scale of Risk
Decision-making Summary
10 Strategic Toolkit: Additional Perspectives
Reflections
Innovation
Artificial Intelligence and Noise
Rewards and Motivation
Corporate Strategic Issues and Social Responsibility
Justice and Fairness
Challenges of Strategy
Five Laws of Behaviour
Communicating and Implementing
Resistance to Change
The Role of Behavioural Psychology
Leadership
Craftsmanship and Managing Yourself
Closing Thoughts
Appendix: Behavioural Bias Checklist
Bibliography
About the Author
Index