Notes on Problem Identification
Identifying Decision Problems
Researchers in the field of behavioral decision making (how people actually make decisions, as opposed to how they should from a rational perspective) have studied the process of problem identification. One way to approach problem identification is to direct attention to perceived "performance gaps" between the existing state of the system and the desired state. The existing state is the current condition or level of performance of the system as measured by key system variables. It represents the actual state of affairs that must be dealt with by management. The desired state is the intended condition or level of performance management would like the system to attain. The performance gap is a measure of the deviation of the system variables' current values from the desired values.
A problem is said to exist if the performance gap between existing and desired states is considered to be an unacceptable deviation from established standards or previously determined objectives. Three types of problems are possible. A Type N problem (negative problem) occurs when the existing state of the system falls short of the desired state--system performance is below expectations. A gap is created when the existing state's performance level decreases while the desired state remains constant. A Type P problem (positive problem) arises if the desired state changes upward while the existing state remains constant, as when expectations of system performance increase. This situation is known as anticipated opportunity. A third type of problem occurs when both the existing state and desired state change concurrently so as to increase the gap, a situation we may term Type NP problem. In this case, management must decide on allocation of problem-solving resources between the competing demands. Two problem aspects should be considered: urgency and importance. Urgent problems usually demand immediate attention, although the solution need not be of a permanent or optimal nature. Important problems require thorough attention and usually call for well-planned, long-term solutions.
There are two situations which are not considered problems. If the system performs better than expected (the existing state is superior to the desired state) on a sustained basis, the desired state is changed to the existing state. On the other hand, prior expectations concerning the desired state could prove unrealistic. In this case, the desired state should be revised downward to a feasible (attainable) performance level.
Biases in Problem Identification
Decision makers, being human, are liable to commit systematic errors of judgment when solving problems. The research literature has addressed two major types of biases associated with problem identification. The first type, perceptual bias, refers to the fact that people selectively filter--consciously or unconsciously--the information they receive from their environment. How a person interprets information depends on a host of factors: his or her beliefs, personal values, cultural background, psychological state of mind, educational background, prior experiences, present expectations, social/organizational standing, financial position, the degree of susceptibility to the opinion of others (peers, superiors, subordinates), tendency to stereotype, sense of personal or economic security relative to the problem being faced, and so on.
Informational bias refers to the ways the available information can mislead the decision maker. What is said and omitted, how it is presented, who is presenting the information, the assumed reliability of the information sources and collecting procedures, the degree of uncertainty of the collected information, and the level of distortion suffered by the information when summarized for reporting, illustrate possible ways of introducing biases into decision-making information.
Biases can arise from other considerations as well. If more than one decision maker is involved in problem identification and solution, conflict of interests can become a source of bias. People have their own personal goals which may or may not coincide with the goals of the organization. Differences between personal and organizational goals can introduce serious biases to management decision problems. If problem identification or problem solving is conducted along departamental lines in an organization, it is virtually assured that the process will be biased from the start.
Biases in Social Dynamics
Management is a social function. Decision makers should therefore be cognizant of typical biases that may affect the performance of managers and nonmanagers in the organization. Distortion of information is not uncommon: people have been known to distort, at times consciously, the information they receive and forward in the organization for a variety of reasons. These reasons include inclinations to inform about positive happenings and avoid negative reports, psychological defense mechanisms, looking out for personal interests, interpersonal rivalries, the pursuit of power, or simply a lack of ethical principles.
Stereotyping means to form simplistic opinions about people or situations by making superficial judgments and relying on prejudiced attitudes. This bias can blind managers to new opportunities in a changing environment and lessen the competitive edge of the organization. Related forms of this bias (inferring unjustified personal traits or situational characteristics) can also mislead managers into serious problems.
Groupthink, the tendency observed in groups to seek consensus about an issue at the expense of a realistic appraisal of the situation, is quite common in organizations. Dogmatic managers, in particular, usually increase the negative effects of groupthink on organizational decision making.
Biases in Personal Behavior
Humans demonstrate certain predispositions when processing information which may prove detrimental to rational decision making. Primacy effect refers to the tendency to embrace the first reasonable explanation that comes to mind for an apparent problem. Recency effect states that recent events exert more influence when putting things into perspective than temporally distant experiences. Representativeness refers to the tendency to make quick judgments about a situation based on past experiences of similar situations while ignoring important differences. Anchoring is the effect of being influenced by an initial assessment to the point that judgment is not properly adjusted when new relevant information is presented. Availability is the tendency to estimate the likelihood of an occurrence by referring to situations that are easily recalled. Framing is the tendency to settle on a different course of action depending on the how the problem is presented. Overconfidence refers to discounting risks because of the belief that one's knowledge of the problem is greater than it actually is. And ordinary force of habit can easily mislead a decision maker by expunging the urge to investigate problems critically.
The Role of the Unconscious
“When it comes to our behavior from moment to moment, the big question is, ‘What to do next?’ ” said John A. Bargh, a professor of psychology at Yale. “Well, we’re finding that we have these unconscious behavioral guidance systems that are continually furnishing suggestions through the day about what to do next, and the brain is considering and often acting on those, all before conscious awareness.” Dr. Bargh added: “Sometimes those goals are in line with our conscious intentions and purposes, and sometimes they’re not.” (Source: "Who's Minding the Mind?" by Benedict Carey, The New York Times, 31 July 2007.)
Managers should be aware of the sources of bias in problem solving and decision making so as to try to correct for these errors. Unfortunately, empirical research shows that even when awareness of bias has been brought to a person's attention, biased behaviors remain operant in problem-solving and decision-making processes.
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