![]() ![]() Indeed, researchers have shown that people in a variety of fields, from foreign policy to firefighting, reason by analogy as a means of coping with complexity and ambiguity. Rau, “Two Stages of Decision Making,” Management Review, December 1999). Reading about other companies makes me a better decision maker because it provides a store of analogies.” (J. John Rau, a former CEO and business school dean, argues that analogies provide a wealth of information: “The fundamental laws of economics, production, financial processes and human behaviour and interaction do not change from company to company or industry to industry. They draw comparisons to similar situations or circumstances from their past or the history of other organizations, and deduce certain lessons from those experiences. REASONING BY ANALOGYīusiness leaders often draw analogies with past experiences when faced with a complex problem. Thus, leaders must use these strategies with great care. When employing these techniques, many leaders draw the wrong conclusions, make biased estimates, pursue flawed policies, or impede the development of commitment within their management teams. Unfortunately, each of these strategies has serious drawbacks as well. These strategies often prove very effective because they enable leaders to make accurate judgments under stressful conditions. The strategies are reasoning by analogy, imitation, rules of thumb, reformulation, deference to experts, rigorous debate, and experimentation. ![]() In this article, I describe seven strategies that leaders can employ to cope with ambiguity and complexity as they make critical decisions. These strategies enable managers to make sense of a confusing situation. They adopt strategies for simplifying complex situations so that they can make decisions quickly and effectively. Most executives find ways to cope with this uncertainty. Many worry that an unknown event will transform their entire industry in a matter of a few weeks or months. They face uncertainty with regard to world politics, macroeconomic growth and stability, technology and changing consumer tastes. Like Napoleon, today’s business leaders must cope with a great deal of ambiguity as they make important choices about the future. They remain indecisive, and their rivals gain the upper hand. Others cannot cope with the complexity and uncertainty. ![]() In turbulent times, some leaders make tough choices with courage and conviction. Napoleon Bonaparte once said that, “Nothing is more difficult, and therefore more precious, than to be able to decide.” He recognized that a few critical decisions put leaders to the test. What managers need are strategies for making clear, accurate judgments under stressful conditions. In their own way, complexity and ambiguity tyrannize decision-making. ![]()
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