Are You Buying Emotionally or Rationally?

Feelings and rationality have been something philosophers debated for centuries. Descartes separated emotion and reason as well as mind and body. The process of making purchasing decisions can be based on emotion, reason, or both depending on the situation in which we make decisions. From a marketing and consumer purchasing approach, emotion or reason are primed by an independent or interdependent self-construal.

According to a study in the Journal of Consumer Research  those with independent self-construal promote reliance on feelings in judgments while interdependent self-construals promote greater reliance on reason (Jiewen & Change, 2015). Decision making is impacted by how we see ourselves in relation to others.

To understand this idea fully it is necessary to comprehend what a self-construal is. Self-construal is the way in which we perceive ourselves in relation to others. Much of our belief is based on our cultural upbringing. Americans are believed to be focused more on an independent self-construal while Asians are more likely to have an interdependent self-construal.

When we have an independent self-construal we often seek to magnify our image and in turn make emotionally based decisions to do so. Most of us can remember a time when we saw something that would make us look better, happier, beautiful, thinner, richer or smarter. We bought a product based on its emotional appeal to our image.

Feelings and rationality are not mutually exclusive and carry with it individual and cultural differences. There are Americans that are more or interdependent than others. The point is that the majority of us make emotional purchases and if we sit back and think about those choices we may be able to enhance still our self-construct while making sound financial decisions. There is little doubt that many Americans are debt rich and cash poor.

Jiewen, H. & Chang, H. (2015). "I" Follow My Heart and "We" Rely on Reasons: The Impact of Self-Construal on Reliance on Feelings versus Reasons in Decision Making. Journal of Consumer Research, 41 (6).

The Microfoundations of Solving Complex Business Problems

Solving problems is a natural part of business development. Every organizational will need to solve particular problems if they hope to overcome market challenges and economic environments. The complexity of today’s global business environment requires better decision making that ensures the best solutions are forthcoming to enhance opportunities. A study by Baer et. al (2013) delves into  a theory of the microfoundations of decisions that help to predict impediments to solution formation when complex and ill-structured problems present themselves.

Problem formation has always been the fundamental stumbling block and main activity of strategic decision making (Quinn, 1980). Without solutions to problems organizations cannot move forward in their development and may be derailed by personalities, vantage points, bounded rationality, and poor decision-making process that take their toll on profitability. 

Complex problems are more likely to be derailed by the microfoundations of decision making due to the inherent self-interest of the decision makers themselves. In complex problems there are simply many more places for them to insert their own needs and interests into the solution thereby creating poor results. A problem is complex when it has lots of varying variables, a high degree of connectivity among the elements, and dynamic actions that change the situation over time (Watson, 1976). 

Teams are naturally limited by their bounded rationality or knowledge and cognitive capacity to understand and solve these complex problems (Simon 1957). Heterogeneous teams allow for greater diversity of thought and the loosening of social structure to incorporate new perspectives and vantage points into the problem. They can help avoid “tunnel vision” or the need to use their limited cognitive capacity on well-worn solutions and selective approaches. 

The authors believe that framing the problem and then formulating the root of the problem is the best approach to handing complex problems. Framing includes the writing down of symptoms of the problem, correlating those symptoms, and then settling on the important ones.  Solutions should not be discussed until all of the symptoms are agreed upon to ensure tunnel vision doesn’t make its way into the process. Once the problem is framed the seeking it is important to see determine the root cause. That root can be used as the catalyst to finding effective solutions.  

Baer, et. al. (2013). Microfoundations of strategic problem formulation Microfoundations of strategic problem formulation. Strategic Management Journal, 34 (2). 

Quinn J. (1980). Strategies for Change: Local Instrumentalism. Irwin: Homewood, IL.

Simon H. (1957). Models of Man: Social and Rational. Wiley: New York.

Watson C. (1976). The problems of problem solving. Business Horizons, 19: 88–94.

What Military Leaders Can Teach Business Executives?

Leadership in tough situations requires one to dig deep to find values, meaning and strength at a more basic level. A paper by Jennings and Hannah discusses the concept of leadership identity formulation among those who experience some of the world’s most intense situations. They create a more concrete formulation of the idea of ethical leadership in the military even when the situation is tough and the right path is not easy to discern. The report focuses on the choice between moral versus legal aspirations.

The ultimate aim of any military is to project and employ force to defend their people, rights of their citizens, interests and very core values of their people. When stressful situations occur individuals within units have multiple competing interests. They may engage in self-preservation, protection of their unit, protecting civilians, engage their personal values, or engage the unit’s values. Each creates different avenues and opportunities for action. How someone chooses between these competing interests determines their ethical leadership stance.

According to Coker (2007) a soldier’s occupation may be fighting but his vocation is to combat the need for war. Thus, the soldier should develop character and virtue rather than simple behavioral compliance with societal norms. To think on this level requires the internalization of concepts such as honor, courage, sacrifice, and patriotism beyond simple social approval. Difficult situations test the very fabric of a person and their ability to draw on internal values versus external compliance.

The author describes military morality a little like Adam Smith’s Theory of Moral Sentiments. At the lowest level is simple grammatical adherence in writing while a higher form of expression breaks all the rules to create an eloquent form of communication.  The professor may give an F on the paper but an A on their ability to think beyond simple substance.  Those who take those types of chances are often judged for breaking codes and standards but can also create new standards that push the envelope.

Essentially, rule following is an extrinsic motivation based in a negative feedback model that creates self-regulation (Bandura & Lock, 2003). Identity conferring constructs are an intrinsically motivated positive feed-forward model based within self-challenge and self-efficacy (Bandura & Locke, 2003). One focuses on social acceptance while the other focuses on complete self-development.

The authors use examples of Above the Call of Duty to highlight their point:

Example 1: The rule-following member does not act to value civilians because he views his life as more important and the rules do not explicitly require him to act to protect others.

Example 2: The identity-conferring member moves beyond the rules and risks his life to protect others because he is guided by his military ethic of what is good, beneficial, and honorable.

The two persons are fundamentally different. The first person is more interested in their life and ensuring that they have the social acceptance of others. The second person is less interested in immediate agreement and moves to take on higher ideals of value. To do so requires a whole different thinking about self in the context of events. He is not only the rule-following soldier only but also the authentic soldier-protector who finds higher value in what he does. He recognizes the value of following the rules but can move beyond them if there is a higher principle worth engaging.

The authors focused on informing and inspiring military conduct under extreme conditions. Previous research fails to develop beyond basic transactional ethics and into the realms of virtuous behavior in combat situations. Exemplary leadership should be seen in terms of transformational and authentic leadership that moves beyond defined standards. As the nature of warfare changes to high civilian interactions and insurgencies the ability to maintain certain ethical considerations in isolation becomes even more important. The author contends that militaries will need exemplary ethics and leadership now and in the future to be successful.

Comment: It can be beneficial to look at leadership in high stress situations where a large array of possible decisions can be made to help organizations formulate a greater understanding of leadership management. This report helps us understand that rule and norm maintenance is an external value system based in self-interest. In day-to-day operations, and standard situations, these rules provide structure and should be followed. Occasionally, it is necessary to think beyond the rules and into greater value systems when difficult situations call for it. Where trust has been broken with the public it is even more important to ensure corporations act in the betterment of society and foster those strengths within their executives so they may think for themselves beyond the social approval of their internal social structure. There are a few examples where business leadership has gone above and beyond the call of duty even when they have taken all the risks.

Bandural, A. & Locke, E. (2003). Negative self-efficacy and goals effects revisited. Journal of Applied Psychology, 88.

Cocker, C. (2007). Warrior ethos: Military culture and the war on terror. New York, NY: Routledge.

Jennings, P. & Hannah, S. (2011). The moralities of obligation and aspiration: towards a concept of exemplary military ethics and leadership. Military Psychology, 23.

Pick the Right People and Make More Money

By Dr Andree Swanson

"If you pick the right people and give them the opportunity to spread their wings—and put compensation as a carrier behind it—you almost don't have to manage them."

— Jack Welch

HR talent and acquisition people tend to place managers in three different categories: Top (executive), middle (middle management), and bottom (supervisory) (Kaiser, Craig, Overfield, & Yarborough, 2011, p. 84). 

Top level managers have a long time span for service from 5 to 20+ years).  Their primary skills are conceptual in nature (Kaiser et al.).

Conceptual thinking, according to Buffalo State College, is the "[a]bility to identify patterns or connections between situations that are not obviously related, and to identify key or underlying issues in complex situations." For an organization to be successful in a globally competitive and complex environment, organizations must hire managers with the intellectual ability to visualize what may not be apparent, then delegate to supervisors the task of strategy execution. (Houston, 2014, para. Conceptual Comptence). 

Great conceptual leaders have great vision.  Consider Martin Luther King… Bill Gates… Steve Jobs… What visionary leaders can you think of?  Why were they top conceptual leaders?

You know there is an ad out currently that talks about all the businesses that started in a garage.   Well, these businesses did not start through osmosis in the garage.  A man or woman was behind these ideas.  What visionaries were they?  The were great conceptual leaders and managers.

Take a look at a few at the blog:

http://www.retireat21.com/blog/10-companies-started-garages

I am personally grateful for # 9 and # 10.  Without them, I wouldn’t have had any Barbies and my house wouldn’t smell like a lemon meringue pie or cookies for Santa!

Picture provided by Dr. Andree Swanson

Middle management are the workers who keep the operations going.  They are also the managers that implement change within an organization.  They have it tough at times.

“Middle managers, it turns out, make valuable contributions to the realization of radical change at a company—contributions that go largely unrecognized by most senior executives. These contributions occur in four major areas” (Huy, 2001, para. 4).

Middle managers:

1.    Have entrepreneurial spirit and intentions

2.    Better communicators with the informal networks

3.    Strong emotional intelligence

4.    Maintain momentum in a changing organization (Huy).

Supervisors keep the systems running, whether they are dealing with people and their issues or product and its issues or machines and their issues.  Excellent supervisors have a strong impact on the financial statements of companies.  “Good bosses are a good deal better than bad ones. Replacing a supervisor from the bottom 10 percent of the pool with one from the top 10 percent increases output about as much as adding a 10th worker to a nine-worker team” (Yglesias, 2012, para. 4). Yglesias wrote about a research study on supervisors.  The results showed that good supervisors not only motivate employees but impact their productivity. “Make sure your most promising workers are paired up with the best supervisors. … teaching and learning are the essence of an effective boss/employee relationship. Good bosses … deliver concrete improvements in workers’ ability to get the job done” (Yglesias, para. 8).

Have you seen a supervisor not only motivate employees, but impact the bottom line?

References

Houston, G. (2014). Why is conceptual competence more important for top managers than for supervisors? DemandMedia. Retrieved from http://smallbusiness.chron.com/conceptual-competence-important-top-managers-supervisors-18744.html

Huy, Q. N. (2001, Sep.). In praise of middle managers. Harvard Business Review. Retrieved from http://hbr.org/2001/09/in-praise-of-middle-managers/ar/1

Kaiser, R. B., Craig, S., Overfield, D. V., & Yarborough, P. (2011). Differences in managerial jobs at the bottom, middle, and top: A review of empirical research. Psychologist-Manager Journal, 14(2), 76-91. Doi:10.1080/10887156.2011.570137

Michael. (2014). 10 world famous companies that started in garages [blog]. Retrieved from http://www.retireat21.com/blog/10-companies-started-garages

Yglesias, M. (2012, Oct). Who’s the boss? Slate.com. Retrieved from http://www.slate.com/articles/business/small_business/2012/10/the_value_of_a_good_boss_stanford_researchers_show_the_economic_value_of.html

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