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Running Head: SYSTEMS THINKING

Project Plan: Literature Review: Systems Thinking






























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In the article The Hidden Traps in Decision Making. John Hammond, Ralph Keeney
and Howard Raiffa (2006) summarized the inherent difficulty in decision making very well by
stating that "...in making decisions, you may be at the mercy of your mind's strange workings."
they also list nine psychological traps that may affect a way that a decision maker makes
business decision.
1. The anchoring trap makes people give inappropriate weigh to the first information we receive.
In business, for example, although it seems the decision that a manager predict how much
product need to be produced by taking the former sales reports as a reference is reasonable, the
old sales numbers become anchors because it may let a manager put too much attention on past
event but not give enough weigh to other factors. Under this situation, it can lead to a poor
forecast.
Also the anchoring trap is related to the often observed primacy effect, wherein
disproportionate consideration is given to early information and initial impressions.
2. The status-quo trap means people may have biases on the situation we feel comfortable with
so that we will not choose other alternatives even they are better. In order to make decisions
rationally and objectively, a decision maker always have to keep in mind that the decision will be
acted under the status quo and never consider status quo as the only alternative. Also the status
quo trap, not surprisingly, is a bias towards the current order. In business, the status quo is often
the easiest and seemingly less risky path.
3. The sunk-cost trap is another serious bias. People always believe that successfully past
decision even though it does not work anymore at the present. In order to put the suck cost away,
a decision maker can list en other people's viewpoints and those people must to be those who did
not experience the earlier decisions.
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4. The confirming-evidence trap makes people find out the information to support an existing
predilection, rather than to conflict it. On the other hand, people will try to discount the opposing
information. In order to avoid the confirming-evidence trap, a decision maker can set up a
clincher, let other people argue it, and listen people's advice. Also the confirming evidence trap
leads us to seek out evidence that supports our perspective and interpret new information
consistent with our biases.
5. The framing trap happens at the beginning of the decision process. When it occurs, the
decision goes wrong because a decision maker has already misstated the problem. Also the
framing trap can lead to different answers to essentially identical questions, depending on how
the questions are positioned.
6. The Estimating and Forecasting Traps have three minor traps,
a. The overconfidence trap makes people overestimate the accuracy of the forecasts.
b. The prudence trap causes people to be overcautious when people make decision under
uncertain or risky situation.
c. The recall ability trap leads people to give incorrect weigh to recent, dramatic events.
Also the estimating and forecasting traps sometimes manifest in overconfidence in
projections, sometimes in overly conservative estimates and other times in overemphasis on the
ability to recall inputs to the projections.
Alas, all traps play tricks on our decision-making abilities, often leading us unwittingly down a
destructive decision path. The article rightly emphasizes the facts that a good decision not only
relies on clearly defining the alternatives, collecting the correct information, and so on during the
decision-making process, but also relate to the benefits and costs which are weighed accurately.
Furthermore, the background, the experience of a decision maker will be one of the factors
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which affect the decision making. Except the factors of individuals, the economic circumstances
will influence the decision and its action too.
Introduction to the group scenario
The group scenario is one in which members of two opposing arguments accept
supporting information and dismiss conflicting information. In a group persons go into a
regression to defend themselves against the conflicts provoked or revealed by their participation
in the group. There is a formation of a group mentality, which is a groups will. This is a system
where there is denial, avoidance, and anonymous input for that the individual members deny. At
one level the group gives importance to work that the group has taken up, in addition there is the
need to undertake creative work, and the third is the work-group methods to remain in contact
with reality (Books Llc 2010),.
Introduction to Systems Thinking
Systems thinking is related to learning, development, and management that are based on
the assumption that the component parts of the system will act differently when isolated from
the system environment/other parts. This means the development of a holistic approach related
to seeing the whole rather than disjointed parts. The value of systems thinking is that it is a way
of understanding reality that stresses on the relationships among the systems parts rather than
the parts themselves. The importance of systems thinking arises because it gives a more accurate
picture of reality so that it can achieve results one wants. It also emphasizes that systems must
be arranged in a particular way to carry out its purpose optimally (Books Llc 2010).
Problem recognition and definition
The problem definition is an important function. The reason is that it helps identify the
question to be considered, or solved. It also focuses the attention of the group on the situation. It
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is a misgiving, or an objection. The problem recognition is the recognition of the gap between
the present state and the desired state. The recognition of the problem begins from ascertaining
the objectives of the decision maker. The problem recognition is the identification problem. In
the context of a group the manner in which the problem is posed can influence how the group or
the individuals think of it. It is helpful to view the problem from different perspectives and it is
necessary to view the problem on ones own before consulting others. Often the problem lies in
ones own wounded self-esteem.
Root Cause Analysis
The root cause analysis is a method that is used to perform a system-based review of
critical incidents. This included the identification of root and contributory factors, identification
of risk reduction, and development of action plans along with measurement strategies. This is a
process of finding the real cause of the problem and dealing with it. Usually, those situations
that are recurring with greatest frequency and consume the greatest amount of resources to
rectify should be applied root cause analysis. Once the root cause is identified it needs to be
found out what is a cost to remove the root cause. The fundamental premise behind root cause
analysis is that problems are best solved by addresses or eliminating root causes. The objective
of the root cause analysis is that problems are best solved by attacking the root causes rather
than the external symptoms (Lincoln. J, 2010).
Defining the problem and its scope
The definition of the hiatus between the present state and the desired state, or a deviation
from a norm, standard, or status quo is the problem definition. There are several issues related to
defining the problem. The original problem statement may be misleading. Further, there may
appear to be not easy solution in sight. Further, the solutions often become problems. Most
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importantly, a problem has many factors. Most importantly, problems have characteristics like
there is an inherent doubt, uncertainty, difficulty, or a question for solution.
The scope defines the area in which the problem has been defined. The area in which the
problem has an impact it is the context in which the problem is associated. The scope sets the
boundaries of the problem. In practice if a problem has to be addressed it is important to clearly
describe the scope of the problem (Lincoln. J. 2010).
The role of research and evidence
The role of research is that of examination, observation, and investigation. Different
perspectives are used for find the truth. The method of investigation is to choose the areas that
interest a person and then following up on such investigations. Research refers to strict inquiry
to seek facts, provide support to or disprove theories, develop applications, or to pursue truth. It
is a process of re-examination. While carrying out research the application of the scientific
method means the application of the scientific methods. The result is that the researcher
provides scientific information and theories. In social sciences, researchers use multiple
methodologies and use both quantitative and qualitative methods. Practitioners from different
disciplines use different methods to gain a degree of autonomy. Research also extends to studies
that are carried out by businesses and other companies that seek ways of communicating with
customers so as to develop, price, and distribute a product effectively.
Evidence in research is usually of two types, the first is related to the research that has
been collected by the researcher. These mean interviews, experiments, surveys, or observation.
On the other hand evidence can be from second hand research or evidence collected from
different texts that have been supplied and compiled by other like books and websites (Proctor.
T, 2010).
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What goes wrong in decision-making?
There are several things that can go wrong in decision making. The first is anchoring.
Anchoring means that the mind gives disproportionate weight to the first information it receives.
In this contexts initial impression, estimates, or thoughts anchor subsequent thoughts and
judgments. Another factor that misleads decision-making is that decision makers display a
strong bias towards those alternatives that perpetuate the status quo. This is rooted in the
decision-makers need to protect its ego. Another reason why decision making goes wrong is
because of the sunk-cost trap. These are old investments of time and money that are now
irrecoverable. In companies this often means that failed projects should be continued. The next
reason that makes decision making go wrong is the Confirming-Evidence trap. In particular this
means that we decide what to do before we decide why we want to do it. Too much importance
is given to information that supports our stand and little importance is given to information that
is not in accordance to our stand. Finally, the framing trap is an important reason for incorrect
decision-making (Hammond. J, Keeney. R, & Raiiffa,H, 2006),.
Focusing on solutions
While focusing on solution one must focus on the right path to a solution. Understanding
the problems enables one to see a solution. The approach is to look for a path to the solution and
to verify the solution reached. Usually, a solution can be found if the unknowns are analyzed
and understood. In research a solutions plan is developed (Proctor. T, 2010).
Chapter 7 of: Making Strategy Work: Leading Effective Execution and Change explicitly
talks about the critical importance of managing change. Hrebiniak believes that (1) managing
strategic change is terribly complex and difficult, and (2) "the emphasis in strategy-execution
program or processes has not focused enough on certain aspects of change management that
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directly affect execution results.









































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References

Books Llc (2010), Systems Analysis: Systems Design, Nessi, Function Model, Problem Frames
Approach, Idef1x, Failure Mode and Effects Analysis

Hammond. J, Keeney. R, & Raiiffa,H, (2006), Harvard Business Review Special Topic on
Decision-making: The Hidden Traps of Decision-making, retrieved on January 30, 2011
from:
http://faculty.insead.edu/popescu/UDJcore/XtraMaterial/Harvard%20Business%20Revie
w%20Online%20%20The%20Hidden%20Traps%20in%20Decision%20Making.htm

Hrebiniak, L. G. (2005). Making Strategy Work. New Jersey: Wharton School Publishing.
Lincoln. J, (2010), Root Cause Analysis: Getting to the Bottom of the Problem, John Wiley &
Sons, Incorporated,

Proctor. T, (2010), Creative Problem Solving for Managers: Developing Skills for Decision
Making and Innovation, E3, Taylor & Francis,