Strategic decision making
Learning goals:
1. Students acquire insights in the historical and contemporary individual, team and organization
level strategic decision-making perspectives in organization studies.
2. Students learn to analyze, reconstruct and to judge strategic decision-making situations from
different perspectives.
3. Students develop the skill to analyze, reconstruct and to assess decisions of strategic decision
makers within organizations.
4. Students learn to apply various theories and strategic decision-making models in organizational
contexts from the perspective of the strategic decision maker
1
,LECTURE 1 – WHAT MAKES A DECISION STRATEGIC?
WHAT MAKES A DECISION STRATEGIC (LEBLEIN, REUER & ZENGER 2018)
The central theme is that interdependence is what makes a decision strategic — not just how big or
risky a decision is.
What makes a decision strategic (via negative; reverse)
Rules of thumb by thinkers meant to guide good decision-making, especially under uncertainty.
• Do not blow up:
o Meaning: Avoid decisions that could completely ruin you — financially, reputationally, etc.
o In practice: Don't risk everything, even for a big gain. Survival is more important than
optimization.
• When possible, keep optionality:
o Meaning: Favor decisions that give you more options later, rather than locking you in.
o Strategic benefit: This reduces regret and increases adaptability, especially in environments
with high uncertainty or fast change.
• Revert, always revert:
o Meaning: When in doubt, fall back to your default or most reliable approach.
o In practice: If a decision path looks too risky or uncertain, go back to proven choices.
2
,LECTURE 2 -INTRODUCTION TO BEHAVIORAL ECONOMICS
EXAMPLE COGNITIVE BIASES
• Loss aversion: when you lose something the value is higher than when you do not have it and
want to get it.
• The graph: losing is more harmful than gaining so below is always lower than reference point
SYSTEM 1 & SYSTEM 2 ACCORDING TO BEHAVIORAL ECONOMISTS
• System 1 constantly making wrong (biased) decisions, rely more on system 2
3
, Examples of cognitive biases (+PDF)
Learn the ones in bold (PDF)
1. Lines are same length, but you may think one is longer/shorter
2. By mortality you would think twice example: doctor intervention.
3. Numbers influence your thinking decision
4. Horn effect is the same but other way around
5. Something happened was obvious
6. Explaining matters
Kahneman’s recognition
• Two reasons: not able to find precise definition of cognitive bias, the sentence saying:
o System 2 quantify things with precision
o Simplifying the process leading to mistakes that are systematic
o Problem: we like to simplify processes what leads to systematic biases.
• Heuristics = the process by which humans use mental shortcuts to arrive at decisions.
Ecological response 1 to “cognitive biases”
4
Learning goals:
1. Students acquire insights in the historical and contemporary individual, team and organization
level strategic decision-making perspectives in organization studies.
2. Students learn to analyze, reconstruct and to judge strategic decision-making situations from
different perspectives.
3. Students develop the skill to analyze, reconstruct and to assess decisions of strategic decision
makers within organizations.
4. Students learn to apply various theories and strategic decision-making models in organizational
contexts from the perspective of the strategic decision maker
1
,LECTURE 1 – WHAT MAKES A DECISION STRATEGIC?
WHAT MAKES A DECISION STRATEGIC (LEBLEIN, REUER & ZENGER 2018)
The central theme is that interdependence is what makes a decision strategic — not just how big or
risky a decision is.
What makes a decision strategic (via negative; reverse)
Rules of thumb by thinkers meant to guide good decision-making, especially under uncertainty.
• Do not blow up:
o Meaning: Avoid decisions that could completely ruin you — financially, reputationally, etc.
o In practice: Don't risk everything, even for a big gain. Survival is more important than
optimization.
• When possible, keep optionality:
o Meaning: Favor decisions that give you more options later, rather than locking you in.
o Strategic benefit: This reduces regret and increases adaptability, especially in environments
with high uncertainty or fast change.
• Revert, always revert:
o Meaning: When in doubt, fall back to your default or most reliable approach.
o In practice: If a decision path looks too risky or uncertain, go back to proven choices.
2
,LECTURE 2 -INTRODUCTION TO BEHAVIORAL ECONOMICS
EXAMPLE COGNITIVE BIASES
• Loss aversion: when you lose something the value is higher than when you do not have it and
want to get it.
• The graph: losing is more harmful than gaining so below is always lower than reference point
SYSTEM 1 & SYSTEM 2 ACCORDING TO BEHAVIORAL ECONOMISTS
• System 1 constantly making wrong (biased) decisions, rely more on system 2
3
, Examples of cognitive biases (+PDF)
Learn the ones in bold (PDF)
1. Lines are same length, but you may think one is longer/shorter
2. By mortality you would think twice example: doctor intervention.
3. Numbers influence your thinking decision
4. Horn effect is the same but other way around
5. Something happened was obvious
6. Explaining matters
Kahneman’s recognition
• Two reasons: not able to find precise definition of cognitive bias, the sentence saying:
o System 2 quantify things with precision
o Simplifying the process leading to mistakes that are systematic
o Problem: we like to simplify processes what leads to systematic biases.
• Heuristics = the process by which humans use mental shortcuts to arrive at decisions.
Ecological response 1 to “cognitive biases”
4
