Risky Business: the Psychology of Strategy in Uncertain Times
23 Apr 2010
New research about why normally, clear headed, rational managers with a wealth of information at their fingertips make bad business decisions will be presented by Professor Dan Lovallo from the University of Sydney at a corporate breakfast this Friday 23 April.
Professor Lovallo, from the Discipline of International Business in the Faculty of Economics and Business says his research has shown that problems in mergers and acquisitions occur because of poor decision making on the part of senior decision makers in times of uncertainty.
Lovallo's research looks to effect change in the way executives make decisions and the presentation will outline new processes and procedures for enhancing decision making skills.
"This is not about fancy analytics," said Lovallo. "It is about identifying better ways for how people communicate and make decisions."
Lovallo and his team have found that most large capital investment projects come in late and over budget, never living up to expectations.
"Our research has shown that a senior executive’s innate cognitive biases cause them to divert from the logical course of action," said Lovallo. "That means senior executives have all this information in their heads - they just don’t use it, and in general, don't ask the right questions when evaluating investments."
For more information on the Powered By Research Breakfast series visit: http://sydney.edu.au/business/research/powered_by_research
Background on Dan Lovallo
Dan Lovallo is a professor of Business Strategy within the faculty of Economics and Business, a senior research fellow at the Institute of Innovation and management and Organisation at the University of California Berkley and an advisor to management consultancy firm McKinsey