The third criticism of the traditional model is that it does not address serendipity⎯the stumbling across good things accidentally. Because serendipitous discoveries can yield numerous opportunities, companies must be able to pursue them, even if they are inconsistent with the current strategic plan.Given these three criticisms, the role of emergent strategies becomes clear. Unplanned responses to unforeseen circumstances that often arise from autonomous action by individual managers deep within the organization can allow a company to prosper.77. Select at least three of the cognitive biases that individual decision makers experience. Then describethe bias and a real or hypothetical situation for each of them, explaining how the bias is evident in the situation.ANSWER: The prior hypothesis bias claims that individuals formulate and use theories about causation, which they sometimes use inappropriately or in spite of evidence that the theory is false. For example, managers for U.S. automakers in the 1960s and 1970s believed that Americans bought cars for the luxury features and styling, and therefore they completely missed the trend toward cars that were more reliable, safer, and fuel efficient. Japanese automakers saw the trends and were able to fill that demand first.Escalating commitment causes managers to continue to "throw good money after bad," to invest in projects that are failing. This takes resources away from successful projects. Students exhibit this bias when they work harder to raise their class grade from a D to a C than they will work to raise their grade from a B to an A, even though both improvements have the same impact on their overall grade average.Managers use reasoning by analogy when they inappropriately make decisions based on simple analogies. For example, some managers use war as a metaphor for business competition. However, this analogy limits their ability to consider options such as cooperation in joint ventures.The representative bias asserts that decision makers make choices based on overreliance on just a few oreven just one data point. Managers who have had one extremely positive or negative occurrence tend toremember and rely on that occurrence when they make future decisions. If a gambler gets very lucky the
first time he wagers, he tends to wager greater amounts and more often than do gamblers who are initially very unlucky.Illusion of control occurs when managers are overconfident about their abilities to control events. Managers who take on projects that are beyond their capabilities or who refuse to admit that they need help are guilty of this bias.78. Describe at least three characteristics of strong strategic leaders. Explain how each of the three characteristics would help motivate and lead an organization's personnel.
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