Jeffrey Saltzman's Blog

Enhancing Organizational Performance

Contextual Decisions

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How things get presented is just as important as to what is being presented. People in marketing and sales have known that for a long time. Others of us have to be constantly reminded. I keep hoping that people will find my content interesting for the content’s sake and not because I have a gratuitous graphic or have surrounded the material with slick marketing. (I have nothing against graphics that add clarity). And while marketing and packaging can certainly make the product more attractive, sometimes the buyers find out that the only thing that was actually there was the marketing and packaging. But regardless, the context of how things get presented can drastically alter how they are perceived and decisions based on that perception. In all aspects of our lives how a situation is presented can dramatically impact choices made, pushing people in one direction or another, perhaps sometimes taking actions that they normally would not consider.

Many businesses are working to increase internal efficiencies and improving business processes as a survival technique during this recession. They the data I have collected suggests that they are tending to shy away from offering potentially lucrative new products and services in favor of increasing internal efficiencies and cost cutting. On the other hand, some may shy away from offering new products and services for good reason. For instance, new juxtapositions of unusual product pairings or unexpected service associations can be humorous, can give one pause, and sometimes can be alarming or even revolting.  But in the spirit of helping organizations squeeze a bit more cash out of their operations, I have come up with some business expansion opportunities that perhaps with a little bit of marketing and packaging may just take off.

First imagine you were driving around in a car, reading the signs appearing in the front of storefronts and other buildings.

  • You pass by a funeral home with a sign out front, “Now Serving Lunch and Dinner, Early Bird Special – No Reservations Required”. Umm…Yummy.
  • You then come across a nuclear power plant that has decided to go into healing baths business and has opened a water immersion spa on its grounds. Right next to the cooling towers. Appealing right? (If you look at this one historically there is an interesting story about “healthy” radioactive waters).
  • You spy in front of a road repair and paving company not a Russian, but a sign saying, “Now seeing dental patients, get your cavities filled, no waiting”. Yes I would imagine that there would be no waiting.
  • Your stomach turns at the banner fluttering over the toy manufacturing company, “Try out our new line of caskets”.
  • And your queasiness continues as you come across a deep water oil drilling company who has opened a fish wholesaler operation at the docks with the sign, “Cheap fish to the trade, come by and sample our deep fried fish and chips”.

Other signs make you stop and think about the larger picture. For instance, there is a sign that I always enjoy reading that is part of the artwork in a restaurant I frequent. The drawing is of an old city scene with various signs hanging in front of old stores. One sign on a lower level store front says “Lawyer 5¢ an Hour”. Above that sign is another, pointing to a second floor office and that sign says “Honest Lawyer 10¢ an Hour”. I think the assumption is that you get what you pay for.

It has been shown in the laboratory that how problems, issues or options are presented can dramatically alter the reactions that people have, how they perceive it and the choices they will make. For instance, Kahneman and Tversky developed the Asian disease problem to study how people make decisions. Say a choice had to be made between two different approaches to fight a life-threatening disease. One approach helps fewer people, but has a 100% cure rate, and the other helps a greater number of people, but has a significant mortality rate even among those helped.

When the choice has to be made between the two approaches and the choice is described in terms of how many people would be saved by each approach, the program that helps fewer people is preferred by decision-makers. When the decision is described in terms of how many lives would be lost decision-makers tend to choose the program that helps more people, even though a significant portion of those helped will die regardless. This is the case when the two approaches are matched in terms of how many people in total actually survive the illness, meaning the same number of people are either saved or die regardless of the approach. So attractiveness of these decisions is contextual, meaning how decisions get considered and made is dependent on the how the situation is presented.

Now suppose that we apply that principle to business decisions in organizations, say layoffs. Our example organization of 1500 people, 150 in management (10% of the workforce), 1350 non-management (90% of the workforce) is feeling pain, business is down, the recession is taking its toll. Customers are delaying or cancelling orders. Management is presented two options on how to cut staff that no longer has work to do.

Option one lays out a course of action which is to cut back 20% across all occupation levels. The resultant organization has 1200 employees, 120 managers (10% of the workforce) and 1080 non-mangers (90% of the workforce).

Option two is to cut the rank and file by 22% leaving management untouched. The resultant organization has 1200 employees, 150 in management (12.5% of the workforce) and 1050 in non-management (87.5% of the workforce).

In both options the same total number of people are employed and the same number will lose will lose their jobs. If someone wanted to potentially influence the course of action taken how might they go about it?  Research suggests that the options will seem more attractive when presented from the standpoint of how many people will remain employed, and less attractive if discussed in terms of the number of those to be laid off. If option one was discussed in terms of the number of jobs saved and option two discussed in terms of number of jobs lost you can make option one appear more attractive than option 2 and vice versa. Is it possible that business decisions are influenced by the context in which they are presented? Now this example casts a rather simplistic light on how a serious discussion like laying off workers should unfold, but the point is how the argument is made will affect the attractiveness of the approaches and options described. Knowing this and being aware of how arguments can influence you by the way they are presented can help you make better decisions.

© 2010 by OrgVitality, Jeffrey M. Saltzman. All rights reserved.

Visit OV: www.orgvitality.com

Written by Jeffrey M. Saltzman

July 16, 2010 at 10:48 am

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