Research shows that project managers continuously prioritised good vibes (positive, but subjective signals) over bad news (negative, but objective signals), which resulted in decisions of poor quality. Without understanding the root causes that generate the bad news and the good vibes, managers could make the wrong decisions.
Managers are frequently surprised by problems in complex new product development projects (Browning and Ramasesh, 2015). Often these surprises come from “unknown-unknowns”: the things we don’t know we don’t know. In response, many tools have been developed to help managers discover these unknown unknowns: to turn them into known unknowns to which risk management procedures can be applied. These tools are both hard and soft, targeting both the analytical, mechanical side of the project, and the behavioural, organic side. Examples of the former are: checklists, decomposition, scenario analysis (Browning and Ramasesh, 2015) and stage gates (Cooper, 2008). The latter includes: informal dialogues with project sponsors (Kloppenborg and Tesch, 2015), building a wide range of experiential expertise (Browning and Ramasesh, 2015), frequent communication (Laufer et al., 2015), help seeking (Sting et al., 2015), and focusing on weak signals (Schoemaker and Day, 2009).
What all these tools have in common is that they aim for clarity in projects that follow an uncertain path through foggy and shifting markets and technologies (Eisenhardt and Tabrizi, 1995). The price to pay for this is more information that needs to be processed by the project manager. Project managers need to make sense of all sorts of signals, whether they come from analytical tools or informal dialogues and communication, whether they are strong or weak, positive or negative, objective or subjective. Eventually, all signals need to be merged to make project decisions. Yet, little is known about how project managers actually make sense of a multitude of (often mixed) signals.
About the Authors
Kim E. van Oorschot (email@example.com) is a professor of project management at BI Norwegian Business School. She received her PhD in industrial engineering from Eindhoven University of Technology. Her research interests include decision making, trade-offs, and tipping points in dynamically complex settings such as new product development (NPD) projects.
Luk N. Van Wassenhove is the Henry Ford Chair of Manufacturing at INSEAD and a Fellow of POMS, EUROMA, and MSOM. He is also a Gold Medalist of EURO. His recent work focuses on sustainability (circular economy) and humanitarian operations.
Kishore Sengupta (firstname.lastname@example.org) is a Reader in Operations at Cambridge Judge Business School, University of Cambridge. His research examines managerial behaviours in the execution of complex projects, and their consequences for the outcomes of such projects. His more recent work focuses on the role of stakeholders in large innovation projects.
Henk Akkermans is a professor of Supply Chain Management at Tilburg University and the director of the World Class Maintenance foundation in Breda, The Netherlands. His research addresses the issue of how inter-organisational supply chains and networks, where no single party exerts full control, can nevertheless effectively co-ordinate their behaviour.
• Antioco, M., Moenaert, R.K. and Lindgreen, A. (2008), “Reducing ongoing product design decision-making bias”, Journal of Product Innovation Management, Vol. 25, pp. 528-545.
• Bazerman, M.H. (1994), Judgment in managerial decision making, New York, Wiley.
• Bourgeois III, L.J. and Eisenhardt, K.M. (1988), “Strategic decision processes in high velocity environments: Four cases in the microcomputer industry”, Management Science, Vol. 34, pp. 737–770.
• Browning, T.R. and Ramasesh, R.V. (2015), “Reducing unwelcome surprises in project management”, Sloan Management Review, Vol. 56 No. 3, pp. 53-62.
• Cooper, R.G. (2008), “Perspective: The stage-gate® idea-to-launch process-update, what’s new, and nexgen systems”, Journal of Product Innovation Management, Vol. 25 No. 3, pp. 213-232.
• Damasio, A.R. (1994), Descartes’ Error: Emotion, Reason, and the Human Brain, New York, Putnam.
• Dane, E. and Pratt, M.G. (2007), “Exploring intuition and its role in managerial decision making”, Academy of Management Review, Vol. 32 No. 1, pp. 33–54
• Diehl, E. and Sterman, J.D. (1995), “Effects of feedback complexity on dynamic decision making”, Organizational Behavior and Human Decision Processes, Vol. 62 No. 2, pp. 198–215.
• Dreyfus, H. and Dreyfus, S. (2005), “Expertise in real world contexts”, Organization Studies, Vol. 26, pp. 779–792.
• Eisenhardt, K.M. and Tabrizi, B.N. (1995), “Accelerating Adaptive Processes: Product Innovation in the Global Computer Industry”, Administrative Science Quarterly, Vol. 40, pp. 84–110.
• Fenton-O’Creevy, M., Soane, E., Nicholson, N. and Willman, P. (2011), “Thinking, feeling and deciding: The influence of emotions on the decision making and performance of traders”, Journal of Organizational Behavior, Vol. 32 No. 8, pp. 1044–1061.
• Forgas, J.P. and Ciarrochi, J.V. (2002), “On managing moods: Evidence for the role of homestatic cognitive strategies in affect regulation”, Personality and Social Psychological Bulletin, Vol. 28, pp. 336–345.
• Gonzalez, C. and Quesada, J. (2003), “Learning in dynamic decision making: The recognition process”, Computational & Mathematical Organization Theory, Vol. 9, pp. 287–304.
• Gonzalez, C., Lerch, J.F. and Lebiere, C. (2003), “Instance-based learning in dynamic decision making”, Cognitive Science, Vol. 27 No. 4, pp. 591–635.
• Kahneman, D. (2003), “A perspective on judgment and choice”, American Psychologist, Vol. 58, pp. 697–720.
• Khatri, N. and Ng, H.A. (2000), “The role of intuition in strategic decision making”, Human Relations, Vol. 53, pp. 57–86.
• Kloppenborg, T.J. and Tesch, D. (2015), “How executive sponsors influence project success”, Sloan Management Review, Vol. 56 No. 3, pp. 27-30.
• Koehler, D.J., Brenner, L. and Griffin, D. (2002), “The calibration of expert judgment: Heuristics and biases beyond the laboratory.” In T. Gilovich, D. Griffin, & D. Kahneman (Eds.), Heuristics and biases: The psychology of intuitive judgment, pp. 686–715, New York, Cambridge University Press.
• Lapré, M.A. and Van Wassenhove, L.N. (2003), “Managing learning curves in factories by creating and transferring knowledge”, California Management Review, Vol. 46 No. 1, pp. 53-71.
• Laufer, A., Hoffman, E.J., Russell, J.S. and Cameron, W.S. (2015), “What successful project managers do”, Sloan Management Review, Vol. 56 No. 3, pp. 43-51.
• Levinthal, D.A. and March, J.G. (1993), “The Myopia of Learning”, Strategic Management Journal, Vol. 14, pp. 95-112.
• Oliver, D. and Roos, J. (2005), “Decision-Making in High-Velocity Environments: The Importance of Guiding Principles”, Organization Studies, Vol. 26 No. 6, pp. 889-913.
• Schoemaker, P.J.H. and Day, G.S. (2009), “How to make sense of weak signals”, Sloan Management Review, Vol. 50 No. 3, pp. 81-89.
• Schwarz, N. and Clore, G.L. (1983), “Mood, misattribution and judgments of well-being: Informative and directive functions of affective states”, Journal of Personality and Social Psychology, Vol. 45, pp. 513–523.
• Sengupta, K., Abdel-Hamid, T.K. and Van Wassenhove, L.N. (2008), “The experience trap” Harvard Business Review, Vol. 86 No. 2, pp. 94-.
• Seo, M.G. and Barrett, L.F. (2007), “Being emotional during decision making – good or bad? An empirical investigation”, Academy of Management Journal, Vol. 50 No. 4, pp. 923-940.
• Simon, H. (1991), “Bounded rationality and organizational learning”, Organization Science, Vol. 2 No. 1, pp. 125-134.
• Sleesman, D.J., Conlon, D.E., McNamara, G. and Miles, J.E. (2012), “Cleaning up the big muddy: A meta-analytic review of the determinants of escalation of commitment”, Academy of Management Journal, Vol. 55 No. 3, pp. 541-562.
• Staats, B.R., KC, D.S. and Gino, F. (2015), “Blinded by experience: Prior experience, negative news and belief updating”, Harvard Business School, working paper 16-015.
• Staw, B.M. (1981), “The escalation of commitment to a course of action”, Academy of Management Review, Vol. 6 No. 4, pp. 577-587.
• Sting, F.J., Loch, C.H. and Stempfhuber, D. (2015), “Accelerating projects by encouraging help”, Sloan Management Review, Vol. 56, No. 3, pp. 33-41.
• Thompson, L., Gentner, D. and Loewenstein, J. (2000), “Avoiding missed opportunities in managerial life: Analogical training more powerful than individual case training”, Organizational Behavior and Human Decision Processes, Vol. 82 No. 1, pp. 60–75.
• Tsai, C.I., Klayman, J. and Hastie, R. (2008), “Effects of amount of information on judgment accuracy and confidence”, Organizational Behavior and Human Decision Processes, Vol. 107 No. 2, pp. 97–105.