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Organizational Learning and Decision Making

Nicholette Inman
ORG 6503: Organizational Theories and Systems
University oI Rockies
ProIessor Shelton
December 11, 2011




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bstract
The Contemporary Connection is a home Iurnishings and decor boutique that is experiencing
various problems and issues within their organization. Iter evaluating the internal operations,
the owner was able to determine that their outdated products and services is a direct result Irom
having speciIic employees who are unwilling to adapt to changing market trends. Because oI
their lack oI growth, there has been a decrease in customer sales and loyalty. There are various
cognitive biases that have aIIected the success oI the organization and its decision making team.
In an attempt to create a new model Ior decision making, the owner has to Iirst evaluate the
previous models oI decision making as well as the learning environment oI the organization to
decide on the best solution Ior organizational success.








Organizational Learning and Decision Making
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With any organization, there are phases oI growth and changes that the organization will
experience throughout their liIe cycle. How an organization learns to adapt to those changes can
have a direct eIIect to the success and the liIe oI that organization. It is oIten that a company who
has been established Ior many years at one time in their liIe cycle experiences a period in which
they lose the loyalty oI long- time customers to newer rivalries. Normally, this is a result oI a
lack oI adaption oI an organization to its external environment and changing customer trends.
For a company to remain successIul and continue to gain the loyalty oI customers, it has to be
willing to adapt products and services to meet the current demands oI their target market, as well
as expand to other markets iI needed.
The Contemporary Connection is a popular upscale home Iurnishings company that
prides itselI on its contemporary Iurnishings and large array oI decorative items available to its
retails customers. For the past IiIteen years, The Contemporary Connection has been the leading
home Iurnishings boutique in the city. However, over the past three years, the store has noticed a
drop in sales since a competing major home Iurnishings chain store opened in the area. s more
and more oI what were once considered to be loyal customers are being lured to the competing
store, sales have dropped 30 over the last year.
Iter speaking with Iormer customers, it is discovered that The Contemporary
Connections has neglected to keep up with the current industry trends and the home Iurnishing
and decorations are viewed as outdated instead oI as contemporary, and there are more customer
related services that are available at the other store. In order to make changes within the
company, we must look at the internal operations that are aIIecting the image and success oI the
organization.
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Cognitive structures are the systems, belieIs, expectations, and values that are developed
over time and help to predetermine one`s interpretation oI events (Jones, 2010). There are
particular Iactors that prevent the managers and leaders oI an organization Irom realizing that
there are potential issues or Iactors that could aIIect the success oI their company. Cognitive
biases prevent managers Irom making proper decisions when it comes to the diIIerent products
or structure oI an organization. Managers oIten misinterpret inIormation and have a reduction in
the quality oI their decision making process (Jones, 2010). In The Contemporary Connection, the
managers experienced diIIerent cognitive biases that prevented them Irom positively reacting to
their various struggles that their organization Iaced over the last Iew years.
Cognitive dissonance is the interpretation oI inIormation to reinIorce belieIs, while at the
same time, ignoring other inIormation that would counter act those prior belieIs (Jones, 2010).
lthough there was inIormation that showed customers were unhappy with The Contemporary
Connection, the managers reIused to Iocus on the underlying issue that it was their products and
services that was pushing their customers away. s the buyers in the company have been with
the organization Ior many years, they continue to purchase the same line oI products Irom the
same suppliers, even though there are more current designs that are more aligned with the current
market trends. The buyers in the company ignore the Iact that the products that they continue to
purchase are no longer the items that the majority oI customers are seeking because they want to
continue with what is Iamiliar. These decision makers made the judgment to purchase Irom these
suppliers based oI the initial market trends when the company opened, however, Iailed to make
adjustments later on as those market trends changed (Das, 1999).
nother cognitive bias that is Iaced in the Contemporary Connection`s managerial unit is
prior hypothesis. Managers are likely to bring their previously Iormed belieIs or hypothesis into
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decision-making situations, which can cause them to overlook inIormation and evidence that can
prove the opposite (Das, 1999). The managerial staII and buyers oI the company believed that
their suppliers were the best in the market and that their product choices were the best Iit Ior their
target market, even though they had inIormation that indicated that home Iurnishing trends had
evolved. Lastly, the buyers in The Contemporary Connection showed signs oI projection
cognitive bias. Projection permits managers to justiIy or reinIorce personal preIerences or values
by attributing them to others (Jones, 2010). When the sales associates were asked as to why they
did not voice their expertise to buyers, they placed the blame on not wanting to waste their time
as they Ielt the buyers would not listen to their opinions. It is apparent that there were multiple
levels within the organization that neglected to place consumer needs as well as the betterment oI
the company beIore their own belieIs. s an established company, it is easy to Iall into the habit
oI believing that customers obtained will continue to be loyal customers. However, as the leaders
oI the company, when customers began to purchase Irom a chain store competitor, the
organization should have taken an in depth look at their internal procedures to determine
diIIerent ways to regain their market presence. UnIortunately, the owner as well as the managers
reIused to acknowledge the inIormation that indicated there were issues within their store that
needed to be addressed.
s the owner oI this retail boutique, there are steps that can be taken to provide an
understanding oI the current operations, as well as implementing a new process Ior making
decisions about the products purchased and customer service provided to new and current
customers, as well as regaining the trust oI prior customers. s the current operations oI the
company are not eIIectively satisIying and meeting customer needs, it is important to examine
the operations to decipher new decision making strategies that would implement a positive
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change in the organization. Operations management Iocuses on the managing the processes to
produce and distribute products and services (McNamara, n.d.). In an attempt to help all the
employees oI the company, especially the upper level salaried staII, understand the operations oI
the company, it must be broken down into the various stages oI the operations process. BeIore
any product makes it to the show room to be displayed and potentially purchased by consumers,
there is an intricate buying process that it goes through Iirst. s there are many parts that play a
role in the procurement and distribution oI the home Iurnishings and decorations that are
showcased in the store, it is important Ior all members to understand those various roles, so that
they can have a better understanding oI the complete operation.
s the current decision making process is also not eIIective to the success oI the
organization, there will need to be adjustments to this process as well. BeIore a new decision
making process is developed, it is important to evaluate the prior process in an attempt to
understand what parts oI the process were working, and which parts were inhibited by biasness.
Taking the time to review the major or signiIicant decisions that were made in the prior year is a
good start to understanding current decision making processes, and how the positively or
negatively aIIected the organization (Richards, 2010). One way to improve decision making is to
place individuals with diIIerent points oI view in charge oI making decisions Ior the organization
(Jones, 2010). By having diIIerent ideas and viewpoints on the same decision making panel, it
provides a complete and inIormational stand on the product beIore a decision is made. Managers
have to be open to suggestions Irom other team members as well as other members in the
organization. nother option Ior improving decision making is to move towards a collateral
organizational structure in which there is an inIormal organization oI managers that operates
parallel to the Iormal organization oI managers (Jones, 2010). In this structure the inIormal
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managers are able to evaluate the perIormance oI the Iormal managers, promoting change
throughout the organization.
Every outcome or situation can be converted into a learning opportunity in an
organization. s everyone learns diIIerently, it is important to identiIy the Iour most common
approaches to learning so that the correct learning process can be established in the organization.
These approaches include experimenting/ doing, observing/ participating, inquiring/ consulting,
and analyzing/ patterning (Dorsett, 2006). Experimenting or doing is a trial and error approach to
learning. When a task is started, managers wait to see what happens so that the individual can
learn by doing. Experimenting leads to explorative learning (Jones, 2010). In observation, the
individuals learn by watching someone else perIorm the tasks to be completed. Iterwards, they
will imitate what they learned (Dorsett, 2006). Inquiring process Ior learning is a beneIit Ior
those individuals who learn Irom understanding and using a thought process. This is also known
as Utilizing Game Theory in which interactions between other organizations are reviewed in an
attempt to understand what they would do in particular decision making situations (Jones, 2010).
Lastly, analyzing involves visible well deIined patterns. There is a step by step process that is
outlined on how to complete tasks that individuals can reIerence as needed (Dorsett, 2006). Even
with the various learning styles there are oIten times in which the leaders oI an organization have
to be replaced in order to instill organizational learning and decision making changes.
The rational mode Ior decision making would be the best suited decision making process
to enable the organization to make better decisions in regards to the operations oI the company.
In this mode the decision makers enter into situations with known objectives and during the
process managers will analyze both external and internal environments (Das, 1999). For this
model to work, there must be various views oI decision makers so that the situation can be
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properly and completely analyzed Irom every possible angle. InIormation needs to be gathered
and alternatives are examined beIore a decision should be made. With this model, the buyers in
The Contemporary Connection will be restructured to include either new employees or new
positions so that there are individuals who have experience not only with the current industry
trends, but also are able to Iollow the industry reports to ensure that the products purchased are
compatible with the current demand.
With any change in an organization, there are ethical considerations that need to be taken
into account. While there are salaried employees who have been with the company Ior many
years, there is a need to bring in new members who are willing and knowledgeable in the current
industry so that the changes being implemented will be successIul. Deciding which employees to
continue to leave in their current decision making positions and which individuals` services
would be better used elsewhere in the company is an important decision that should be evaluated.
While it is the ultimate goal to regain customer loyalty, The Contemporary Connection needs to
be aware oI how they realign their organization so that it does not appear that they are copying
the services that are oIIered by the competing chain company, but instead their services go a step
above and provide added beneIits to their restructured organization.
It is important to regularly evaluate the diIIerent aspects and stages oI an organization`s
operations to ensure that the company is operating to the best oI its ability. When it is discovered
that there are areas that are lacking, having swiIt and precise evaluations oI the problem areas
can lead to prompt and successIul adjustments to decision making processes. lthough the
Contemporary Connection neglected to analyze the internal operations oI its company until aIter
a competing company came into their territory and there was a decrease in sales, iI the
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organization can embrace the idea that there needs to be a new process Ior decision making in
the organization, they should be able to regain their target market.















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ReIerences
Benoit, W. L. (n.d.). Cognitive Dissonance Theory. Retrieved Irom Persuasion:
http://www.cios.org/encyclopedia/persuasion/Dcognitivedissonance1theory.htm
Das, T. (1999). Cognitive Biases and Strategic Decision Processes: n Integrative Perspective.
Journal of Management Studies 36.6, 1-22.
Jones, G. (2010). Organi:ational Theory, Design, and Change (6th ed.). Upper Sadle River:
Prentice Hall.
McNamara, C. (n.d.). Operations Management. Retrieved Irom Management Help:
http://managementhelp.org/operationsmanagement/
Paul M. Johnson Department oI Political Science. (2005). Organi:ational Procesa Models of
Decision Making. Retrieved Irom Glossary oI Political Economy Terms:
http://www.auburn.edu/~johnspm/gloss/organizationalprocess
Richards, J. (2010). How to Improve Your Decision Making Process. Retrieved Irom Ezine
rticles: http://ezinearticles.com/?How-to-Improve-Your-Decision-Making-
Process&id4723751