2.4.3 Principles of decision making (Part 3)

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Managing the Company of the Future

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University of London

Managing the Company of the Future

535 classificações

The aim of the course is to provide you with a comprehensive framework for understanding both the traditional principles of management inside companies today as well as the alternative principles that are becoming increasingly important. It provides both theoretical and practical perspectives on the nature of management in today’s organisations.

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Week 2

Welcome to Week 2 of 'Managing the Company of the Future'. This week, we'll be learning about traditional and alternative approaches to coordination and decision making, and how you can experiment with some of the new alternative ideas in your own company.

2.1 Defining your management model 11:18

2.2.1 Principles of co-ordination (Part 1) 8:10

2.2.2 Principles of Coordination (Part 2) 7:11

Steven Weber, University of Berkeley: Making our actions visible to others enables better coordination and overall social welfare3:44

2.2.3 Principles of co-ordination (Part 3) 6:01

2.3 Moving from bureaucracy to emergence 11:32

2.4.1 Principles of decision making (Part 1) 6:18

2.4.2 Principles of decision making (Part 2) 5:54

Gary Hamel, London Business School : A crowdsourcing approach to getting new ideas funded in large companies 4:15

2.4.3 Principles of decision making (Part 3) 6:47

2.5 Moving from hierarchy to collective wisdom 8:40

Week 2 summary7:36

Conheça os instrutores

Julian Birkinshaw
Professor of Strategy & Entrepreneurship
London Business School

[MUSIC]

So collective wisdom sounds pretty good.

It sounds like a good idea to tap into the wisdom and

the insights of people across an organization.

And indeed many, many books have been written on the subject in recent years.

But let's also acknowledge the, the other side.

Let's acknowledge where collective wisdom actually goes wrong.

And I'll just give you two quite, quite humorous examples.

The first is an example from the UK from where I live, which is a,

an organization which is called myfootballclub.com.

And the guy behind that, Will Brooks was his name,

he was a journalist, he had the bright idea that he would get a bunch of people,

tens of thousands of people, to club together to buy a football club.

So that they could actually tell the manager of that football club

which players to buy, which players to put on the pitch, how they should,

what their tactics should be.

He, he wanted to kind of democratize the running of the football club.

Now this was launched in 2007.

Very successful for a couple of years.

He actually managed to get about 40,000 people to, to pay some money, to buy,

to buy, put enough money into a fund to buy a football club.

They bought a club called Ebbsfleet United.

A small, small, lower ranking club in the U.K., and for the first season or

so, they, they were very successful.

They actually won a trophy.

They were able to, to actually get the manager of

the club to agree to being owned by this mass of people.

But the problem is that the enthusiasm just ran out of steam.

I mean, there's, there's no better way of saying it.

It's kind of fun, this idea of, of being part owners of a football club.

So you got the crowd incited.

You got them excited about the idea of, of owning a football club.

But from 40,000 members in 2007, by about three years later it had dropped to

about 3,000 members and so, of course, they ran out of money.

And ultimately, I think they ended up having to sell,

sell the thing because they simply couldn't afford to keep it going.

So the point of that little story is it's quite easy to get a crowd excited, but

it's actually quite hard to maintain that enthusiasm.

And those organizations I know who've created, for example, big suggestion

schemes around innovation, they often find that enthusiasm wanes very quickly.

My second, slightly humorous example is actually from

when Barack Obama because President in 2009.

And he was a presidential candidate who used social, social media a lot.

And so he had the bright idea of using digital technology in order

to create what he called a citizen's briefing book.

And a citizen's briefing book was a classic idea scheme,

whereby he got people from across the country to submit their ideas for

things that he should be working on, principles, you know, bits of legislation

that he should be, should be actually spending time on when he became President.

And they went through two rounds.

First of all, people submitted ideas and then they clustered them and

then they went through a voting process.

Well, once the results came in,

it became clear that this wasn't going to be a very useful list.

Top of the list was legalizing marijuana.

There was a piece around age appropriate sex education.

There was a piece about making America the greenest country in the world.

Something about bullet trains.

Not, not necessarily bad ideas.

That's not my point.

My point is that these were special interest ideas.

These were people who had a particular axe to grind.

And if you think about it, this was in 2009 when President Barack Obama was

trying to manage the global financial crisis, strangely enough the things on

this list just didn't get anywhere near the top of the list.

And, again, the, learning the lesson from this point is, I think,

quite clear, which is that if you ask people for their views, and

you ask them a really broad question, you know, don't be surprised if the answers

they give you don't actually link with your own particular agenda.

Because they don't have any enormous accountability as you do

as a leader to actually make things happen.

So, two examples of where I would say,

collective wisdom as a principle has kind of fallen apart.

Let me just summarize these points in, in the following slide.

Which is to say that there are about four sort of conditions if you like,

where collective wisdom goes wrong.

First of all, the crowd doesn't feel any great accountability for their ideas, so

if you ask them for their views on something, it's very dangerous to

do that if they think that they're, they're getting kind of a free lunch.

Here, here's, here's something that you should work on because I can't be

bothered to do it myself.

That's not very helpful.

Secondly, there are many situations where the crowd actually doesn't have the,

the knowledge to contribute.

You know, it's, it's very easy to ask the crowd for their views on something.

But if it's a finer point for example around exchange rate policy, or

it's a finer point around the technologies behind a company's products.

What you need to do is to make sure that the people you ask actually know

something about what you're talking about.

Otherwise, you're going to get very unhelpful views.

Thirdly, it's often the case that the crowd doesn't actually have

what you might call independent points of view.

The notion of collective wisdom is based on the idea that lots and

lots of people are offering their independent views.

So we've got the sort of the wisdom of the crowd on one hand, but

the downside of that is what we can call the madness of the crowd.

Which is that crowds will often look at what each other is doing,

in order to figure out what to do themselves.

And this is why we see so-called herd behavior.

This is why we see crowds doing crazy things.

So if you're going to use some sort of collective wisdom-based scheme for

providing input, for example, to a decision,

make sure that people are asked to make their judgments on their own basis,

rather than by collaborating and discussing first.

Finally, the crowd also typically loses interest,

as I've said with my football club example.

It's very easy to get a one shot interest in some sort of idea,

but it's actually quite difficult to get them continuing to invest in a project,

unless they've got some sort of accountability or stake in the outcome.

One final point I'll make.

Crowds are not very good at coming up with creative inputs.

There was an experiment done a few years ago by Penguin, the book publisher.

And they had this idea of crowdsourcing a novel.

They called it amillionpenguins.com, and it was an outright disaster.

I mean, people can't collaborate together to

create a creative input such as a novel.

I'll provide the website on the course, and so that you can actually go to

the website which explains how that particular project fell apart.

It's quite an amusing story.

So in sum, crowdsourcing, terrifically valuable, but

when used inappropriately it can also get us into deep trouble.

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