Simon’s Quote on the Capacity of The Human Mind
“The capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problems whose solution is required for objectively rational behavior in the real world or even for a reasonable approximation to such objective rationality” (Simon, 1957, p. 198). In other words, human beings encounter situations that require them to make decisions every day in their lives but this is quite complex in some instances. This notion has been supported by Dostal (2015) who states that human beings encounter different situations that contain obstructions and these can impact negatively on their desire to achieve the intended goals in life (Dostal, 2015). Therefore, appropriate decisions have to be made in order to solve these challenges encountered by people in their lives. However, the decision making process may be biased but this now depends on the perceptions of different people. As such, this essay seeks to discuss the Simon’s quote above in reference to a critical examination of the following concepts: The Principle of Bounded Rationality, Rational Components in Role Behavior, Rational choice as well as Rational Choice and Learning.
According to Simon (1958), human behaviour especially in organizations is best described as “intendedly rational.” This means that the people are expected to take a rational approach towards decision making which helps the organization to ensure consistency in the decision making process (Leoveanu, 2013). Ideally, decision making is goal oriented and there are different concepts that can be attributed to this whole process. These concepts are discussed in detail below and their biases are also outlined.
This concept states that the economic man is comprised of mainly two species namely the consumer and the entrepreneur. The major similarity between these two parties is that the consumer wishes to maximise utility from using a commodity or service and his or her behavior is bound by this need while on the other hand, the entrepreneur seeks to maximize profits from a particular course of action (Simon, 1958). This concept of Bounded Rationality assumes that both types of economic men are rational. They make decisions that are primarily intended to help them to achieve their desired goals which in turn satisfy their needs. Human beings have different needs in their lives and these needs to be satisfied in various ways. As rational beings, people tend to seek the best alternative way that can be taken in order to solve the problems at hand. In this particular case, the notion of rationality is mainly concerned about taking the right course of action in order to solve a problem.
The Bounded Rationality concept is biased in that it assumes that both consumers and entrepreneurs’ behaviors are affected by external factors only. The consumer is affected by budget constraints while the entrepreneur is likely to be affected by factors demand and supply as well as production processes (Simon, 1958). The bias is that it does not take into account psychological factors that can also significantly affect the behavior of rational human beings. It can be argued that the behaviour of human beings is not only affected by external factors only since they are bound to be influenced by psychological forces. In as much as the customers want to maximise utility from consuming a particular product, their behaviour is also influences by psychological forces. In the same vein, the decisions made by organisations are also influenced by the same. The underlying principle is that the concept of rationality seeks to provide the best alternative method that can be taken to solve a problem. Therefore, the desire to maximise profits cannot override the desire to safeguard the interests of the stakeholders that are affected in various ways by the operations of the organization.
Concept 1: The Principle of Bounded Rationality
This concept states that an actor plays a leading role in a given scenario (Simon, 1958). The major notable aspect about this concept is that behavior of the person involved should be within the subscribed area. This concept mainly draws from the scenario of acting in dramas or movies. An actor has a role to play and the role expectation should be achieved. In the same vein, the model states that the leader say in the organization should also strive to act in the subscribed manner. It can thus be seen that behaviour is adaptive only within the given limit set by the environment. In the organization, this model states that the leaders should act as expected.
However, this concept does not take into account the social or psychological behaviour of the individual concerned. There can be conflicts of interests here since the role hypothesis states that the large fraction of different premises obtain from socially defined role that is appropriate to the situation in which the actor is placed (Simon, 1958). The concept is biased in that it does not take into account that human mind is not a programmed machine. This inherently means that his or her behaviour is affected by other external factors that they come into contact on a daily basis. This also affects the decision making process of the parties involved since they are not conditioned objects. This implies that the leaders should think out of the box in order to make effective decisions. Problems encountered in the day to day operations of the organization are not uniform hence the need for the responsible leaders to be flexible in their approach to solving problems they may encounter in their day to day operations.
According to Simon (1958), this concept assumes that rational choice is choice among objectively given alternatives given alternatives that have objectively given consequences that reflect all consequences of the real world accurately. In other words, this concept is trying to state that people should be strictly guided by objective alternatives available in certain situations. However, it can be seen that the concept of objectivity is relative in this case since the issue here is to try to find the best approach to solving a problem at hand. This does not necessarily mean that there are readily available objective alternatives that can be implemented since there are quite a number of issues that need to be taken into account.
From the above argument, it can therefore be observed that this concept is biased in that it ignores the principle of bounded rationality where the decision making behaviour of the individuals is mostly influenced by their desire to achieve certain goals and needs in their lives. The issue of subjectivity in decision making cannot be overlooked since there is no single prescribed method that can be implemented to solve different problems. This means that there are different alternatives that can be implemented as long as they satisfy the needs of the parties involved. Notably, these alternatives cannot be objective and similar in nature.
Concept 2: Rational Components in Role Behavior
The concept of rational choice and learning is somewhat a combination of learning theories as well as decision making theories (Simon, 1958). This notion is of the view that rational human beings are capable of scanning the environment and understand the causes of the problems at hand as well as finding the best solutions that can be implemented in order to address them. This can be possible through learning. The social learning theory that was polularised by Bandura states that human beings learns from the environment around them (Funke, 2010). This means that human beings learn from various social interactions with the other people around them. First and foremost, people need to learn something from observing the behavior of the other members within their social groups. This plays a pivotal role in shaping the attitude and perceptions of different people about how they view different issues around them. This also shapes the approach they can take in order to solve various problems they may encounter in their everyday lives. This particular concept to decision making views learning as a very important component that can help people to make informed decisions. In most cases, people learn from their own mistakes and they can also learn from other individuals around them. This is very important since it helps them choose the best alternative from the ones available.
From the discussion above, it can be observed that human beings often encounter complex problems particularly in different organizations where they are attached. Notwithstanding their complexity, problems encountered in the operations of the organisation ought to be solved in order to ensure its long term viability and sustainability. The rational decision making model is considered as one of the viable alternatives that can be implemented in order to solve different challenges that are encountered by various firms. As Simon (1958) observed, the behaviour of human beings in organizations is described as “intendedly rational.” Rational human beings are expected to behave in a certain way so that they can be in a better position to fulfill their desires.
The case of Samsung is going to be used to illustrate how different concepts discussed above can help the company to identify bias, assess methods by which bias can be evaluated, strategies to overcome bias in the scenario as well as the measures that can be taken to improve the situation.
According to Mozur (2017), a number of cases about Samsung Galaxy 7 batteries exploding and causing injuries to the users and other people have been reported since the beginning of September 2016. This problem has been attributed to the flaws in the design of this type of phone since the batteries overheated which often in the device catching fire. In order to resolve this complex problem, the company recalled all the Samsung Galaxy Note 7 smartphones from the global market in order to safeguard the interests of the targeted stakeholders at large as well as to protect the image of the organization which came under scrutiny following the reported cases of the batteries from the Note 7 phone exploding. The organization ultimately cancelled the production of this product as a long term measure to ensure that the lives of the stakeholders were not put at risk.
Concept 3: Rational choice
In the first concept of bounded rationality, it can be noted that the decisions are solely made out of the need to maximize either utility by the customers or profits by the company involved (Simon, 1958). As illustrated in the case of Samsung, this concept can be applied in order to solve the problems that are facing the company. Indeed, it is true that Samsung Company is bound by its objective of making profits from its operations. Given the magnitude of the problem identified above, it can be seen that bias can be identified in the event that the company tries to underplay the problem all for the love of maximizing profits. In the first instance after the problem was reported, Samsung tried to downplay its impact by changing the suppliers of the batteries but it kept on persisting. This is where bias is identified when it seems that the company is in denial of the problem that exists. Using this concept of bounded rationality, the extent of bias can be measured by evaluating damage caused by the problem. In order to address this particular type of problem, it is imperative for the company to consider its interests as well as that of its consumers for its long term benefit. Like the decision made by Samsung, it can be observed that the company sought to address the problem once and for all. This process can help to improve the decision outcomes since the responsible authorities have the autonomy to monitor and evaluate the situation after implementing the suggested decision.
The second concept discussed in the first part is Rational Components in Role Behavior and it states that the behaviour and decision making process should be guided by the standards set by the organization. In other words, the internal policies should guide the process of making decisions that are meant to address the problem identified. With reference to the given cases study of Samsung explained above, it can be seen that bias is identified if the company is particularly concerned about its internal operations without paying attention to the demands of the external environment. Had the company ignored the effects of flawed batteries in the Samsung Galaxy 7, then it would have acted in a biased way. In similar fashion, the method that can be used by the company to measure the extent of bias is to assess the level of damage that has been caused by the problem identified. In some cases, the damage can be quantified in the form of losses that have been witnessed after the problem has been identified. In this case, Samsung lost billions of dollars in revenue following the outbreak of the problem. In order to address this problem, it is imperative for the organization to act in a rational approach and consider the interests of all stakeholders that may be affected by the problem identified. This helps the company to gain first-hand information about the actual causes of the problem identified. This process can improve the situation in that it helps the responsible authorities to gather as much information as possible about the likely cause of the problem. This helps them to rectify the root problem not the effects of the problem. This also helps the company to implement long lasting solutions.
Concept 4: Rational Choice and Learning
The third concept as discussed above is rational choice which assumes that the rational choice is among the objectively given alternatives that also have objective consequences (Simon, 1958). Bias in this concept is observed in that it emphasizes that people should be strictly guided the objective alternatives are available in certain situations. The case of Samsung is quite complex in that there is no clear alternative that is objective which raises the question of bias. Such types of problems are not clearly defined from the onset which makes them tricky to identify an objective solution that can be implemented. The best method that can be used to measure the level of bias is to assess if the suggested solution yields benefits not only to the company but the stakeholders involved at large. It can be folly for the company to focus on its profit oriented goals alone without considering the extent to which the damage has affected the other stakeholders. In the example of Samsung presented in the case study highlighted above, it can be seen that the company’s denial of the problem caused more problems since the consumers continued to experience its impacts. In order to address the problem of bias, a holistic approach should be taken to ensure that the needs of all the interested parties are addressed. When the needs of different stakeholders are given the priority it deserves, then there are likely chances that a long lasting solution can be found. This process can help to improve the decision outcomes in future in that it helps to minimize chances of conflicts. When all the parties are happy about the outcomes of the decision made, then mutual understanding is created.
The fourth concept pertains to rational choice and learning. This concept states that rationality and learning are two concepts that are complimentary to each other. In other words, this means that a rational decision model is significantly influenced by learning. In the given case of Samsung, it can be observed that bias can be identified when the parties involved resist to learn as well as to implement rational solutions that are good to the majority of people. Bias can also be measured by assessing the level of satisfaction among the members about the decision that has been suggested. In the case of Samsung, the level of bias can be measured by assessing the extent to which the final decision that was implemented helped to solve the problem identified. In this case, the customers are the major stakeholders hence their interests need to be taken into account in order to ensure that they get satisfactory services from the company. The process of evaluating the decision making process can have long term benefits to the company in that there will be limited chances of the recurrence of the problem in future. Essentially, decision making process is primarily concerned with finding a long term solution to a particular problem that can threaten the viability of the company.
In conclusion, it can be said that the concepts discussed above aid decision making in various ways. These are also designed to give the decision makers various options they can take in order to solve certain problems. However, not all problems encountered by organisations are universal. This means that the methods that can be used to solve them are also not similar. The other issue that has been observed from the above scenario is that decision making process can be biased in one way or the other. This affects the quality of the decision likely to be made and this can negatively impact on the operations of the organisation in future. In order to avoid bias in decision making, it is imperative for the decision makers to thoroughly scan the environment so that they gain understanding of the root cause of the problem rather than merely focusing on the effects of the problem. This is advantageous in that the problem would be solved once and for all and there would be no chances of it recurring.
References
Bazerman, M. H. & Moore, D. A. (2013). Judgment in Managerial Decision Making (8th ed).Hoboken, NJ: John Wiley & Sons.
Chen, BX & Sang-Hun C. (2016). “Why Samsung Abandoned Its Galaxy Note 7 FlagshipPhone.” The New York Times, Viewed from:
https://www.nytimes.com/2016/10/12/business/international/samsung-galaxy-note7-terminated.html
Funke, J. (2010). “Complex problem solving: A case for complex cognition? Cognitive Processing, Vol. 11, 133–142.
Mozur, P. (2017). “Galaxy Note 7 Fires Caused by Battery and Design Flaws, Samsung Says.”TheNew York Times, Viewed from https://www.nytimes.com/2017/01/22/business/samsung-galaxy-note-7-battery-fires-report.html .
Simon H.A. (1958). Models of Man: Social and Racial. New York: John Willey and Sons.
Wood, R., Cogin, J. & Beckmann, J. (2009). Managerial Problem Solving: Frameworks, Tools,Techniques. North Ryde: McGraw Hill, Australia.
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