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In his book, Operations Management, author William J. Stevenson indicates that modern business organizations have three, basic functional areas: finance, marketing, and operations. A fundamental association exists between these functional areas resulting in significant interfacing and collaboration. This effort involves exchange of information and cooperative decision making (Stevenson, 2011). Indeed, Roy indicates that, “the rationale of having these functional areas work together is the increased likely hood of developing a plan that will work and one that everyone can live with” (Roy, 2005 pg 154). The interaction between functional areas is a necessary dynamic which helps overcome information processing challenges and lends itself to both formal and intuitive strategic decision-making, particularly when variables are capricious, and facts are limited and clearly don’t point the way to go, This is also true because, as , Sadler-Smith, Burke, Claxton and Sparrow indicate, intuitive strategic decision-making varies with job level; senior managers are typically more intuitive than middle or lower-level managers (Hodgkinson, Sadler-Smith, Burke, Claxton & Sparrow, 2009).  For example, an interface between marketing and operations may exist to provide a business with an understanding of its markets from both perspectives. Research by Ruekert and Walker, Jr. support this assertion, and led to the development of their theoretical framework for examining how and why marketing personnel interact with personnel in other functional areas in planning, implementing, and evaluating marketing activities. Their model demonstrates that effective performance of the marketing function requires a variety of transactional flows between functional areas. These flows include resource flows of a primarily financial nature, work flows, and assistance flows. Work flows refer to the parts of a specific function being divided between the marketing department and other functional areas, while assistance flows describe technical and staff services (Ruekert & Walker, Jr., 1987).  The model succeeds particularly in the area of interrelated functional decisions such as where to divide the market into segments, which segments to target, what goods and services to offer each segment, what promotional tools and appeals to employ, and what prices to charge all reflect the marketing strategies.

With respect to the research above, it’s been my experience that the interaction between the different functional areas of an organization is often contentious, but equally vital to the success of decision-making process. Simply put, a marketing department reflects the interests and wishes of clients while also monitoring and analyzing emerging challenges posed by competitors and opportunities and threats related to trends in the external environment. All of these factors, ultimately, help shape the strategic goals of an organization. Operations helps determine the feasibility and the means with which to meet these strategic goals based on the resources available while the financial segment provides a forecast of how much it will coast to reach the goals. In this way, all functional areas play a crucial role in influencing strategies formulated at higher levels in the organization.

Hodgkinson, G. P., Sadler-Smith, E., Burke, L. A., Claxton, G., & Sparrow, P. R. (n.d.). Intuition in organizations: Implications for strategic management. (2009). Long Range Planning, 42, 277-297.

Dr. Roy, R. N. (2005). Modern approach to operations. Daryaganj, New Delhi : New Age International (P) Ltd., Publishers.

Ruekert, R. W., & Walker, Jr., O. C. (n.d.). Marketing’s interaction with other functional units: A conceptual framework and empirical evidence. (1987). Journal of Marketing, 51, 1-19.

Stevenson, W. (2011). Operations management. (11 ed., Vol. 148). New York: McGraw-Hill/Irwin.

I’m currently studying quantitative and qualitative decision making, and discussing Campbell, Whitehead and Finklestein’s Why Good Leaders Make Bad Decisions and the red flag factors that influence poor decisions.  In order to frame the discussion, I’ll point to  An Introduction to Management Science: Quantitative Approaches to Decision Making, in which authors Anderson, Sweeney, Williams, Camm and Kipp Martin define decision making as the steps involved with the problem-solving process. The first step in the process is to identify and define the problem. The process then culminates with the choosing of an alternative, which is the act of making the decision (Anderson, Sweeney, Williams, Camm & Kipp Martin, 2011). In quantitative terms, it appears to be a straight-forward procedure. However, Campbell, Whitehead and Finklestein concede that the decision making process is often-times defective; that, “important decisions made by intelligent, responsible people with the best information and intentions are sometimes hopelessly flawed” (Campbell, Whitehead & Finklestein, 2009 pg. 60). The authors point to three factors in the decision-making process that are “red flags” for failure. These issues either alter leaders’ emotional tags or encourage them to see a false pattern. They include:

• The presence of inappropriate self-interest: the emotional bias one attaches to information, forcing us to see what we want to see.
• The presence of distorting attachments: the bonds we develop with people, places, and things and the way these bonds affect the judgments we form about the situation we face.
• The presence of misleading memories: referring to anamnesis which appears relevant at the time, but eventually lead to the wrong conclusions. (Campbell, Whitehead & Finklestein, 2009)

Of these biases, the Authors consider the presence of distorting, emotional attachments as one of the most powerful. “Personal attachments surround us and can have a major role in any decision,” they write, “sometimes to our extreme detriment “(Finklestein, Whitehead & Campbell, 2009 pg.84). The nature of these attachments can be complex: from intimate to detached, sinister to unthreatening, subtle to ingenuous. They include family and friends, communities and institutions, and objects. We can even become attached to emotional states and conditions, as Hammond, Keeney and Raiffa elucidate when referring to a similar bias in which decision makers exhibit a strong partiality toward alternatives that perpetuate the status quo. “Breaking from the status quo means taking action,” the Authors explain, “and when we take action, we take responsibility, thus opening ourselves to criticism and to regret” (Hammond, Keeney & Raiffa, 2006 p.121). I can think of numerous examples in which I have fallen victim to these somewhat irrational biases and the consequences associated with them. One example that comes to mind is my decision to retain a cleaning company to clean a certain number of our company’s facilities. I had employed the outfit personally in my home, was pleased with their efforts, and was aware that they were looking to branch out into office cleaning. Due to my personal relationship with the company, we endured their growing pains and learning curve for approximately a year before I made the difficult decision to employ a different vendor. So, not only did I make the wrong decision based on an emotional attachment, I chose not to act to deal with the problem in a timely manner. As Hammond, Keeney and Raiffa explain, in a situation in which “sins of commission (doing something) tend to be punished much more severely than sins of omission (doing nothing), the status quo holds a particularly strong attraction” (Hammond, Keeney & Raiffa, 2006 p.122). As a result, it was necessary to handle vendor contracts differently from that point on: I outline expectations as thoroughly as possible at the beginning of the contract, have frequent review periods, and build as many out-clauses into the contract as possible. Campbell and Whitehead’s analysis holds true in this case: “Flawed decisions will only result when the decision process that supports and challenges the key decision maker(s) also fails” (Whitehead & Campbell, 2010 p.8). Its been my experience that service companies that differentiate themselves through expertise in their field often carry this attitude toward the vendors they employ: “they’re the experts; they should know how to do the job”. It’s the same kind of faith organizations hope clients will put in them. I wonder if others that work in service-related fields have experienced similar bias in judgement?

Anderson, D. R., Sweeney, D. J., Williams, T. A., Camm, J. D., & Kipp Martin, R. (2011). An introduction to management science: quantitative approaches to decision making. (13th ed.). New York, NY:

Campbell, A., Whitehead, J., & Finklestein, S. (2009). Why good leaders make bad decisions. Harvard business review, 87(2), 60-6.

Finklestein, S., Whitehead, J., & Campbell, A. (2009). How inappropriate attachments can drive good leaders to make bad decisions. Organizational Dynamics, 38(2), 83–92.

Hammond, J. S., Keeney, R. L. & Raiffa, H. (2006, January). The hidden traps in decision making. harvard business review, Retrieved from http://hbr.org/2006/01/the-hidden-traps-in-decision-making/ar/1