Tunnel Vision: A Multi-Perspective Model and Case Application of Organizational Social Responsibility
Judith Winters Spain, J.D.
Allen D. Engle, Sr., D.B.A.
J.C. Thompson, D.B.A.
Peggy Brewer, D.B.A.
Judith Winters Spain, J.D.
Associate Professor, MMAC Department
Eastern Kentucky University, Richmond, KY 40475
Judith W. Spain is an Associate Professor in the Department of Management, Marketing, and Administrative Communication. She received her J.D. degree from Capital University Law School in 1983. Her research interests include ethics and employment law issues. She has published in various ethics journals.
Allen D. Engle, Sr. is a Professor in the Department of Management, Marketing, and Administrative Communication. He received his D.B.A. in Human Resources Management in 1990 from the University of Kentucky. His research interests relate to compensation, leadership and organizational change, job analysis, managerial competencies, and organizational design. Dr. Engle has presented academic papers on these topics in the U.S., Canada, Germany, Hungary, Spain and the United Kingdom.
J.C. Thompson is a Professor in the Department of Accounting, Finance, and Information Systems. He received his D.B.A. degree in Finance in 1990 from University of Kentucky. His research interests concern investment risk/return characteristics, mergers, and acquisitions. Dr. Thompson has presented numerous papers and has published in various finance journals. He actively maintains a money management and venture capital consulting practice and serves on the boards of several corporations.
Peggy Brewer is a Professor of Management in the Department of Management, Marketing, and Administrative Communication. She teaches principles of management and organization behavior. She received her D.B.A. degree from Louisiana Tech University, Ruston, Louisiana. Her research interests center around developing innovative teaching methods for management courses.
Many traditional undergraduate business students are unfamiliar with the complex, long-term strategic decision processes that characterize organizational life. Furthermore, these same students are often naïve as to how differing perspectives within a business, e.g., legal compliance, financial management, human resources, and administrative behavior, view these strategic processes.
In an effort to provide students with an approach to deal with these two issues, the authors provide a model of socially responsible decision-making that distinguishes between the intended consequences of a business decision, the foreseeable unintended consequences of said decision, and the unforeseeable unintended consequences of that decision. Rather than pursuing intended consequences with an intensity of focus approaching “tunnel vision,” this model may be used as a framework by which decision makers using these four viewpoints can expand their “peripheral vision” and make more complete socially responsible business decisions
The authors describe how each of the aforementioned four perspectives within business studies present its own set of models, theories, and conceptualizations to deal with the issue of intended versus unintended consequences. The paper highlights how practitioners and professors with these differing perspectives view the responsibility of decision makers to integrate methods/ways to push back the limits of unintended unforeseeable consequences and more completely consider and, therefore, to foresee the potential unintended consequences of complex and dynamic organizational decisions.
A case study dealing with the failed Martin Marrietta/Bendix merger is presented by way of an example of how this multi-perspective model may be used. By utilizing this model to discuss the various viewpoints, teachers may simultaneously present to undergraduate students in a business ethics or legal environment course a discussion of the cognitive and moral complexities of strategic group decisions, while at the same time outlining multiple perspectives - a form of interdisciplinary study.
Tunnel Vision: A Multi-Perspective Model and Case Application of Organizational Social Responsibility
“tunnel vision n (ca. 1942) 1: constriction of the visual field resulting in loss of peripheral vision 2: extreme narrowness of viewpoint: narrowmindness; also : single-minded concentration on one objective – tunnel visioned adj (Webster’s Collegiate Dictionary, 1996)
Tunnel vision is the term adopted by the authors as shorthand to describe that class of errors made by managers, particularly top-level executives, as they engage in strategic business decisions. Often these executives are forced to make critical decisions in an environment characterized by complexity, dynamic interactivity, and an interdependence of events. These decisions have long-term consequences. Often the stakes of these decisions are the very survival of the firm. These decisions often play out over months or years, yet with intense bursts of actions and reactions that may only take days or even hours (Sloan, 1983). The fundamental error is to fail to perceive, or if perceived to ignore, those consequences of a decision incompatible with the executive’s expectations. Successful executives perceive they can, by force of will, ensure the intended consequences of their actions – even in the face of mounting evidence that the outside forces (e.g. competitors, regulators, economic conditions or customers) are not reacting to their expectations “correctly.”
Greek tragedians referred to this failing as “hubris” – the overwhelming pride that blinds the tragic hero to the consequences of his/her actions. The audience can clearly foresee the inevitable fall from a great height, but the tragic hero is blind to all but his intentions.
It is this lack of ability to stretch beyond one’s narrow individual perspective that can lead to the downfall of an organization. Obviously, many undergraduate business students are unfamiliar with the complex, long-term strategic decision processes that characterize organizational life. Furthermore, these same students are often naïve as to how differing perspectives within a business, e.g., legal compliance, financial management, human resources, and organizational behavior, view these strategic processes.
In an effort to provide students with an approach to deal with these two issues, the authors provide a model of socially responsible decision-making that distinguishes between the intended consequences of a business decision, the foreseeable unintended consequences of said decision, and the unforeseeable unintended consequences of that decision. A case study dealing with the failed Martin Marrietta/Bendix merger is presented by way of an example of how this multi-perspective model may be used. By utilizing this model to discuss the various viewpoints, professors, as well as business executives, may simultaneously present to undergraduate students or employees a discussion of the cognitive and moral complexities of strategic group decisions as well as at the same time outlining multiple perspectives - a form of interdisciplinary study.
Tunnel Vision – A Business Phenomena
Managerial decision-making has been the topic of much research and study by educators and practitioners alike (Miner, 1980, 1982; Simon, 1976). If the classical model for decision-making could be consistently applied, where the environment is assumed to be certain and stable and the manager rational, then managers could consistently be relied upon to make just and correct decisions. The scientific approach to problem solving would be used and concern for “unforeseeable” and “unintended” consequences would not exist since certain economic assumptions would be applied: complete and perfect information; perfectly defined problem/situation; clearly identified and accurately weighted criteria; all alternative solutions are known; and alternative with highest calculated value is applied (Dessler, 2002).
However, it is widely recognized that rarely do these economic assumptions apply perfectly and that decision makers more often fit the assumptions of the normative model for decision making. The normative decision making model incorporates the concepts of bounded rationality, intuition, satisfying, and heuristics (Simon, 1976). These heuristics (rules of thumb or short cuts) can be influenced by characteristics inherent in the decision maker (values; past experiences; tendency for procrastination; reliance on and perceived accuracy of intuition; personality; cognitive intelligence; and emotional intelligence) as well characteristics of the organization (structure; policies/procedures; political environment; quality and accessibility of information; and presence of crisis and/or conflict) (DuBrin, 2002).
More recent decision models that incorporate the realities of politics and ambiguity also exist. Political models assume that managers use self-interest and power building as decision criteria and therefore will bargain and compromise to promote career advancement and personal well-being. The garbage can model of decision making views decision making as a time-sensitive process incorporating four relatively independent streams: problem streams, solutions streams, participant streams, and choice opportunity streams (Champoux, 2003). This model sees decision making as chaotic with “solutions” looking for problems to solve and decision makers using an arbitrary mix of whatever streams are in the garbage can—decision makers who are available at the time have an opportunity to make a decision and apply solutions that are available to them at the time to an issue facing the organization at that particular point in time.
Obviously, the decision making model and its associated assumptions will influence the quality of managerial decisions. Given that no one model accurately describes the decision-making process consistently, how can managers become effective decision makers? Getting managers to more accurately anticipate and assess the possible unintended and currently unforeseeable consequences of a decision can help prevent tunnel vision and short-sightedness in the decision making process.
The authors propose a model for assessing any type of business decision. The following figure presents the framework for this model.
Figure 1: Tunnel Vision Model
1 = zone 1 (foreseeable intended consequences)
2 = zone 2 (foreseeable unintended consequences)
3 = zone 3 (unforeseeable unintended consequences)
Organizations begin with a goal. Organizations begin with intended consequences – the attainment of the goal. Decision-makers create strategic processes to plan for goal achievement (Daft, 2002). But, when one is so concentrated on and devoted to the attainment of the goal, can a business executive view the issues surrounding the goal?
The center of the model (zone 1) represents the tunnel vision. In this center, the executive can only see the intended consequences of their decisions. They can see the profit and loss issues as well as the attainment of the goal. But, is this view too narrow in scope?
Surrounding the center of the model is a peripheral area titled “foreseeable unintended” consequences (zone 2). The authors submit that in this area the executive should hypothesize what could be the ultimate ramification of a particular business decision. Based upon prior experience and common knowledge, the possible outcomes of the decision could be exposed and discussed. In conjunction with that review, a business executive would also be required to scrutinize the decision from a variety of perspectives including reviewing the legality of the decision, its financial impact, the human resource aspect, and the organizational behavior impact. The business executive would ultimately be able to go forth in the decision making process with full understanding of the potential foreseeable unintended consequences of the decision.
On the outer edge of the model is the peripheral area titled “unforeseeable unintended” consequences (zone 3). The authors submit that this is the area of vision lacking in most organizations. In this peripheral area, decision-makers must first either glimpse some movement or become aware of some anomaly, some reaction to our corporate actions outside of our expectations. Next, they must focus attention on this aberration caught out of “the corner of” the corporate “eye” and define and diagnose this anomaly. Finally, the decision-makers must incorporate this reality into their strategic designs, often altering their courses of action.
Executives who are too worried about the bottom line of profit making fail to take the time necessary to reflect and analyze their decisions in view of potential unforeseeable unintended consequences of their actions. How to motivate executives to stay in this peripheral area and review their options is an important aspect of this paper.
Application of Model
The merger initiated by Bendix in its proposed takeover of Martin Marietta began as had many before it. Bendix, which was run by William Agee, made an overture to Thomas Pownall, the CEO of Martin Marietta, attempting to convince him to enter into what Agee hoped would be a friendly transaction between the two companies. (“Bendix seeks to acquire”, 1982). A friendly transaction was important because at this time on Wall Street hostile takeovers were the exception rather than the rule. Pownall rebuffed Agee’s bid which lead to one of the most bizarre takeover battles in history. (“Martin Marietta spurns offer”, 1982).
In 1982, when this merger was proposed, the economy was recovering from the back-to-back recessions of the prior two years. Defense spending was expected to rise dramatically under the new administration of Ronald Reagan. Because Bendix had operations in the defense business, and because it was sitting on a massive amount of cash, Agee decided that his best route for growth was to acquire other aerospace and defense businesses instead of attempting to grow Bendix. Agee's strategy in this regard made complete sense. His choice of Martin Marietta, it would turn out, did not.
The normal foreseeable course of events, which Agee and his bankers must have foreseen, involved a tender offer for Martin Marietta shares followed by calls by Bendix’s investment bankers asking for negotiations. That offer was opposed by the management of Martin Marietta and a proxy fight began.
Martin Marietta had in place defensive measures that had been adopted prior to the offer from Bendix. These measures, known as “poison pills”, make it more difficult for the acquiring company to complete a takeover. Bendix had no such defenses but, at least in the beginning of the process, did not seem overly concerned. Bendix also assumed that the effect of the poison pills could be mitigated. At this point, the attorneys for each firm filed the obligatory lawsuits saying that the other is in violation of one or several securities laws at the federal or state level.
The expectations, therefore, on the part of Bendix were similar to the intended foreseen consequences of other firms involved in acquisitions of the period. They were relatively certain that Martin Marietta would fight the takeover in the courts and in the court of public opinion by attempting to persuade their shareholders to not tender their shares. Bendix would counter with court action of its own and offer a high enough price to entice Martin Marietta’s shareholders to tender their shares regardless of the protests of Martin Marietta’s management. At this point it still looked like a run of the mill merger battle.
In spite of the defensive situation at Martin Marietta, the company decided to employ a very offensive strategy. Martin Marietta did what nobody on Bendix's team could have anticipated - it began a tender offer of its own for Bendix. This strategy caught Bendix completely off guard. To this point, no one had attempted such a strategy, known as the ‘Pac-Man defense’. (“Pac-Man defense”, 1982).
The scenario now faced by the two firms was the very real possibility that Bendix could own more than half of Martin Marietta and vice-versa. At that point, it became a contest to determine which company had the right to vote its recently acquired shares first. The potential legal complications were significant. The companies were chartered in different states (Bendix in Delaware and Martin Marietta in Maryland) with different securities laws.
Unbeknownst to Bendix, Martin Marietta held discussions with United Technologies about assuming the role of "white knight”. (“United Technologies launches bid”, 1982). United Technologies would also make a tender offer for Bendix shares with an agreement that, upon the acquisition of Bendix, Bendix's operations would be split between Martin Marietta and United Technologies. As a result of this turn of events, Bendix found itself as the potential acquirer of Martin Marietta and the potential acquiree of both Martin Marietta and United Technologies.
At the same time Bendix was holding discussions with Allied Corporation about Allied joining the fray. These discussions went nowhere early in the battle but would prove to be pivotal later on.
As is typical in merger cases, the firms involved include what are known as "escape clauses" in their offers. Martin Marietta had included several as had Bendix. In an effort to convince Bendix of the seriousness of its offer, Martin Marietta at this point removed most of its contingencies including the ones allowing it to not purchase Bendix shares. This set up what was referred to as a "doomsday defense." The contingency removal virtually forced Martin Marietta to buy the tendered Bendix shares if Bendix bought the Martin Marietta shares. The Bendix brain trust was astonished to the point that they did not believe that Martin Marietta would go through with the plan. As it turns out, the Martin Marietta people were prepared to do so.
The situation resulted in several more court cases, but the end result of the cases was of little consequence to the outcome. At the earliest date allowed, Bendix did indeed purchase the Martin Marietta shares that had been tendered.
Because Bendix had a several days headstart by being the company that launched the takeover, Bendix was able to purchase the tendered Martin Marietta shares before Martin Marietta could purchase the tendered Bendix shares. (“Bendix bought Martin Marietta shares”, 1982). Because of the differences in their states of charter, neither Bendix nor Martin Marietta was able to vote their shares until after each could buy the other. Numerous meetings aimed at breaking the stalemate occurred in the time period after Bendix bought the Martin Marietta shares but before Martin Marietta could buy the Bendix shares. The meetings were to no avail. As it had said it would do, Martin Marietta purchased the tendered Bendix shares and now both companies owned more than fifty percent of the other.
On the surface, the worst of all possible unforeseeable unintended situations had come to pass. After both companies had used up substantial portions of their capital to buy each other, it is estimated that the combined Bendix-Martin Marietta Company that would result would have 2.7 billion dollars in debt and only 1.1 billion dollars in net worth. Its borrowing costs would be stratospheric and its market value commensurately reduced. Its only likely path to survival would be to sell assets to reduce debt. Such an urgent sale would be known to suitors resulting in potentially substandard prices for everything that had to be sold.
In the end, it was Allied that held the trump cards. Once it became obvious to Agee that the combination as it now appeared likely could not work, he negotiated to sell Bendix and its Martin Marietta shares to Allied. Allied then negotiated with Martin Marietta to buy back the Martin Marietta shares tendered to Bendix and to sell to Allied its Bendix shares. (“Allied, Bendix, and Martin Marietta untangle”, 1982). Ultimately, the unforeseeable unintended consequences of this merger resulted in Allied completing its acquisition of Bendix, Martin Marietta being once again an independent company, and an immense amount of money being spent on legal and advisor fees.
Decisions made by managers and board members of Bendix, Martin Marietta, United Technologies, and Allied Corporation, provide examples of how social irresponsibility in decision making can lead to unintended unforeseen negative consequences. Personal vendettas, power plays, egos, and bias all seemed to play an important role in influencing decision makers in these organizations. In fact, it has been suggested that such visceral factors, although complex and unpredictable, should be included in decision models (Loewenstein, 2000).
Although the scenario at Bendix provides a number of examples of convoluted decision making, were any of the consequences predictable and avoidable? The authors submit that by using the proposed tunnel vision model, one can view the facts from the various perspectives, i.e., legal, financial, human resource, and organizational behavior, and insight can be garnered as to how the outcomes of decisions made individuals involved in the Bendix/Martin Marietta fiasco could have (should have) been foreseen and possibly prevented.
From a legal perspective, tunnel vision is easy to adopt. The Security Exchange Act of 1933, Security Exchange Act of 1934, and similar federal and state regulations, set forth in great detail the standard of care from which a business should operate in situations involving mergers and acquisitions. Compliance with those applicable rules generally should result in foreseeable intended consequences (zone 1). Thus, it is relatively easy for a business executive to look only to the law for all their answers and ignore all other perspectives.
In addition, the foreseeable unintended consequences (zone 2) of a decision are relatively easy to resolve using the legal perspective. Foreseeability is defined as “the ability to see or know in advance, hence, the reasonable anticipation that harm or injury is a likely result of actions or omissions”. (Black’s Law Dictionary, 1968). Based upon this definition, by reviewing prior mergers and acquisitions, case law, and applicable state and federal laws, the possible outcomes of a situation should be exposed.
In this scenario, the foreseeable intended course of events that would have started the hostile takeover would have been a tender offer followed by a proxy fight. However, this did not occur; rather, the Bendix/Martin Marietta scenario presents an interesting twist, i.e., the ‘Pac-Man defense’. While it is true that this defense had not previously been used, it is logical to assume that if the one company utilized this defense, it was not beyond the realm of foreseeablility that this defense would be used. If an executive had looked to the personality of the individuals involved and the climate of the country, it might have been possible to foresee this type of defense. At minimum, once this defense was generated, the company should have realized the strength of its adversary and contemplated not continuing with this action. But, that did not occur.
It is in this field of vision (zone 2) that the potential for lawsuits arise. Thus, a business would be short-sighted to not review prior to their actions the possible ramifications of their decisions, i.e., could this result in the company being sued, would this result in bad publicity for the company regardless of whether or not a lawsuit occurs, would this result in other legal ramifications for the company such as possible federal or state law violations, or similar discussions. If a business person could spend time reviewing decisions in zone 2, it is possible that some of the potential legal problems associated with the decision- making process could be reduced or eliminated.
The unforeseeable unintended consequences of an action go outside the scope of the legal environment. From a legal perspective, the liability of a company should not be applicable for a decision that results in these types of consequences. Businesses generally are not absolute insurers of their actions and foreseeability must be established in order to attach liability. On the other hand, the reality of today’s litigious society makes this visionary area fraught with concern.
If a business produces a product, consummates a merger, or provides a service, and the end result is injury or harm to a person or business, the potential for a lawsuit always exists. While it is likely that the company will be successful in their defense of such lawsuit, the expense and negative publicity could far outweigh the value of the product, the merger, or the service.
Thus, it is critical that business executives be taught to stay in this peripheral area (zone 3) and review their options. Think like the average person. Throw away the treasured law degree and imagine how the public/government/little old lady down the street would view your company’s actions. If the company feels comfortable about their decision after viewing it from this peripheral area, then the decision is the right one. If not, the decision should be altered.
From a financial standpoint, the tunnel vision paradigm is easily adaptable. From the outset of the Bendix/Martin Marietta possible merger, it appeared that the foreseeable intended consequences (zone 1) could be predicted considering the merger and acquisition climate of the time period. There was every reason to believe that after the negotiations for a friendly merger failed that the commencement of an unwanted takeover would take on a certain predictable character. There would be an outcry from Martin-Marietta about its desire to remain an independent company accompanied by a letter to its shareholders expressing management's assertion that their shareholders would be better served by remaining independent. There would also be the requisite letter in the Wall Street Journal to the same effect. It could also be assumed that both sides would engage outside law firms to provide advice and the inevitable lawsuits that accompany these activities. Most of the legal action would accuse the other company of securities law violations at either the state or federal level.
In terms of foreseeable unintended consequences (zone 2), Bendix could assume that the presence of a "fight" for Martin Marietta would perhaps result in Bendix having to pay a higher price than planned. With peripheral vision, Bendix also could have potentially foreseen the unintended consequences of the major investment banks becoming involved in what could be a hostile takeover. At this time, only a very few investment banks would take sides in hostile takeovers. The potential presence of the investment banks changed the entire dynamic of the process by expanding the strategic options that could be developed.
The most interesting part of this takeover is the category of unforeseeable unintended consequences (zone 3). It is reasonable to assume that the involvement of some of the largest and most respected investment banks in the U.S. would not have been brought to bear in this situation. This merger marked the first foray into this area for several of them. In addition, there is little to suggest that Bendix could have imagined that Martin Marietta would attempt to purchase Bendix. The sheer logistics of determining voting order and the amounts of money needed to pull it off would have put the counter-takeover off Bendix' radar screen.
As the battle unfolded, even more unforeseeable unintended consequences came into play. There was no reason to believe, even after the announcement of the proposed Martin Marietta’s takeover of Bendix, that a company with Martin Marietta’s resources could succeed. Indeed, the offer from Martin Marietta was dismissed by the markets until the involvement of United Technologies and its CEO, Harry Gray, became part of the process. With United Technology’s backing, the offer had the heft it needed to begin the process of Bendix' shareholders tendering their shares. At this point, the Pac-Man defense was in full swing. Also, as a result of United Technologies now participating, the very real possibility existed that United Technologies could take over Bendix as well.
The dropping of the ability by Martin Marietta to halt the takeover was most unusual. It amounted to a basic decision that caused Martin Marietta to have to buy Bendix shares and led to a situation that could easily have resulted in the demise of one or both companies. The authors suspect that under no reasonable circumstances could this have been anticipated from a financial standpoint alone. However, as discussed in the next two sections dealing with the human resource and organizational behavior perspective, it is arguable that the unforeseen unintended consequences of this failed merger might have been expected if an executive would have realized the nature of the involved business executive’s personalities.
Human Resource Perspective
From the human resources (HR) perspective a number of issues in the areas of recruitment and selection as well as training and career development are evident in the Bendix/Martin Marietta situation. The authors submit that these issues all contributed to the tunnel vision aura surrounding this failed merger.
Recruitment and Selection:
A significant element in this case is the limited scope of Bill Agee’s career. His dominant and some might say limited Harvard Business School MBA education was reinforced at Boise-Cascade where as Controller and eventually CFO he was surrounded by similar MBA “types” (Sloan, 1983: 70-71). When he moved to Bendix as Executive Vice President he sponsored other Harvard alumni, the most high profile individual being his eventual wife, Mary Cunningham.
The differing leadership styles of the two companies highlights a key issue. If a business executive is “exposed” to only similar viewpoints, how could tunnel vision not develop? Business executives seeking to hire only people “like me” will waste their decision making opportunities by only looking at foreseeable intended consequences (zone 1).
Training and Development:
Decisions relating to personal and career issues can be subject to the same errors associated with legal, financial, and managerial decision making. Agee’s career is characterized by the express elevator – a rapid rise to the top of a major corporation within the finance “silo.” Early in his career Agee faced no major professional crises or failures, although his jump to Bendix occurred just before several projects he was involved in at Boise Cascade ran into difficulties. Without experience with professional failure, he developed a strong belief in his own personal persuasive powers to get him out of any business crisis (Sloan, 1983). Eliminating strong dissenting opinions on the Bendix board left Agee surrounded by people who stroked his ego and reinforced his illusion of invulnerability (Sloan, 1983).
When Agee was considering a possible merger between Bendix and Burroughs, he also exhibited some “naivety” in the business world. Agee did consider the ethics of some individuals having ties to both organizations. However, he either ignored or assumed away the potential foreseeable consequences associated with dual allegiance and ultimately “war” was declared between the two companies. Later, Agee insisted that board members make a choice to serve on either the Bendix or Burroughs board. Agee also seemed to underestimate his predecessor at Bendix, former mentor and current nemesis, Michael Blumenthal.
In addition, Mary Cunningham’s decision to begin her career at Bendix with Bill Agee as CEO was fraught with seemingly unrelated issues that ultimately led to major career-related and personal consequences (Cunningham, 1984). By underestimating or not considering the unintended and unforeseen consequences of “naivety” in the business world, Ms. Cunningham suffered personal and career-related blows.
For example, she underestimated people’s (men’s) reaction to her as a woman (young, attractive, Catholic, married to a black man) in a position of power. She also underestimated the importance of building a network of friends and associates at Bendix but rather became exclusively loyal to her boss and mentor, Bill Agee. Although Ms. Cunningham was obviously very smart and very well educated, she admitted to being very naïve in her understanding of how to succeed in the business world. To quote Ms. Cunningham, “business school teaches about cash flow, not corporate politics; about ROI, not about egos and pride” (Cunningham, 1984: 283).
Thus, Cunningham’s career largely appears to be the victory of form and flattery over substance and performance – first at Harvard’s MBA program and then at Bendix (Sloan, 1983). Her limited career in no way prepared her for the complex, high-stakes environment she entered at Bendix in 1979 (Sloan, 1983).
It is because of this complex, high-stakes nature of business that should force executives to understand and appreciate the requirement of training and development within an organization. Failing to do so contributes to tunnel vision since the employees will begin to think alike and not look beyond the immediate answer to a problem in order to hypothesize about the foreseeable unintended consequences (zone 2) and/or the unforeseen unintended consequences (zone 3) of a particular decision.
Organizational Behavior Perspective
Both internal and external stakeholders hold managers accountable for using their authority to make correct and socially responsible decisions. A typical “textbook” list of variables that could influence managers to make decisions without due consideration includes: selective perception; organizational context; causal attributions; escalating commitment; recollection (recency); overconfidence (ego); ethics (values); intuition (“feelings”); vested interests; time/resource constraints; self-interest; politics; reliance on heuristics; framing effect; etc.
While most managers are well aware of the possibility of bias in decision-making, many seem to adopt the “not me” attitude and only recognize the presence of less than due diligence in decision making after the fact—if then. One might assume that “experience” and increased expertise would make for better decision making. Klein and Weick (2002) suggest that this may not be the case and managers may even be reluctant to “beef up” their decision-making skills.
While some still cling to the folklore of the “heroic decision maker” who invariably makes correct decisions under circumstances of great risk and adversity, most managers recognize that good decision makers are not necessarily unique individuals with special powers to make better decisions than others (Ritti, 1994). The situation at Bendix and Martin Marietta offer evidence as to how decision-making may have been more effective with less reliance upon the “heroic” decision maker and the unilateral focus on goals (zone 1). Bendix’s focus on finance and new technologies and Martin Marietta’s focus on operations and tradition both proved to be too narrow and short-sighted. Accessing more information and other opinions – typical of the team decision format – could have broadened and lengthened the focus of strategic decisions for both companies. (Sloan, 1983).
Two guidelines offered by Von de Embse and Wagley (1991) may have made a difference in the Bendix situation: (1) make ethics an integral part of management decisions and (2) distinguish the ethical and moral dimensions of the situation. Escalation of commitment to decisions made by managers of the companies involved in the takeover/merger of the companies involved may have been reduced and/or prevented by following some advice offered by Kinicki and Kreitner (2003): get different individuals involved in making initial and subsequent decisions about a project; encourage decision makers to become less ego-involved with a project; and make decision makers aware of the costs of persistence.
This did not happen in the Bendix/Martin Marietta case. Instead, in this merger fiasco, the escalation of commitment by the executives was caused by tunnel vision. The executives were focused on intended foreseeable consequences (zone 1) and the single goal of acquiring/rebuffing the company.
By leaving zone 1 and traveling into zone 2, Bendix and Martin Marietta could possibly have foreseen the potential problems and developed solutions. For example, developing “what-if” scenarios and increasing one’s knowledge about all aspects of a situation can help augment a decision maker’s intuitive orientation. Dessler (2002) recognizes that there is more “give” in most decisions that one might realize. In fact, it is a manager’s job to recognize that a decision needs to be changed and to lead the drive to make the change. Indeed, if Bendix or Martin Marietta executives had developed “what if” scenarios, could they have foreseen the intended (zone 1) and unintended (zone 2) consequences of their decisions?
By using Decision Support Systems (DSS), for example, decision makers can systematically analyze problems before making a decision and extend the range and capability of the decision making process, thereby increasing its effectiveness (Gallegos, 2002). There is evidence that persistence in making moderate adjustments/changes to decision support systems models can lead to optimal outcomes in the decision making process (Brown, Dell, Wood, 2002). Causing decision makers to take a broad perspective and focus on foreseeable unintended consequences (zone 2) can combat the tendency to selectively perceive based upon preconceived belief structures formed from past experiences, training, or functionality (Chattopadhyay, George, Glick, Pugliese, Beyer, 2002). In this merger, the executives from both companies did not view this situation from a broad perspective. Instead, with their preconceived beliefs based upon their limited experiences concerning how another company would respond to these takeover and counter offer events, this led to tunnel vision and the demise of both companies.
In addition, enterprise information systems (EIS) and integrated strategic management (ISM) systems can also be used to incorporate input from many levels of the organization as well as input from external stakeholders (Parkinson, 2002). Similarly, human-based methods of brainstorming, nominal group technique (NGT), Delphi technique, devil’s advocate technique, and dialectical inquiry can also be useful.
Finally, managers need to be able to think imaginatively. The authors would submit that the use of teams for group decision making could have increased the possibility of developing “what if” scenarios that could have lead to thinking about unforeseen unintended consequences (zone 3). To do so, managers need to decide when it is best to use a group or decision-making. While both advantages and disadvantages to group decision-making are well-documented and generally well-known to managers, distinguishing when to use groups and who to include in the groups can be challenging.
The following guidelines may be helpful. Managers should consider using group decision making if: additional information would increase the quality of the decision; acceptance is important; and people can be developed through their participation (Kinicki and Kreitner, 2003). Managers sometimes overestimate their own decision-making ability and do not get others involved at appropriate times. These same managers would probably have difficulty with appropriately delegating decisions as well. In summary, while managerial decision making is both an art and a science, many managers can become more effective decision makers if they recognize the need to do so and force themselves to look outside of their narrow tunnel vision.
Summary and Conclusion
Along the way of this possible merger, did the ability to reach the ultimate goal become lost in the bewildering and confining structure of the organization? The authors contend that this goal was never attainable due to the tunnel vision adopted by the organizations. The Bendix and Martin Marietta executives looked only to the foreseeable intended consequences (zone 1) of their daily actions. Their employees were not provided with the requisite training and exposure to the financial, legal, human resources, and organizational behavior aspects of the merger in order to determine the consequences of their actions.
The authors submit that without proper training and exposure the employees will continue to look only to that which is helpful to them today in terms of monetary gain and social approval and will fail to look beyond those confines to that which is beneficial to the organizational structure as a whole in the future. This article attempts to remedy that situation by providing a realistic role model for use by the organization to break out of the mold of tunnel vision and increase peripheral vision in decision-making.
Extending the peripheral vision of executives in a firm is a complex topic. Six recommendations may assist decision makers and students alike as they deal with the dilemma of modern corporate leadership. First, a wide range of experiences by the top management team may provide more flexibility of thought in complex decision environments. Second, selecting team members that have experienced a significant business failure at least once in their careers can act as an inoculation to the illusion of invulnerability. Third, if the team is comprised of a mix of experienced “old hands” that know the industry in detail and newer “young Turks” that bring a fresh skeptical perspective, decisions can be crafted to ensure a broader base of options. Fourth, if the team acts as a team, sharing confidences and building trust, an expanded vision can be achieved. Fifth, if team members actively monitor the situation, listening more often than they speak - trying to understand rather than influence and bully – inconsistencies with the intended plan can be caught and dealt with. Finally, if the team acts out of a deliberate course of planned action, rather than having individuals unilaterally improvising, then strategists can use lull periods to incrementally prepare contingency plans for crisis events. Fast-paced management under crisis situations is an inevitable aspect of the world of modern executives – how they are prepared and how they respond determines the viability of their companies.
The merger of Bendix and Martin Marietta failed. The executives at both companies constricted their viewpoints and failed to utilize their peripheral vision.
In contrast, by using the proposed tunnel vision model, an executive or student will be forced to look beyond the merger, assignment, or class project and view the problem as a whole by using the four perspectives (legal, financial, human resource, and organizational behavior) presented in the paper. Being willing and able to look beyond the narrow scope of vision and utilize peripheral vision could determine whether your company is blindsided by events or arises to be a successful company in today’s complex society.
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