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.
Contact
Author:
Judith
Winters Spain, J.D.
Associate
Professor, MMAC Department
Combs 215
Eastern
Kentucky University, Richmond, KY 40475
(859)
622-3174
Biographies
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
Case Overview
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.
Case Application
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.
Legal Perspective
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.
Financial Perspective
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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