Management and Magic

Modern managers still believe in magic. Some of the superstitions they practice include forecasting, new product market research, capital budgeting, and long-range strategic planning. Under conditions of uncertainty, there is little evidence that use of these techniques makes for more effective decision making. However, like all superstitions, they do relieve anxiety and permit us to cope with ambiguous situations. The danger is that they may build biases into our decisions, and that these biases may be less efficient than simple random behavior. Better decision making under uncertainty requires a greater tolerance for ambiguity.