Executive Interviews: Interview with Samuel E Bodily on Decision Making
May 2008 - By Dr. Nagendra V Chowdary

Samuel E Bodily
John Tyler Professor of Business Administration at The Darden School, University of Virginia.

We also incorporate competitive analysis, where we do the game theory payoff matrices, and analyze the behavior of both competitive players. Inmy elective, Management Decision Models, we consider preference for risk and the use of expected utility, real options, and optimization with uncertainty and simulation. We also extend the problem domain to include dynamic models that extend over time, with state variables and random walk models. This provides for a rich discussion of the simulation of uncertainties over time, exposure and correlations, hedging, and discrete event simulation. Throughout the course, we develop general modeling skills and experience with a decision quality process.

• Are there any tools/mathematical models/decision trees, etc. that the students are taught? Was there a danger of tools being mistook as the decisions themselves?
  In our courses, we use cases daily and a learning process that expects them to develop good judgment. Students understand that the analysis is done for insight that may lead them personally to a decision, but that the analysis is not an answer machine. We consider how sensitive the choice is to various assumptions in their models. Students work to understand how to do their own analysis and the analyses of others, thenmake their own choices.Wemay end a class with differing views on what should be done.

• Is decision making a science or an art? If it is to believed as science, can its principles be applied universally? If it is an art, how can someone be trained to be an effective decision maker?
  Yes It is a science and an art. The science part is taught with immersion into methods and concepts. The art part can only be conveyed by doing. In my elective, we employ a kind of modeling studio. It is not art appreciation; it is watching each other build models as we build our own and gaining an eye for an insightful model and developing the judgment of an effective decision maker.

• In today's corporate environment, executives are often not willing to be so decisive, as they fear mistakes and the resulting fallout.At the same time, there is zero tolerance for indecision, lapses in integrity, and, above all, weakness—all of which can be career ending. How should executives/ leaders engage in a (delicate) balancing act of decisiveness and indecision; overconfidence and insufficient confidence? Would anticipatory regret hinder decisiveness?
  Part of our core course are exercises where students make forecasts and observe the common result that their forecasts exhibit overconfidence— i.e., 40-50% of outcomes fall outside their 90%-confidence region. They learn to express their forecasts with wider ranges. Yet, they also learn how to make decisions in conditions of uncertainty. They see that a good decision does not guarantee a good outcome and a good outcome does not guarantee that a good decision was made. Over many decisions and many outcomes, however, you can see patterns of good and bad choices. They learn not to be paralyzed by uncertainty and to decide in the face of many possible futures.

• What is the role of business schools in preparing better decisionmakers? What specific steps do you suggest for business schools in terms of designing their curricula and delivering focused courses to prepare better decision makers?
  Not all business schools teach decision analysis, Monte Carlo simulation, and how to use them for risk analysis. They should.

1. Decision Making Case Study
2. ICMR Case Collection
3. Case Study Volumes