When McKinsey & Co.'s Olivier Leclerc began to study decision making, he stumbled upon Mihnea Moldoveanu and "flexible ontological structures."
Professor Moldoveanu is director of the Desautels Centre for Integrative Thinking at University of Toronto's Rotman School of Management, a Romanian-born poet and philosopher as well as management savant whose barrage of ideas draws together elements from diverse fields.
A meeting with Mr. Leclerc, who is based in Los Angeles, led to a new way to think about decision making, which was previewed in an article the two co-authored for the McKinsey Quarterly and will be the subject of a book next fall.
Essentially, they offer five lenses to look at a problem. You might use only one lens, or several, depending on the situation. For Prof. Moldoveanu, the lenses are languages, derived from the social and natural sciences, by which you can talk about and think about an issue. In other words, flexible ontological structures – flexons, for short.
"They can solve problems for individuals, organizations and societies," Prof. Moldoveanu explained in an interview. The five lenses are:
With this lens, the situation you face is represented as a bunch of nodes and edges depicting the relationships between everyone involved. Studying the situation, you might look at trust – who trusts whom? Or influence: Who influences whom? In the article, they offer as an example pharmaceuticals, where some physicians are opinion leaders who can influence colleagues about which drugs to prescribe. A pharmaceutical company that is launching a new drug would create a network map showing doctors who have authored scientific articles. Who connects with whom will often be critical, as well as matters such as the density of the network (how many connections in a given area) and who seems to be central to the network.
This lens represents entities as populations that change over time, reacting to ecological factors. You may be familiar with models that show how rabbits evolve over time in a certain area, influenced not only by their breeding patterns but also by the presence of predators. Prof. Moldoveanu points to a bank, which can be thought of as a hierarchical system in which people vie to be promoted; some succeed, some remain stationary, others leave. In studying the bank's operations, it would be important to understand the selection metrics for promotions and hirings, and the diversity of people in the population. A packaged goods company could use this approach to study consumer habits and behaviour, and which groups to run trials with.
3. Decision agent
This approach represents teams, companies or industries as engaging in a series of competitive and co-operative interactions. Economic theory fits this lens, focusing on competition for economic payoffs. Prof. Moldoveanu notes that while senior executives often employ this approach, they tend not to assume that other people are also decision-making agents. "The CEO sees himself as capable of decisions, but not customers or staff as capable of making decisions," he said. "This flexon forces the creation of a decision tree for everyone involved. There's a huge advantage to doing so. Now you have a coherent model – not assuming some people are capable of making decisions and others aren't."
4. System dynamics
This is a common outlook for engineers, who think of problems in terms of flows. It can be helpful to think through not only how to handle a pipeline spill (the flow of oil) but also how a bank operates (the flow of money). Much of manufacturing, from clothing to automobiles, involves flows. In tackling problems, you could look at where leaks and bottlenecks occur, as well as storage, shipping, and other elements of the dynamic system.
5. Information processing
This lens provides a way to view various parts of an organization as information-processing tasks. It focuses attention on the information used, the cost of computation, and how efficiently various problems are solved. Prof. Moldoveanu said this lens can illuminate why it is so difficult to be a leader without sufficient time to gather full information. "As an executive, you don't have endless time. The clock is always ticking. You have five or six minutes per issue. So the challenge is not to find the best solution but finding the best solution in five or six minutes," he notes.
You can choose the lens that seems ideal for the situation you face, or two or three to help illuminate different sides of the challenge, he said. You can also divide a problem into various elements, and use the lens that seems most appropriate for each.
For example, a telecommunications company considering a new service might apply the decision-agent lens to understand how various industry players might react; and use the networks lens to understand the relationships between customers and the service providers; and system dynamics to ponder possible bottlenecks.
As Mr. Leclerc and Prof. Moldoveanu conclude in their article: "Flexons help turn chaos into order by representing ambiguous situations and predicaments as well-defined, analyzable problems."
Special to The Globe and Mail
Harvey Schachter is a Battersea, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column Balance. E-mail Harvey Schachter