UNIVERSITY OF PENNSYLVANIA THE WHARTON SCHOOL Management/OPIM #690 Professor A. Kastenelinboigen Fall Table of Contents

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1 1. UNIVERSITY OF PENNSYLVANIA THE WHARTON SCHOOL Management/OPIM #690 Professor A. Kastenelinboigen Fall 2002 Table of Contents 1. Some comments 2. Decision sciences an Integrative Perspective 3. Chess as a model 4. Theories of Bounded Rationality 5. Programming a Computer for Playing Chess 6. Business Chess 7. Chess as a Valued Metaphor 8. Two Archetypes in the Psychology of Man 9. A Typology of Planning 10. Comments on R. Ackoff's Concept of Interactive Planning 11. The Fall and Rise of Strategic Planning 12. Business Behavior 13. A branch of Economics is Missing 14. Competitor Orientation 15. The Myth of Market Share The W. Buffett s Thoughts 19. The Leadership Moment 20. The Role of Science in Business Strategy 21. Efficient and Optimal Growth 22. R. Ackoff on Ethics 23. Planning on the Left Side and Managing on the Right 24. Leading Creatively 25. R. Ackoff on Aesthetics 26. A Mathematical Theory of Art 27. Aesthetics and the Decision Sciences 28. The Democratic Corporation 29. Towards Constructing a Typology of Corporate Leadership 30. Power In and Around the Organization 31. Images of Organization Appendix Indeterministic Economics

2 3. Fall 2002 Professor Aron Katsenelinboigen OPIM, The Wharton School, University of Pennsylvania COURSE OUTLINE AND READING LIST MGMT/OPIM 690 MANAGERIAL DECISION MAKING: An Aesthetic Approach to Decision Making Prerequisites: To play chess on the level of understanding what does mean to loose. Office Hours: Tr 10: Lectures: Tuesdays & Thursdays 3: Course Overview This is a conceptual course; it is not a technical course. The purpose of the course is to treat decision-making process in organizations as a multistage process involving different structures corresponding to different methods of action. From this point of view, one can distinguish three major classes of methods - randomized, aesthetic, and scientific. The core of the course is the development of the aesthetic method, which is based on a semiordered incomplete and inconsistent program linking the beginning and the end in some indeterministic situations. This method deals with the formation of predispositions towards the next phase of development. The mathematics relevant to this method I call "Calculus of Predispositions." The core of the method is the formation of a weight function that includes as independent variables along with material parameters relations, and also uses new type of values based on the "degree of conditionality." Application of the aesthetic method to decision making promises to open up some new avenues in this field, e.g. the understanding of the role of subjectivity (the impossibility to separate the person who is judging the decision from the person who will implement it); the differences of the decision making processes on different layers of a corporate hierarchy and corresponding needs of different types of people. Chess is used as a model that illustrates all of the above mentioned methods and their synthesis and also can be used as an experimental means for verification some decision-making processes. The course is based on my own research in the philosophy of indeterminism and its applications.

3 4. Basic books: 1. A. Katsenelinboigen Indeterministic Economics (IE). New York: Praeger Publ., {Attached as an Appendix to the Book pack) 2. A. Katsenelinboigen, The Concept of Indeterminism (CI). New York: Praeger Publ., {free on the Internet 3. An Aesthteic Approach to..., ed. by A. Katsenelinboigen and M. Mandelbaum. Philadelphia: Frends of Art, 1997 (The book is available on the WEB opim-web.wharton.upenn.edu/aesthetic/ There will be one homework assignment concerning rules of thumb together accounting for 5% of the grade; a midterm exam (25%), a term paper (60%), and participation (10%). 1.. Introduction. The structure and the methodology of the course. 1. A. Katsenelinboigen, "Some comments." In the book An Aesthteic Approach to..., pp. I-IX. 2. P. Kleindorfer, H. Kunreuther, P. Schoemaker, Decision sciences: an integrative perspective. New York : Cambridge University Press, 1993, pp A. The decision making methods in chess 2. Chess as model for a multi-stage system and variety of decision making procesess. 1. Katsenelinboigen, A., "Chess as a Multi-Stage Game," Selected Topics in Indeterministic Systems, Seaside, CA: Intersystems Publ, 1989, pp Katsenelinboigen, A., CI, pp , Simon, H., Models of Bounded Rationality, Cambridge, MIT Press, 1982, Vol 2, pp The styles in chess: the reactive and selective. 1. Katsenelinboigen, A., "Chess as a Multi-Stage Game", pp Katsenelinboigen, A., CI, The multidimensional approach to the positional style in chess. 1.Katsenelinboigen, A., "Chess as a Multi-Stage Game", pp The weight function for the evaluation of a chess position. 1.Katsenelinboigen, A., "Chess as a Multi-Stage Game", pp , 158,

4 2. Katsenelinboigen, A., CI, Shannon, C., "Programming a Computer for Playing Chess," Philosophical Magazine, No. 41, 1950, pp The operational approach to the positional style. The conflict between depth and broadness; learning and the layers of programs. 1. Katsenelinboigen, A., CI, pp Calculus of predispositions and subjective probabilities. Why a new mathematics is necessary for protracted systems with a Janus effect? 1. Gelfand, I. Two Archetypes in the Psychology of Man. Nonlinear Science Today 1 (1991): Katsenelinboigen, A., CI, pp B. Decision making in a corporation 8. The concept of interactive planning. The role of ideals, objectives, goals, aimes, targets. 1.Ackoff, R. "A Typology of Planning." Creating the Corporate Future, New York: John Wiley, 1981, pp Business Chess, Perspectives, The Boston Consulting Group, Chess, a Valuable Metaphor. Appendix to the book Profit Patterns by A. Sliwotzky and D. Morrison 4. Katsenelinboigen, A., Some Comments on R. Ackoff's Concept of Interactive Planning." Planning for Human Systems: Essays in Honor of Russell L. Ackoff. Philadelphia: University of Pennsylvania Press, 1992, pp Mintzberg, H., "The Fall and Rise of Strategic Planning." Harvard Business Review, January-February 1994, pp The concept of interactive planning (continuation) 10. "Combinational style." The discussion of the book Innovation and Entrepreneurship (New York: Harper & Row, 1985) by Drucker, P. 11. Continuation of the discussion of the book Innovation and Entrepreneurship. 12. Continuation of the discussion of the book Innovation and Entrepreneurship. 13. Continuation of the discussion of the book Innovation and Entrepreneurship.

5 14. "Positional style." The deviations from profit making in current situations. 1. Baumol, W., Business Behavior, Value and Growth, New York: Marcourt, Buffett, W., Track Record is Everything. Across he Board, Oct. 1991, 28 (10), pp Buffett, W., Buffett s Bully Pulpit. Fortune, April (7), pp Buffett, W., Mr. Buffett on the Stock Market. Fortune, Nov (10), pp Katsenelinboigen, A., IE, pp , Leibenstein, H., "A Branch of Economics is Missing: Micro-Micro Theory." Journal of Economic Literature, June 1979, Vol. XV, pp The elaboration of semiconditional values for material parameters in a corporate position. 1. Katsenelinboigen, A., IE, pp. 8, Lancaster, K., Mathematical Economics. New York, The Macmillan Co, 1968, Ch The controvercy in the usage of positional parameters (strategig factors) in evaluation of the performance of a corporation The controvercy in the usage of positional parameters (strategig factors) in evaluation of the performance of a corporation. The critical analysis of the PIMS model. 1. Armstong, S. and Collopy, F. "Competitor Orientation: Effects of Objectives and Information on Managerial Decisions and Profitability." Journal of Marketing Research, 1996, Vol. XXXIII, pp Katsenelinboigen, A., IE, pp Miniter, M. "The Myth of Market Share." The Wall Street Journal, June 15, Schoeffler,S. "The Role of Science in Business Strategy." Handbook of Business Strategy. Boston: Warren, Gorham, and Lamont, 1991, pp.4-1 to A.Kalina s lecture: an example of the positional style. The lecture is available on the Internet under the rubric Downloads The discussion around Kalina s lecture and Merck s case. 1. Useem, M., The Leadership Moment. New York: Random House, 1998, Ch.1. C. Corporate ethics. 20. The relations between ethics, moral, and law.

6 1. Ackoff, R. on ethics in Ackoff, R., The Democratic Corporation. New York: Oxford University Press, 1994, pp Katsenelinboigen, A., CI, Ch The relations between ethics, moral, and law (continuation) D. Art and aesthetics in decision making 22. The essence of the aesthetic method in a decision process 1. R. Ackoff on aesthetics in Ackoff, R., The Democratic Corporation. New York: Oxford University Press, 1994, pp ; Birkhoff, G., "Mathematics of Aesthetics, "The World of Mathematics by J. Newman. New York: Simon & Schuster, 1956, Katsenelinboigen, A., CI, Ch. 6 and Conclusion. 4. Lopes, L., "Aesthetics and the Decision Sciences," IEEE Transactions on Systems, Man, and Cybernetics. Vol. smc-16, No.3, 1986, Mintzberg, H., "Planning on the left side and managing on the right" Harvard Business Review, July-August 1976, pp Palus, C. and North, D., "Leading Creatively: The Art of Making Sense," The Journal of Aesthetic Education. Vol. 30, No. 4, Winter 1996, E. The government of an organization in the light of the concept of a multistage decision making process. 23. The present structure of an economy and corporation: involvement R&D as a part of these structures. The present views on a corporate political system. 1. Ackoff, R. The Democratic Corporation. New York: Oxford University Press, Mintzberg, H. Power in and around the Organization. Englewood Cliffs, N.J.: Prentice Hall, 1983, Ch. 6, 11,13, 20, 23, Morgan, G., Images of Organization. Thousand Oaks: Sage Publ., 1997, Ch The trapezoid corporation as the basis for decision making and its implementation. 1. Kastenelinboigen, A., ID, pp Katsenelinboigen, A., CI, pp. 100, 154. F. An Observation Lecture and Discussions around the final reports by students