Ch 3: Managing Changes

Question 1

How to manage changes, what drives them?

Answer 1

1) Show commitment
2) Involve employees in change management
3) Establish champions and change management leaders
4) Avoid cognitive biases

Question 2

What are the seven psychological phenomena that make people to make mistakes when they decide?

Answer 2

1) Status quo bias
2) Centre-stage effect
3) Anchoring
4) Sunk Cost
5) Frequency validity effect
6) Zero-risk bias
7) Bandwagon effect

Question 3

What is status quo bias and centre-stage effect?

Answer 3

Status quo bias - It is natural to want to preserve the status quo, and human nature being what it is we tend to defend the dominant industry logic.
Centre-stage effect - Present someone with three options and they are most likely to go for the middle course.

Question 4

What is anchoring and sunk cost?

Answer 4

Anchoring - Once a number (however random) has been suggested, all future alternatives will be measured by it. if a project business worth US $300 million to top management and in fact ‘only’ US $50 million are effectively generated, management is likely to find this result disappointing
Sunk Cost - Even when a company has not managed to capitalise on an innovation, it is much easier to abandon a US $50,000 project than a US $3 million one.

Question 5

What is Bandwagon effect?

Answer 5

Humans have a tendency to follow the herd.

Question 6

What is fat smoker syndrome?

Answer 6

They are aware of the health risks and have a strategy to solve the problem within their grasp. But they lack the determination and discipline to keep their promises. The temptation of
another cigarette or sumptuous meal is just too much.

Question 7

What are the goals that can to develop a plan of action?

Answer 7

The twin goals you must bear in mind are to develop a long-term vision that inspires your actions and achieve short-term
milestones that confirm you’re on the right path.

Question 8

What is a SMART approach ?

Answer 8

Specific: Goals must be specific and precise;
Measurable: Goals must be clearly measurable;
Acceptable: Goals must be accepted by the team;
Realistic: Goals must be reachable;
Time-bound: Goals must be achievable within a given time-frame.