Strategic Thinking and Decision Making
Name of the Faculty: V.N. Bhattacharya
Designation/Affiliation: Adjunct Faculty
Teaching Area: Strategy
(such as Finance & Accounting; Marketing; Production &
Operations Management; Strategy)
This course may be offered to: PG Programmes
(PG Programmes / Doctoral Programme)
http://www.iimb.ernet.in/programmes
Credits (No. of hours): 3 credits (20 sessions)
(3 credits=30 classroom hours; 1.5 credits-15 classroom hours;
session=90 minutes)
Term / Quarter: PGP Term 4 (Jun 2023 – Aug 2023)
(Starting April /June /September/December) PGPEM Qr, 6 (Jun 2023 – Aug 2023)
Course Type:
(Core or Elective) Elective
Offered as: Regular
(Regular Course: staggered across the term or
Workshop1 Course: 3-5 continuous days)
Grading Norms Standard
Standard (On a scale of 1 to 4) OR
Qualitative (Excellent, Good, Satisfactory and Unsatisfactory)
Are there any financial implications to this NIL
course, apart from the allocated budget?
1
Workshop course: Please provide reasons as to why the course is being offered in workshop mode and why it cannot be offered
as a regular course (that is spread over 5-10 weeks). As an institution, IIMB prefers courses offered in the regular mode, since it
results in better learning experience for the students and avoids overlapping of courses. Not more than 15 hours will be
scheduled for a workshop course conducted on campus during workshop week.
Degree Granting Programmes: Template for proposing new course outlines_v2020
Course Summary
Strategy is an imperative. If you wish to achieve an objective in business, the playing field, or life, you need
strategy. In business it is critical for growth, health and prosperity of the firm. Strategy has been defined
as a pattern of decision-making that enables a firm to create and sustain competitive advantage. That is
why strategic thinking is an important managerial and leadership skill.
Strategy is a product of mental models. Formulation of effective strategies requires abstract thinking as
opposed to thinking of specific actions. We make judgements, weigh risks and evaluate costs and benefits
in order to make decisions. Simply put, strategic thinking is goal directed thinking. It is the process by
which we figure out the best way to achieve a given end in the context of our desires, values, risks,
resources and the environment. It is a product of rational and non-rational – intuitive, and emotional –
thinking.
Intuition is a powerful involuntary and spontaneous thinking process. Unfortunately, it is sometimes
affected by biases that creep in unbeknown to us. They affect judgement and decisions, sometimes
adversely. Fortunately, intuition helps us make life and death decisions in the blink of an eye. As students
of strategic thinking we need to know where it works well and when it might not.
There is much better understanding of intuitive processes of the mind today. We can learn from research-
based knowledge to achieve working knowledge of how the strategic mind functions. Formal study can
sharpen awareness and help us train our thinking to become more effective as individuals and
organisations.
This outline provides you (students) a bird’s eye-view of the course, what you may gain from it, and the
nature and extent of effort that will be expected of you.
Learning Objectives / Outcomes
This course has been designed to create an awareness of the way we think and introduce you to
methodologies by which you can train yourself to make good judgements and think like seasoned
strategists. It will enable you explore processes, behavioural and cultural aspects of strategic thinking in
organisations. Briefly, the course will help you
1.1. Achieve an appreciation of how we think. Become aware of the powers of the rational as well
as the non-rational processes of the mind.
1.2. Acquire working knowledge of principles, theoretical models and concepts that can make
rational thinking rigorous and effective.
1.3. Become aware of how we think intuitively and how emotions and biases help and hinder
decision-making.
1.4. Learn to apply the principles to everyday life and business and make good decisions.
Degree Granting Programmes: Template for proposing new course outlines_v2020
Pedagogy
The course will be covered in two modules.
Module 1: Rational thinking. This module will be anchored in Game Theory and focus on how to think
using its precepts. We will use non-mathematical approach to Game Theory and focus on the
anticipatory aspect of strategic thinking.
• What is strategic thinking? How creativity, innovation and strategic thinking are different, yet
related. Abstraction as a strategic thinking process.
• Goal directed behaviour, defining the problem, search for abstract solutions as different from
reaching out for solutions. How objectives – perceived or real – influence strategy.
• How we think. Two systems of thinking: intuitive and analytical.
▪ Introduction to game theory. Strategic Form, Extensive Form (Sequential), and combination games,
their solutions and applications. Games of conflict: zero-sum and non-zero-sum games and their
solutions. Repeated Prisoners' Dilemma, Nash Equilibrium and lessons for strategists.
▪ Strategic moves: warning, threats, assurances and promises. Brinkmanship and other moves aimed
at creating strategic advantage.
▪ Fostering co-operation. Overcoming the limitations of conflict games and how co-operation can be
engineered for better outcomes for players. Application in negotiation, organisational policy,
taxation, law and order, etc.
▪ Concept of Added Value and its relationship with strategic advantage (power). Application in
negotiations and stakeholder management. Value Net and other strategies using added value;
applications in business in everyday life.
Module 2: The non-rational mind – intuition and emotion in decision-making. In this module we will
study intuitive thinking from the heuristics and biases tradition as well as decision making in naturalistic
settings. The approach will be to examine strengths and weaknesses of the non-rational mind and
explore ways in which individuals and organisations can make better choices.
• Perception and different systems of cognition; deliberate and intuitive thinking.
• Bounded rationality, heuristic thinking as opposed to traditional view that humans as economic
agents act rationally in self-interest. Intuition, how it helps and hinders decision-making.
• Framing effects on decisions. Why and when people make risky or conservative choices. How to
avoid undue risk taking and risk-averse behaviour.
• Heuristics and cognitive bias. Important heuristics, associated biases and how they affect
perception of risk, judgement, and decisions. De-biasing strategies for individuals and groups, how
they work and where they don’t.
• Principal – agent problems, morality, ethics and values in decision-making. Corruption in everyday
life and lessons on organisational policy.
• Intuition, insight and creative problem solving. How intuition fuels insight. Different ways in which
insight is gained. Organisational strategies to mitigate bias, encourage intuitive thinking, proliferate
insight and foster innovation. The role of leadership in shaping organisational culture of objectivity.
Degree Granting Programmes: Template for proposing new course outlines_v2020
The teaching method will be a mix of lectures interspersed with exercises, and case discussions. You will
greatly benefit by reading extensively beyond the requirement of the course. Essential and
supplementary reading materials have been recommended in the Schedule of Lectures. Some are
available on the Internet and can be freely downloaded for individual consumption. Please observe
appropriate intellectual property and copyright laws while downloading them. Several Internet
resources have been recommended in section titled Consolidated List of Reading Material. Please read
selectively as appropriate.
Course Evaluation & Grading
Components2 Syllabus Duration No. of Elements Weightage %
(mins)
Quizzes3 on dates 3 sessions 10-15 each 1 (Better of 2) 15
announced in preceding
advance each quiz
Mid-term Sessions 1- 60 1 35
examination 10
End term Sessions 7- 60 1 50
examination 20
Total 4 100
Examinations will assess your grasp of concepts and ability to apply them to real world problems and
situations. You will do well to write succinct and precise answers in a lucid manner. Quality of
explanations and use of appropriate concepts will fetch higher marks. If you do not know the answer or
are not sure, and try to apply a number of concepts in the hope one of them will stick, you may lose
marks.
If you miss an examination, you will not be given a retest except as applicable under Institute rules.
Session-wise plan
Schedule of Lectures
Topics are arranged by lectures. Reading in this section means essential reading. Supplementary
reading material is prescribed where applicable. There are two textbooks for this course.
• Games of Strategy by Avinash Dixit, Susan Skeath & David H. Reiley Jr. for lectures 1-9.
• Thinking Fast and Slow by Daniel Kahneman for sessions 10-20.
2
All examinations and quizzes will be on open book basis.
3
10-15 min quizzes on the content of preceding three sessions (specifics to be announced to class in due course). It
may include case studies if any. All quizzes will be held after classes on mutually agreed dates and time.
Degree Granting Programmes: Template for proposing new course outlines_v2020
Session 1: Introduction to the course. Decision dilemmas senior managers face. Learning ‘how to decide’ as
different for ‘what to decide’. Strategic thinking as goal directed thinking and different from
creative and innovative thinking. Two systems of thinking: analytical and intuitive as part of the
strategic thinking process.
Case discussion: DHARNA by Prof. V.N. Bhattacharya (see section titled Cases below).
Framework based thinking: role of strategy models in strategic thinking.
Reading.
Text book or course pack Student to source from Internet
Text Book: Games of Strategy by Dixit, Skeath & > Maps of Bounded Rationality: A Perspective on Intuitive
Reilley, chapter 1. Judgement and Choice. Prize Lecture, December 8, 2002 by
Daniel Kahneman, Princeton University, Department of
Case study: DHARNA by Prof. V.N. Bhattacharya.
Psychology. Pages 449-456.
Copy and paste the link in your browser if you cannot click
through.
https://www.nobelprize.org/uploads/2018/06/kahnemann-
lecture.pdf
Session 2: Strategy formulation in interactive human situations. Introduction to Game Theory: types of
games, their solutions and applications in everyday problems. Sequential games: decision and
game trees. Roll back reasoning and equilibrium. Game Theory in everyday life and business.
How it can be used to formulate strategy.
Reading.
Text book or course pack Student to source from Internet
Text Book: Games of Strategy by Dixit, Skeath &
Reilley, Ch. 2; Ch. 3 (pages 47-74).
Session 3: Simultaneous games. Zero-sum and non-zero-sum games. Prisoners Dilemma, dominant,
dominated strategies and equilibrium. Solving simultaneous games by dominance method, best
response, rationalizability, and cell-by-cell inspection.
Case discussion: Practising Socialism in Class by Prof. V.N. Bhattacharya.
Dominant strategy equilibrium, Nash Equilibrium and their business applications. Games with more than one
equilibrium. Games of co-ordination and the need for conventions or rules. Applications in policy formulation for
within and outside the corporation.
Reading.
Text book or course pack Student to source from Internet
Text Book: Games of Strategy by Dixit, Skeath &
Reilley, chapters 4, 5
Case study: Practising Socialism in Class by Prof. V.N.
Bhattacharya.
Degree Granting Programmes: Template for proposing new course outlines_v2020
Session 4: Resolving Prisoners Dilemma. Prisoners Dilemma Tournament and lessons for fostering co-
operation. Tit-for-Tat strategy: philosophy, applications, strengths and weaknesses. Basic co-
operative and bilateral monopoly games. Evolution of co-operation, and how to foster it.
Discussion: Prisoners’ Dilemma in business situations and how to resolve them.
Reading.
Text book or course pack Student to source from Internet
Book chapters:
The Evolution of Cooperation, Chapter 1 (pages 3-11):
The Problem of Cooperation.
The Evolution of Cooperation, Chapter 2 (pages 27-
54): The Success of Tit for Tat in Computer
Tournaments.
Session 5: Business game: Between a Rock and a Hard Place by Prof. V.N. Bhattacharya (see section titled
Cases)
Nash Equilibrium in repeated Prisoner’s Dilemma games. Bidding and auctions – design and strategy. Tender
design and procurement strategies of firms with high buyer power. Integrating Game Theory and Porter’s Five
Forces in bidding and competitive strategies in hyper competitive commoditised markets where buyers are strong.
Bertrand and Cournot competition.
Reading.
Text book or course pack Student to source from Internet
Text Book: Games of Strategy by Dixit, Skeath &
Reilley, Ch. 17 pages 657-665.
Business game: Between a Rock and a Hard Place by
Prof. V.N. Bhattacharya. Prof. Bhattacharya will
provide the material directly to students after
add/drop.
Session 6: Strategic moves: use of unconditional and conditional moves. Properties of promises, threats,
assurances and warnings. Brinkmanship in politics, war, negotiation and business. Reputation
and commitments.
Case Discussion: The Cuban Missile Crisis.
Reading.
Text book or course pack Student to source from Internet
Text Book: Games of Strategy by Dixit, Skeath & The Cuban Missile Crisis (Copy and paste them in your browser
Reilley, chapters 10 and 15 (pages 593-610). if you cannot click through.)
http://en.wikipedia.org/wiki/Cuban_Missile_Crisis
The Cuban Missile Crisis, Declassified – Nuclear Warfare
Documentary Films.
https://www.youtube.com/watch?v=vmqM7uaGfrk
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Session 7: Concept of Added Value, subjective rationality and allocentrism. Applications in bargaining and
creating strategic advantage. Use in competitive strategy and assessing relative power of players
in negotiations.
Reading.
Text book or course pack Student to source from Internet
The Right Game: Use Game Theory to Shape Strategy by Adam
M. Brandenburger and Barry J. Nalebluff, HBR July-August 1995.
Session 8: Case Discussion: Hard Wired by Prof. V.N. Bhattacharya.
Value Net, the co-operative model of strategy. Use of complementors to create superior value for customers and
competitive advantage for the firm.
Reading.
Text book or course pack Student to source from Internet
The Right Game: Use Game Theory to Shape Strategy by Adam The Ultimate Guide to Rationality by Steven Pinker
M. Brandenburger and Barry J. Nalebluff, HBR July-August (Harvard University)
1995.
Case: Hard Wired by Prof. V.N. Bhattacharya.
Session 9: Case Discussion: Massive Inc. (A), HBR case.
Use of frameworks, strategy models in strategic decision-making. How they help. Why we are not always able to
easily discern points of strategic leverage and fail to craft effective strategies.
Reading.
Text book or course pack Student to source from Internet
Case: Massive Inc. (A), Harvard Business Review case.
Session 10: Perception and cognition. Intuition and reasoning, two systems of thinking, their characteristic
properties. Framing effects on decisions and response to risk.
Reading.
Text book or course pack Student to source from Internet
Textbook, chapters: 3-8, 26-29. Supplementary reading:
Mid-term Examination – Syllabus: sessions 1 - 10
Degree Granting Programmes: Template for proposing new course outlines_v2020
Session 11: Heuristics and cognitive biases 1: Availability, anchoring, confirmation and representativeness
heuristics. Associated biases and how they affect judgement and influence decisions. Examples
and exercises that demonstrate their advantages and dangers.
Reading:
Text book or course pack Student to source from Internet
Text book: Thinking Fast and Slow by Daniel Kahneman. Chapters 3-4, 11-
16.
Supplementary reading:
Distortions and Deceptions in Strategic Decisions by Dan P. Lovallo and
Olivier Sibony. The McKinsey Quarterly, 2006 Number 1.
Session 12: Case discussion: Columbia’s Final Mission. Effect of context, perceptions of gains and losses and
cognitive bias on decision making by experts.
Reading:
Text book or course pack Student to source from Internet
Case: Columbia’s Final Mission. HBR Case 9-304-090.
Session 13: Heuristics and cognitive biases 2: Affect heuristic. Emotion in decision-making.
Reading:
Text book or course pack Student to source from Internet
The Affect Heuristic in Judgments of Risks and Benefits. By Melissa Supplementary reading:
Finucane, Ali Alhakami, Paul Slovic, and Stephen Johnson, Journal
of Behavioural Decision Making, 13, pp 1-17.
Hot-Cold Empathy Gaps and Medical Decision Making. By
Loewenstein, George, Health Psychology; Jul 2005 Supplement,
Vol. 24, pS49-S56, 8p, 2005.
Text book: Thinking Fast and Slow by Daniel Kahneman. Chapters
13, 19-20. Emotion, overconfidence, optimism, and related biases.
Session 14: Analogies and assumptions. How they shape behaviour; advantages and pitfalls.
Case discussion: United Express Flight 3411 Incident (see section titled Cases).
Reading:
Text book or course pack Student to source from Internet
How strategists really think: tapping the Case: United Express 3411 Incident: decision making in crisis. Copy and
power of analogy by Giovanni Gavetti & paste the link(s) in your browser if you cannot click through.
Jan W. Rivkin. Harvard Business Review,
https://en.wikipedia.org/wiki/United_Express_Flight_3411_incident
April 2005.
Johnson & Johnson, the Tylenol murders
Case brief: United Express 3411 Incident:
decision making in crisis.
Degree Granting Programmes: Template for proposing new course outlines_v2020
http://knowledge.wharton.upenn.edu/article/tylenol-and-the-legacy-of-
jjs-james-burke/
Jan Carlzon and SAS https://en.wikipedia.org/wiki/Jan_Carlzon
Supplementary reading:
When to trust your gut. By Alden M.
Hayashi, HBR Feb ’01.
Session 15: Case discussion: Mt. Everest 1996, HBR Case.
Reading:
Text book or course pack Student to source from Internet
Case: Mt. Everest 1996, HBR case. What Climbing Expeditions Tell Us About Teamwork
https://www.gsb.stanford.edu/insights/what-climbing-
expeditions-tell-us-about-teamwork?sf113824538=1
Session 16: The principal–agent problem. Moral hazard, ethics and values in decision-making, how they
guide strategy formulation and determine payoffs. Applications in negotiation, conflict resolution
and other problems.
Reading.
Text book or course pack Student to source from Internet
Dishonesty in Everyday Life and Its Policy A framework for thinking ethically. Copy and paste the link(s) in your
Implications. Nina Mazar and Dan Ariely. browser if you cannot click through.
Journal of Public Policy and Marketing, Vol. 25
http://www.scu.edu/ethics/practicing/decision/framework.html
(1) Spring 2006, 1–000.
Supplementary material:
Stanley Milgram experiment on obedience to authority. YouTube
video. Copy and paste the link(s) in your browser if you cannot click
through. https://www.youtube.com/watch?v=fCVlI-_4GZQ
Session 17: Decision making under high risk, high uncertainty and time pressure.
Case discussion: Joe Gifford in Tal Afar, Iraq (A), (HBR Case, see section titled Cases).
Reading:
Text book or course pack Student to source from Internet
Case: Joe Gifford in Tal Afar, Iraq (A). HBR Case.
Degree Granting Programmes: Template for proposing new course outlines_v2020
Session 18: Intuition, insight, and innovation. What is insight? How does it help problem solving, creativity,
and innovation? How insight is impeded, and fostered. Value innovation.
Reading:
Text book or course pack Student to source from Internet
A Naturalistic Study of Insight by Gary Klein and Andrea Jarosz,
Journal of Cognitive Engineering and Decision Making, Volume 5,
Number 4, December 2011, pp. 335–351.
Creating Breakthroughs at 3M by Eric von Hippel, Stefan Thomke,
and Maruy Sonnack, HBR Sep-Oct 1999.
Session 19: Developing insightful individuals and organisations. What fuels insight and how it can be
strengthened in individuals? How to kindle insight in organisations? The role of and how to instill
an innovative culture.
Reading:
Text book or course pack Student to source from Internet
The Power of Asking Pivotal Questions by Paul J.H. The surprising habits of original thinkers (Adam Grant
Schoemaker and Steven Krupp, MIT Sloan Management on TED)
Review, Winter 2015, December 16, 2014.
The Ultimate Guide to Rationality by Steven Pinker
(Harvard University)
Session 20: Summarising the course, its application in decision-making in business, politics and life. Role of
leadership in building an insightful, objective, and innovative organisation.
Reading:
Text book or course pack Student to source from Internet
The Big Idea: Before You Make That Big Decision by Daniel Supplementary material.
Kahneman, Dan Lovallo, and Olivier Sibony, HBR, June 2011.
Skepticism: why critical thinking makes you smarter.
Judgment in Managerial Decision Making by Max Bazerman https://bigthink.com/videos/critical-thinking-skills
and Don Moore. Chapter 11 (pages 179-199): Improving
(15 min video)
Decision Making.
Textbook: Thinking Fast and Slow by Daniel Kahneman. Chapter
titled CONCLUSIONS (pages 408-418).
End-term Examination – Syllabus: sessions 7-20
Degree Granting Programmes: Template for proposing new course outlines_v2020
Profile: V N Bhattacharya
Mr Bhattacharya is a highly regarded business and corporate strategy
consultant. He advises and works with senior management teams to help make
firms competitive and grow them rapidly and profitably in a sustained manner.
His work cuts across industry sectors ranging from electronics to engineering,
paints to pharmaceuticals, software to shipping, and telecom to technology.
He is deeply involved in executive education. He conducts custom
management development programmes for senior managers, and provides
business coaching to CXOs.
He teaches Strategic Thinking and Decision Making in Indian Institute of
Management (IIM) Bangalore. Till recently, for ten years, he also taught in IIM Ahmedabad. He serves
on the Editorial Advisory Board of American Journal of Business. He writes regularly on management
and is a sought after speaker.
CAREER. Mr Bhattacharya is a seasoned business leader with a rare breadth of perspective and world-
view. He has over forty years’ experience in diverse industries in India and abroad. He has turned
around loss-making businesses, revitalised old ones and created new streams of revenue. He blends
conceptual rigour and rich experience with strong focus on execution.
During his corporate career he worked in large and medium sized Indian and multi-national
corporations. His breadth of perspective stems from experience in many industries – consumer goods,
automobiles, paints and chemicals, engineering, capital equipment, packaging, hospitality, and
telecom. He served as the Chief Executive of BPL Telecom Ltd. – a telecom engineering, and
networking company - before setting up his consulting practice.
CONSULTING. His consulting work is strongly anchored in research-based management theory and
settled thinking. He engages deeply with clients to help them create and execute effective and
innovative strategies. He guides managers to develop insight, broaden perspective, and bring to bear
superior knowledge and data to make crucial business decisions.
EXPERTISE. Formulating and guiding implementation of strategies for sustainable and profitable growth
is his special forte. He has advised firms on business portfolio selection, managing multi-business
corporations, and designed structures for complex organisations.
He is deeply interested in decision-making of leaders and senior managers. He guides them on
structural, and process methodologies that foster curiosity, collaboration, and innovation. He has
studied the subject extensively. It is one of his research interests.
He is one of the few practitioners of Game Theory. He uses its principles in his consulting work, in
establishing collaborative practices in firms, and to encourage anticipatory (strategic) thinking among
senior managers.
EDUCATION. He earned a Bachelor of Technology in Chemical Engineering from Indian Institute of
Technology (IIT) Kanpur and Post-graduate Diploma (MBA) in Marketing and Finance from Indian
Institute of Management (IIM) Calcutta. He blends rich experience with strong academic credentials.
INTERESTS. VN, as he is better known, enjoys English fiction, science and astrophysics, behavioural
economics, and cognitive psychology. He is an avid golfer and played tennis. He loves mountains and
high-altitude trekking in the Himalayas. He lives in Bangalore, India with his wife and dog. There is more
information on him on his website www.vnbhattacharya.in. He can be reached at
[email protected].
END
Degree Granting Programmes: Template for proposing new course outlines_v2020
