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Solvay BSEM – Chaire du management de l’erreur

Research project on “Management of Error”

Good error management is a key issue for an effective management of corporations of any size. Corporate failures often take place when errors are not detected, or detected too late, and when they are not tackled properly.

Over the last decades, research and education in management have focused mostly on making the right decisions, implementing them effectively and efficiently, and avoiding errors. This is the case of the rational approach (e.g., Decision theory, Managerial economics), the behavioral approach (e.g., Organizational Behavior, Leadership), the functional disciplines (e.g., Finance, Control, Marketing, Operations, Human resource management, Audit) and the more integrative disciplines (e.g., Strategy, Systems thinking, Change management).

Despite the abundance of theory and practice about “doing the right thing” and “doing it right”, errors are being made, sometimes with extreme consequences, such as the bankruptcy of the corporation. Several categories of causes have been identified to explain these errors, notably (other than pure fraud): emotional or political decision-making, rational decisions based on a fraction only of the available relevant information or without understanding of second-order effects, and seemingly rational decisions based on all the relevant information available but influenced by powerful individual and collective cognitive biases. Given the resilience of these causes, it is clear that errors will continue to be made.

To the best of our knowledge, very little research and no education programs have, however, been devoted to “managing errors once they’ve been made”. This would be the focus of the proposed research project: it is not about avoiding errors, it is about detecting them, and managing them, i.e. mitigating their consequences and/or embarking on a new course of action altogether when faced with a new context. The proposed research project is by nature cross-disciplinary. It would bring key benefits to individual managers, businesses, and society: from raising the awareness about the importance of detecting errors early, to reducing or eliminating the bitter consequences of currently ill-managed errors.

It would be responsibility of the research team to develop the research methodology and agenda. Possible strands of analysis could include:
– Definition of error: defining a robust conceptual definition of “error”, recognizing that most decisions in a business environment imply trade-offs and that a decision should not be characterized ex post as an “error” simply because it has generated over time some undesired consequences.
– Detection of error: examining the mechanisms of error detection not only by relevant third parties (such as control groups within the company, the Board of directors or other relevant organs of governance, or regulators), but also, and foremost, by the decision makers themselves.
– Management of error: considering the range of managerial behaviors and techniques and their relevance in different business contexts, the research will aim at building a robust analytical framework based on real life cases.

This highly innovative project consists in funding two post-doctoral research fellows for five-year full-time positions at the SBS-EM. The estimated cost, including gross wage, overheads (15%), travel expenses, and research material is of about EUR 250 k per year, and EUR 1,250 k for the five years.

Research objectives
The post-doctoral fellows will have to perform first class research in the field of error management, contributing to all, or most of, the following dimensions, in a multidisciplinary setting:

– Perform in-depth state of the art of the scientific literature that addresses error management, including a critical analysis of the economic literature on ‘rational choices’;
– Investigate several case studies, and provide in-depth qualitative analyses of these cases;
– Put forward hypotheses on how to manage errors effectively;
– Generate an ambitious research agenda for future applied and fundamental research projects,
– Prepare innovative course material for the creation of specialized course at master level and executive education level

this project is financed by