IIM Indore Study Finds ‘Good Enough’ Decisions Can Reduce Uncertainty In Short-Term Projects
· Free Press Journal
Indore (Madhya Pradesh): In a finding that could reshape how managers make decisions in uncertain and rapidly changing business environments, a new study by Indian Institute of Management Indore has found that choosing a “good enough” solution rather than constantly pursuing the optimal one can substantially reduce uncertainty, particularly in shorter-duration projects.
The study, conducted by Prof Sasanka Sekhar Chanda and published in Computational and Mathematical Organization Theory, is titled An Update to Duncan’s Theory: Uncertainty as a Function of Complexity, Environmental Turbulence, and Managerial Approach to Decision-Making. It revisits and extends Duncan’s theory of organisational uncertainty by examining not only the complexity of tasks and turbulence of the external environment, but also the manager’s approach to decision-making.
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Duncan’s theory holds that managerial uncertainty is shaped primarily by task complexity and environmental turbulence.
Uncertainty is lowest in static, simple environments and rises to its highest levels when organisations operate in dynamic and complex conditions.
Chanda’s research adds a third dimension: how managers make decisions.
Using an agent-based computational simulation model, the study represented organisations as groups of decision-makers tackling tasks under varying environmental conditions.
The model incorporated multiple actors, limits to knowledge and two contrasting approaches — maximising, where managers seek the best possible outcome, and satisficing, where they accept a solution that meets an adequate threshold.
The findings reinforce Duncan’s central proposition: uncertainty consistently increases as task complexity and environmental turbulence rise, regardless of the decision-making approach.
The relationship between time and uncertainty is more complex. In stable environments, uncertainty initially increases with the time available for decision-making, reaches a peak and then declines.
In turbulent environments, longer tasks generally produce greater uncertainty.
The study found that a satisficing approach can substantially reduce uncertainty, especially in shorter-duration projects, compared with maximising.
This comes with only a slight trade-off in the probability of organisational success.
For managers operating amid rapid change, the findings suggest that searching for the perfect answer can increase cognitive pressure and uncertainty, while making a timely decision that is sufficiently effective may offer a better balance between confidence, speed and outcomes.
The research also suggests organisations rethink how managerial performance is evaluated.
Rather than judging managers solely by outcomes, organisations should consider the level of uncertainty they had to overcome to achieve those outcomes.
The framework also bridges objective measures of uncertainty, such as industry and environmental data, and the subjective uncertainty experienced by individual managers, offering organisations a more balanced way to understand decision-making challenges.
The findings have implications for organisational design, information systems and leadership development.
Companies could tailor information flows, support systems and training to the complexity and turbulence managers face.
Encouraging satisficing where appropriate could reduce cognitive load and burnout, build resilience and shift managerial focus from perfection towards learning and adaptation.
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