Managers have the greatest influence on the organizational performance in terms of its alignment to short and long-term goals

Managers have the greatest influence on the organizational performance in terms of its alignment to short and long-term goals. Their behaviors can, therefore, directly affect the quality and quantity of business operations. Likewise, the business often needs proper decisions by investors to ensure progress and confidence of employees in working for the business. Because of the irreplaceable roles of these crucial stakeholders, the startup company has to learn from the undoing of the Blockbuster team to avoid mistakes arising from three aspects of operations mistakes: endowment effect, status quo bias, and inter-temporal choice.

Endowment effect
This is an emotional bias resulting from perceived value of a product higher that its real market value. John Antioco, the Blockbuster’s manager was evidently irrational in degrading Netflix and thinking of his company to own unshakable market share. To avoid such unfavorable cases, the startup company can make it a requirement for the manager to make strategic decisions only based on analyzed data of the company’s and competitor’s market values. When doing the market analysis, the management should be factoring in opportunity cost to avoid possible undervaluing. Moreover, the investors can appoint a panel of experts to be making decision for the company. A panel is often known for brainstorming ideas before making every decision.

Status quo bias
This refers to cognitive bias that makes one comfortable with the current environment and state of affairs. The startup company can learn from the organizational impact of Blockbuster’s manager to ignore the importance of online presence. The startup managers and investors should not be blinded by the proverbial bird in hand, and instead understand the backwardness in doing nothing. The management should always get updated on current and upcoming technologies that can improve performance. The company can assign such a role to particular department, which should consistently update the management and investors on market trends. The company should make it known to workers the cost of lost time and doing nothing.

Inter-temporal choice
This describes how current decision can influence the business progress in future. The startup company managers and investors should cultivate visionary performance, which analyzes every available information for decision making and its long-term impacts. Like Blockbuster, the startup might be approached by a competitor for discussions on possible merger or collaborative projects. It is important to analyze every available options in comparison with the organizational goal and market trend.


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