The theory of Behavior finance shows us the influence of emotions in the decision-taking-process. Because of various reasons, we use rules that are not always rationally sound.

Myers and Briggs have elaborated the psychology of Jung into a psychological model that describe different personality types. These types give insight in which different people have different preferences. For example, the differences in the way they consume information (through concrete observation or through intuition).

"Everybody has thoughts and feelings but some pay more attention to their thoughts than to their feelings…Those who attend mainly to their thoughts are said to govern themselves with their head, their concepts and percepts being their guides to action." David Keirsey

This is only for individual level. For you and me. The important question is how does your organization deals with topics like rationality and emotion? Does your organization always take rational decision? Are there checks and balances that will verify so?

The problem of this topic –- whether or not to take rational decisions -- is not so much that all decisions need to be taken rationally. That would make both investment and management very boring. The passion that hides behind an organization will drive this organization but will also cater for imperfect and irrational decisions.

Some parts of your organization are more exposed to emotions than others. One such an area is the “front” of your organization – in the middle of the market, filled with misleading desires and emotions of all kind. Sales and marketing know all about it. But this same market is often biased, because of the same and dominating emotions.

And it’s the art of management to know the difference, to beat these market rules with your own knowledge. Knowledge of the organization.

© 2006 Hans Bool

Hans Bool is the founder of Astor White a traditional management consulting company that offers online management advice. Astor Online solves issues in hours what normally would take days. You can apply for a free demo account

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