Alex Cohen
Position Paper #1
Prompt: In this first position paper as we combine our thinking and discussions on decision making
and strategy, I would like you to identify 2-3 types of heuristics/biases or other cognitive traps you
would suspect might have been in play as the University transitioned from one strategy to another over
time. In addition to identifying and describing them, please craft a short scenario about how the
particular biases/traps you identify may have manifested themselves in decision making at the
University at that time.
Who would have thought that only 25+ years ago Penn State competed as a low-cost provider,
with a fraction of what tuition is now, a majority of in-state students, and almost everyone coming
from a branch campus? Many would not know of what PSU used to be considering its current status.
But, had this transition from a “Focused Low-Cost Leader” strategy to a “Broad Differentiation”
strategy not been so smooth, it would have been much more obvious. Many heuristics and biases
come into play during this shift and could have had negative effects on the conversion.
Humans have the tendency to unintentionally mimic what surrounds them. When it is visible
that a certain way of approaching something is succeeding, it is difficult to see past those ideas and
develop new methods of achieving similar goals. The availability heuristic explains that frequent
events are more easily remembered. Inadvertently, PSU could have in some respect “copied” what
other universities did that resulted greater endowments. This copycat behavior could have led PSU
into the trap of lack of differentiation. PSU was no longer a low-cost institution, so it needed ways to
attract prospective students. If PSU had failed to differentiate itself, it would fail to appeal to new
students and therefore decrease revenue. Fortuitously, PSU found ways to differentiate itself such as
leveraging its large alumni base to increase recruitment opportunities, its reputation for educational
quality based on graduates with intern experience, and the multitude of majors offered.
Young minds are often responsible for developing fresh and new ideas that are vital to the
growth of most organizations. Many of the staff members at PSU prior to the transition are still here
today. Selective perception could have caused a problem in the transition period of PSU. The lack of
new employees could have caused the current staff to selectively perceive the nature of the problem.
Alex Cohen
This could happen because they had been members of the PSU staff for so long that they lack current
and revolutionary ideas. In this situation, selective perception could have caused stagnation or stunted
the growth of the University.
The way in which the problem was framed could have had a huge impact on the way it was
addressed and could also caused unintended consequences to occur. The problem could have been
looked at in two ways: the decrease in the market based on less student applicants and the need to
increase revenue. If the people presenting the problem only focused on the fact that state funding had
gone down, they would have focused on ways in which to increase tuition. Even as an institution built
on the charge of educating the children of the working men and woman of Pennsylvania, the majority
of revenue comes from out of state tuition. Although it is critical for PSU to maintain its in-state
student tuition levels, it is equally critical to increase the national and international student attendance
and tuition. To achieve this, PSU would have to differentiate itself to incent attendance and tuition
from this larger market. That translates to adding value to the educational experience by having the
best professors, the most state of the art facilities, and a wide offering of innovative programs.
Without striving to achieve this threshold of excellence, PSU might have risked losing in-state student
attendance and tuition to other competitive and world class universities as well as not gain the out of
state students. Therefore, it would not have been beneficial to solely focus on increasing revenue,
because out of state students are not going to pay more for an institution that is not appealing and does
not have much to offer. This goes back to the need to identify the problem correctly. The problem
was multi-faceted and could not be solved without acknowledging both. To feasibly achieve the
growth that is required to develop and maintain the stature of a world-class university, PSU could not
rely solely on in-state tuition; it was necessary to create other sources of revenue such as increased
tuition for out of state students.
Alex Cohen
There are many ways in which this transition could have gone wrong. Whether it was the
mimicking of other schools, the lacking of fresh ideas, or difficulty to recognize the problem, PSU
took a big risk during this shift. Thankfully, PSU’s national and international program, numerous
opportunities within majors, and strong alumni relations make it a very prosperous university.