ob - decision making

Ch 12 – Decision MakingBUSA 220 – Wallace – Spring 2012

Krietner/Kinicki, 2009

• Problem – gap between an actual and desired situation.

A rental car company notices a dip in revenue from 12 months ago. The branch is located in a very congested area and hybrid vehicles can travel in express lanes. Customers complain that they would like environmentally-friendly cars to choose from to rent.

Problem Solving


•Historical Cues – Trends?•Scenario Technique – Multiple futures.•Stakeholder (not stockholder) Perceptions

Problem Solving Methods

Graphic Source: geraldnunn.files.wordpress.com


• Decision making –

Identifying and choosing solutions that lead to a desired end result• First, determine

responses or actions necessary to alleviate a problem• Second, choose the best

alternative

Decision Making

Graphic Source: http://www.secondaryrti.com/problemSolving/psModel


• Rational Model logical approach to decision making

1. Identifying the problem

2. Generating alternative solutions

3. Selecting solution

4. Implementing and Evaluating

Models

Graphic Source: www.the-happy-manager.com


• Do decision makers actually make decisions this way?

• What goal does the rational model assume the decision maker has?

• What assumptions does the rational decision making model make?

Rational Model

http://www.unc.edu/~nielsen/soci410/nm11/m11001.gif


• Based on premise that decision making is not rational

• Assume that:• Decision making is

uncertain• Not all information is

available or known• Making optimal decisions

is difficult

• Simon’s Normative Model• Garbage Can Model

Non-Rational Models


• Decision makers are guided by bounded rationality• constraints that restrict

decision making• Decision making is

characterized by• Limited information

processing• Satisficing

•Choosing a standard that meets a minimum standard of acceptance

Intelligence

Design

Choice

Simon’s Normative Model


• Decision making is sloppy and haphazard

• Decisions are made as a result of the interaction between:• Problems, solutions,

participants, and choice opportunities

• What are the implications of the Garbage Can model?

Garbage Can Model

http://www.unc.edu/~nielsen/soci410/nm11/m11006.gif

Krietner/Kinicki, 2009Source: www.dilbert.com

http://dilbert.com/dyn/str_strip/000000000/00000000/0000000/100000/00000/8000/200/108249/108249.strip.sunday.gif


Integrating Normative & Rational• Stable, cause & effect is clear• RATIONAL MODELSimple context

• Cause & effect is clear but multiple solutions would work

• RATIONAL MODEL; investigate optionsComplicated context

• One right answer; cause & effect unclear• EXPERIMENT; test options; seek a creative

solutionComplex context

• Cause & effect constantly changing• Act to establish order; then identify patterns to

manage the problemChaotic context


• Availability heuristic – use information readily available in memory

• Representativeness heuristic – using similar situations to predict the occurrence of an event

• Confirmation bias – decide before investigating then seek confirming evidence

• Anchoring bias – decisions are influenced by initial information, data, stereotypes

Decision Making Bias


• Overconfidence bias – tendency to be overconfident about estimates or forecasts

• Hindsight bias – knowledge of an outcome influences our belief about the probability that we could have predicted the outcome earlier

• Framing bias – tendency to consider risks about gains differently than risks about losses

• Escalation of commitment bias – tendency to stick to an ineffective course of action when it is unlikely that the bad situation can be reversed

Decision Making Bias


Which of the following will reduce escalation of commitment? (A=Reduce, B=Won’t reduce)1. Set minimum targets for performance, and have

decision makers compare their performance with these targets

2. Have the same person have decision making authority over all aspects of an on-going project

3. Tie the person’s reputation to the success of the project

4. Provide more frequent feedback about project completion and costs

5. Make decision makers aware of costs of persistence

What Do You Think?


• Knowledge Management• Implementing systems and

practices that increase the sharing of knowledge and information throughout an organization.

• What specific actions can organizations take to facilitate knowledge management?

Decision Making Dynamics


A. Troy is very effective at conducting client meetings. He knows what to say when and manages the discussion to maximize the impact of the meeting for all parties. (TACIT)

B. Sandra has established a process for efficiently and accurately conducting financial analyses. She has established a spreadsheet accompanied with a set of instructions. (EXPLICIT)

• Which of the following types of information would be easier to share or capture? Why?

Knowledge Forms


Two dimensions of individual style:• Value Orientation

• Task vs. People/Social• Tolerance for Ambiguity

• High vs. Low• Your text has a

questionnaire to determine your style

Decision Making Styles


Decision Making Styles

Analytical Conceptual

Directive Behavioral

Tasks and TechnicalConcerns

People and SocialConcerns

Value Orientation

Low

High

Tole

ranc

e fo

r Am

bigu

ity


• People often use more than one decision making style.• Is one style better than another?•What is the benefit to you to understanding different decision making styles?

What Do You Think?


Intuition


Ethical Decision Tree


•Which of the following research findings are true? (A-True, B-False)

1. Groups are more efficient than individuals.

2. Groups are more confident in their choices than individuals.

3. The larger the group, the poorer the decision quality.

What Do You Think?


1) If additional information would increase the quality of the decision

2) If acceptance is important

3) If people can be developed through their participation

When to use Groups vs. Individuals


• A process to generate a quantity of ideas

• Quantity is more important than quality

• Criticism is withheld• Build on others ideas• Create status-free

environment

Brainstorming

Krietner/Kinicki, 2009Graphic Source: www.bioteams.com


1. Group meets to discuss a problem

2. Individuals generate ideas independently

3. Everyone shares an idea from his/her list and they are recorded but not discussed

4. Group discusses all ideas

5. Group members vote for their top choices

Nominal Group Technique

Graphic Source: www.mindspring.com


1. Manager identifies an issue to investigate

2. Questionnaire is sent to others and returned to manager

3. Manager summarizes responds and sends feedback to participants

4. Participants send their feedback and comments

5. Cycle repeats until issue is resolve or all relevant information is gathered.

Delphi Technique

Graphic Source: Canada Institutes of Health Research


• CREATIVITY is thinking up new things. INNOVATION is doing new things. ~ Theodore Levitt

• Process of developing something new or unique

Three types…• Creation: entirely new• Synthesis: combines

existing• Modification:

improvement

Creativity and Innovation


Creativity Model

Krietner/Kinicki, 2009http://www.excelsior-learning.com/igniteyourimagination.html

http://www.excelsior-learning.com/igniteyourimagination.html


Which of the following will foster creativity? (A-Yes, B-No)

1. Punishing mistakes or ideas that fail

2. Allowing time for fun and playing around

3. Holding people accountable for creative ideas

4. Emphasize the importance of taking action or generating output

5. Encouraging discussion of “half-baked” ideas

6. Rewarding creativity

7. Establishing a rigid, hierarchical corporate culture

What do You Think?


Design Thinking• Involve design thinkers before

direction has been setBegin at the beginning

• Factor in human behavior, needs, and preferencesTake a human-centered

approach

• Encourage rapid experimentation and prototypingTry early and often

• Look for opportunities to co-create with customers and consumersSeek outside help

Source: Design Thinking, Harvard Business Review, June 2008


Design Thinking• Manage a portfolio of innovation

including incremental and revolutionary projects

Blend big & small projects

• Rethink funding approach based on opportunitiesBudget to the pace of innovation

• Hire from interdisciplinary programs of DesignFind talent any way you can

• Plan assignments so design thinkers go from inspiration to ideation to implementation

Design for the cycle

Source: Design Thinking, Harvard Business Review, June 2008


You can’t find the right answers if you’re asking the wrong questions.

By John C Maxwell

http://johnmaxwellonleadership.com/author/admin/

ob - decision making

Education