Final Project Part I

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Decision-Making Processes

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Organiza(on Theory and Design Twel%h Edi+on Richard L. Da%

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Types of Decisions •  Organiza(onal decision making – process of

iden+fying and solving problems - Problem Iden+fica+on - Problem Solu+on

•  Programmed Decisions – repe++ve and well defined

•  Nonprogrammed Decisions – novel and poorly defined

©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Decision Making in Today’s Environment

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Individual Decision Making

•  Ra(onal approach – ideal method for how managers should make decisions

•  Bounded ra(onality perspec(ve – how decisions are made under severe +me and resource constraints

©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Steps in the Ra+onal Approach

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Bounded Ra+onality Perspec+ve

•  There is a limit to how ra+onal managers can be—+me and resource constraints – Nonprogrammed decisions

•  Constraints and Tradeoffs – Constraints impinge the decision maker

•  The Role of Intui+on – Experience and judgment rather than logic

©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Constraints and Tradeoffs During Nonprogrammed Decision Making

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Organiza+onal Decision Making

ü Management Science Approach

ü Carnegie Model

ü Incremental Decision Model

8 ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Management Science Approach

•  Use of sta+s+cs to iden+fy relevant variables •  Remove human element •  Very successful for military problems •  Good tool for decisions where variables can be inden+fied and measured

•  A drawback of management science is that quan+ta+ve data are not rich and lack tacit knowledge

©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Carnegie Model

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Incremental Decision Model

•  Focus on structured sequence of ac+vi+es from discovery to solu+on

•  Large decisions are a collec+on of small choices

•  Decision interrupts are barriers – Iden+fica+on Phase – Development Phase – Selec+on Phase – Dynamic Factors

©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The Incremental Decision Model

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Problem Iden+fica+on and Problem Solu+on

When problem and problem solu(on are uncertain

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Garbage Can Model

•  Paaern or flow of mul(ple decisions •  Think of the whole organiza+on •  Explain decision making in high uncertainty - organized anarchy: – Problema+c preferences – Unclear, poorly understood technology – Turnover

•  Streams of events instead of defined problems and solu+ons

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Consequences of the Garbage Can Model

•  Solu+ons may be proposed even when problems do not exist

•  Choices are made without solving problems •  Problems may persist without being solved

•  A few problems are solved

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Illustra+on of Independent Streams of Events in the Garbage Can Model of Decision-Making

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Con+ngency Framework for Using Decision Models

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Special Decision Circumstances •  Today’s environment presents high-stakes, quick decisions

•  Managers must deal with: – High-velocity environments – Learning from decision mistakes – Understanding cogni+ve and personal biases • Escala+ng commitment • Prospect theory • Groupthink • Evidence-based management • Encourages dissent and diversity

©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Design Essen+als v Most decisions are not made in a logical manner v Individuals make decisions, but organiza+onal decisions are not made by a single individual

v Conflict exists when problems are not agreed on

©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Design Essen+als

vThe garbage can model has become a descrip+on of decision-making vOrganiza+ons operate in high-velocity environments and must make decisions with speed v Allowing biases to cloud decision making can have nega+ve consequences