Case Study
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Neck2e_PPT_08.pptxChapter 8
Decision Making, Creativity, and Innovation
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Case Study: Creativity and Innovation, Arizona State University
Case Questions:
What innovative decision boosted Arizona State University’s enrollment?
How does ASU think about enrollment differently than competitors, and why do they do thing this why?
How could the practices mentioned in this chapter and case report be integrated into your workplace?
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Decision-Making and Problem-Solving
Decision-making and problem-solving are not the same thing
Decision-making: Takes place during problem solving and involves judgment
Problem-solving: Method using analytical thinking to find a solution
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LO 8.1 Identify the primary types of decisions managers make to solve problems
Decision making is the action or process of identifying a strategy to resolve problems.
Problem solving is a method that requires analytical thinking and intuition to find a solution; whereas decision-making is a process that takes place during problem-solving and involves judgement to decide on the right course of action.
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Decision-Making and Problem-Solving
Two types of decisions:
Programmed: Routine
Non-programmed: Nonroutine
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Programmed decisions are automatic responses to routine and recurring situations. Usually, these situations have occurred in the past and are familiar to the people dealing with them.
Non-programmed decisions respond to new or nonroutine problems for which there are no proven solutions. In these situations, employees will not find the answer they are looking for in the company handbook or policy guidelines.
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Decision-Making and Problem-Solving
Five-step model of decision-making often used by managers
Define the problem
Identify and weight decision criteria
Generate multiple alternatives
Rate alternatives on the basis of decision criteria
Choose, implement, and evaluate the best alternative
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The first step in the decision-making process is to define the problem. You need to fully understand the nature of the problem and be able to describe it in clear, concise terms in order to arrive at a solution.
Now that the problem has been defined, you will need to identify and weigh the criteria in the decision. For example, the hazards and risks involved in the injuries, the degree to which employees follow safety procedures, and why injuries are becoming more common.
Next, you may think of alternate solutions to the defined problem. Perhaps if you discover that employees are not adhering to safety guidelines, then stricter sanctions and punishments should be imposed for violations of safety standards.
During the rating alternatives step, you might spend some time weighing the two possible solutions against each other and find they both rate poorly on the basis of the criteria. For example, sanctions and punishments could be viewed negatively and as a threat, and employees might fail to report injuries for fear of punishment.
Once the first four steps have been completed, it time to make a decision on the basis of the information you have gathered. In this example, you might use a critical thinking strategy to resolve the problem.
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Decision-Making and Problem-Solving
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Decision-Making in the Real World
Other factors in decision-making:
Bounded rationality
Complete rationality
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LO 8.2 Identify factors that influence the way we make decisions in the real world
Bounded rationality is the idea that we are restricted by a variety of constraints when making decisions. This concept is in contrast with complete rationality, which assumes we take in to account every single criterion or possible alternative to make a decision. In reality, most of us don’t have the time or mental processing capacity to deal with so much information; instead, we tend to narrow the options to a few key criteria.
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Decision-Making in the Real World
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Decision-Making in the Real World
Other factors in decision-making:
Satisficing decisions
Intuition
Heuristics
Availability heuristics (availability bias)
Anchoring and adjustment heuristics (anchoring bias)
Representativeness heuristics
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Satisficing decisions aim for acceptable results rather than for the best or optimal solutions. Satisficing is useful for less important decisions. For example, when purchasing a pack of chewing gum, we tend to choose something that looks good. We don’t spend time researching the merits of all the different chewing gum brands and flavors on the market. However, satisficing is not appropriate for important decisions.
Intuition is the unconscious process of making decisions based on imagination and possibilities.
Another aspect of decision making is heuristics, shortcuts or “rules of thumb” that allow us to make judgments and decisions quickly and efficiently. There are three types of heuristics:
Availability heuristics allow us to make judgments based on examples and events that are available and immediately spring to mind. Sometimes, we can make incorrect judgments about certain issues because of our reliance on information that is more readily available to us. This is called availability bias.
Anchoring and adjustment heuristics lead us to base decisions on the first piece of information and then adjust it, leading to anchoring bias, which is the tendency to over-rely on initial information while overlooking other important criteria.
With representativeness heuristic, we base a decision on our existing mental prototype and similar representative stereotypes.
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Decision-Making in the Real World
Decision making is influenced by different biases:
Common-information bias
Confirmation bias
Ease-of-recall bias
Hindsight bias
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Common-information bias is the inclination to overemphasize information held by the majority of group members while failing to consider other perspectives held by the minority.
Confirmation bias is the tendency to seek out information that fuels or confirms our preexisting views and to discount information that conflicts with them.
Ease-of-recall bias is the propensity to over-rely on information recollected from memory when making a decision.
Hindsight bias is the tendency to overestimate our ability to predict an outcome of an event.
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Decision-Making in the Real World
Decision-making is influenced by different biases:
Projection bias
Escalation of commitment
Sunk coast bias
Framing error
Lack of participation error
Randomness error
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Projection bias is the inclination to believe that other people think, feel, and act the same way we do (we project our thoughts and attitudes onto them).
Escalation of commitment is the increased commitment we may make to a decision despite receiving negative information about the consequences.
Sunk cost bias is the decision to continue an unwise investment based on past investments of time, effort, and/or money.
Framing error is the tendency to highlight certain aspects of a situation, either positive or negative, to solve a problem while ignoring other aspects.
Lack of participation error is the inclination to exclude certain people from the decision-making process.
Randomness error is the tendency for people to believe they can predict the outcome of chance events based on false information or superstition.
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Decision-Making in the Real World
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Creativity and Innovation in Individuals, Teams, and Organizations
Creativity and innovation can aid decision-making
Large organizations like Apple and Facebook have business models based on promoting creativity and innovation
Emphasize creativity and innovation to stay competitive
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LO 8.3 Discuss the critical nature of creativity and innovation in today’s organizations
Creativity and innovation can aid decision making by giving people a greater understanding of the company needs and its customers.
Creativity is the generation of meaningful ideas by individuals or teams, and innovation is the creation and development of a new product or service.
Creativity and innovation affect organizational behavior in those organizations in which employees are expected to generate creative products, processes, and strategies. The contribution from a group of individuals with varying knowledge, skills, backgrounds, and experiences can be a powerful force in creating innovative ideas, making decisions, and generating solutions. It is not just technology companies that have embraced this business model. Most successful organizations, whether in media, fashion, architecture, medicine, or engineering, are emphasizing creativity and innovation in order to stay competitive.
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A Three-Component Model of Creativity
Creativity is a process involving:
Domain-relevant skills and expertise
Creativity-related processes
Productive forgetting
Use of heuristics
Task motivation
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LO 8.4 Describe the three-component model of creativity
Creativity researcher Teresa Amabile believes that creativity is a process rather than a list of traits, and she proposes a three-component model of creativity to describe the factors necessary for an individual to be creative.
The three components of Amabile’s model are domain-relevant skills and expertise, creativity-relevant processes, and task motivation.
Amabile argues that we must have what she calls domain-relevant skills and expertise; that is, knowledge about the subject and the skills and talent to provide the most creative and productive responses. An increase in knowledge leads to higher levels of creativity.
According to Amabile, creativity-relevant processes, work methods dependent on particular personality characteristics, methods of thinking, and knowledge of heuristics, are a second component needed for creativity. Personality traits such as self-discipline, perseverance, delayed gratification, and independence, for instance, appear to be associated with creative minds. They also have the ability to use productive forgetting, which allows them to abandon a solution that isn’t working in favor of a new one.
People who have an innate interest in a chosen task tend to be more motivated to produce creative ideas. It stands to reason that if we find a task interesting and stimulating, then we will be more inclined to engage with it. More recent research suggests that extrinsic motivation, when used in the right way, could support intrinsic or inner motivation, especially when the levels of intrinsic motivation are already high.
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A Three-Component Model of Creativity
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Creative Potential Versus Practiced Creativity
People with creative potential possess skills
People with practiced creativity spot opportunities to apply skills in the workplace.
Creativity can lead to:
Innovative thinking
Better performance
Increased job satisfaction
Positive impact on the bottom
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LO 8.5 Identify the three types of support for creativity
People with creative potential tend to possess the skills and capacity to generate ideas. In contrast, practiced creativity is the ability to spot opportunities to apply these skills in the workplace.
If companies get it right, a creative mindset can lead to innovative thinking, better performance, increased job satisfaction, and a positive impact on the bottom.
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Creative Potential Versus Practiced Creativity
Three types of support for creativity:
Organizational
Supervisory
Work group
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Creativity flourishes when employees are provided with the autonomy and resources, they need to implement their concepts and when they are given license to take risks. Organizations that provide appropriate rewards and feedback and that encourage a collaborative environment tend to possess a more creative culture.
Employees who perceive their supervisor as supportive will feel more comfortable about speaking up and making suggestions.
Group members can support creativity by establishing certain norms, such as welcoming different perspectives, actively listening, fostering collaboration, being open-minded, and clearly communicating their views and approaches.
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The Innovation Process and Types of Innovation
Steps in the innovation process:
Idea generation
Problem-solving
Implementation and diffusion
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LO 8.6 Outline the steps in the innovation process
The first step in the innovation process is the creation of the idea itself. Usually, an idea is born out of the recognition of a need for a solution and generated from existing information, experience, and knowledge.
The second step of the innovation process is to identify any advantages and disadvantages associated with the innovation, explore costs and value, and set goals and priorities.
The final stage of the innovation process is producing and distributing the new product or idea. Without implementation, there is little chance of an idea becoming a reality.
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The Innovation Process and Types of Innovation
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The Innovation Process and Types of Innovation
Different types of innovation include:
Product innovation (e.g., Amazon Kindle)
Process innovation
Organizational structure innovation
People innovation
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Product innovation is the development of new or improved goods or services that are sold to meet customer needs. The Amazon Kindle would be an example of a new product innovation.
Process innovation is the introduction of new or improved operational and work methods. Footwear manufacturing company, Nike is focusing on 3D printing as a way of revolutionizing its manufacturing process for mass scale production.
Organizational structure innovation is the introduction or modification of work assignments, authority relationships, and communication and reward systems.
People innovation includes the changes in beliefs and behaviors of individuals working in an organization.
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The Innovation Process and Types of Innovation
Different types of innovation continued:
Exploitative innovation
Exploratory innovation
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Exploitative innovation focuses on the enhancement and reuse (exploitation) of existing products and processes.
Exploratory innovation focuses on risk taking, radical thinking, and experimentation.
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