week 9
alaynafaith
chapter_12_handout.pdf
© 2013 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Twelve
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Learning Objec5ves
LO.1 Compare and contrast the rational model of decision making, Simon’s normative model, and the garbage can model.
LO.2 Discuss eight decision-making biases. LO.3 Discuss the thrust of evidence-based decision
making and its implementation principles. LO.4 Explain the model of decision-making styles. LO.5 Explain the model of intuition and the ethical
decision tree.
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Learning Objec5ves (cont.)
LO.6 Summarize the pros and cons of involving groups in the decision-making process.
LO.7 Contrast brainstorming, the nominal group technique, the Delphi technique, and computer-aided decision making.
LO.8 Describe the stages of the creative process. LO.9 Discuss the practical recommendations for
increasing creativity.
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Models of Decision Making
! Decision making 9 iden5fying and choosing alterna5ve solu5ons that lead to a desired state of affairs
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Models of Decision Making
! The Rational Model 9 proposes that managers use a rational four-
step approach to decision making.
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The Ra5onal Model
! Identify the Problem or Opportunity 9 Problem – exists when the actual situation and
the desired situation differ 9 Opportunity - represents a situation in which
there are possibilities to do things that lead to results that exceed goals and expectations
! Generate Alternative Solutions 9 For routine decisions alternatives are readily
available through decision rules
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Ra5onal Model
! Evaluate Alternatives and Select a Solution 9 Is the potential solution ethical? 9 Is it feasible? 9 Will it remove the causes and solve the
problem?
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Ra5onal Model
! Implement and Evaluate the Solution 9 After solution is implemented, the evaluation
phase is used to evaluate its effectiveness 9 Optimizing – producing the best possible
solution
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Summarizing the Ra5onal Model
1. The quality of decisions may be enhanced 2. It makes the reasoning behind a decision
transparent 3. If made public, it discourages the decider
from acting on suspect considerations
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Nonra5onal Models of Decision Making
! Nonrational models 9 Attempt to explain how decisions are actually
made 1. Decision making is uncertain 2. Decision makers do not possess complete
information 3. Difficult for managers to make optimal
decisions
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Simon’s Norma5ve Model
! Bounded rationality 9 represents the notion that decision makers are
“bounded” or restricted by a variety of constraints when making decisions
! Satisficing 9 choosing a solution that meets some minimum
qualifications, one that is “good enough”.
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Simon’s Norma5ve Model
Most frequent causes of poor decision making
! Poorly defined processes and practices ! Unclear company vision, mission, and goals ! Unwillingness of leaders to take responsibility ! Lack of reliable, timely information
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Garbage Can Model
! Garbage Can Model 9 decision making is sloppy and haphazard 9 decisions result from complex interaction of
four independent streams of events: problems, solutions, participants and choice opportunities
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Implica5ons of the Garbage Can Model
1. More pronounced in industries that rely on science-based innovations
2. Many decisions are made by oversight 3. Political motives frequently influence decision
makers 4. Important decisions are more likely to be
solved
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Integra5ng Ra5onal and Nonra5onal Models
1. A simple context is stable, and clear cause- and-effect relationships can be discerned, so the best answer can be agreed on
2. In a complicated context, there is a clear relationship between cause and effect, but some people may not see it, and more than one solution may be effective
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Integra5ng Ra5onal and Nonra5onal Models
3. In a complex context, there is one right answer, but there are so many unknowns that decision makers don’t understand cause-and-effect relationships.
4. In a chaotic context, cause-and-effect relationships are changing so fast that no pattern emerges.
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Decision-‐Making Biases
! Judgmental heuristics 9 rules of thumb or shortcuts that people use to reduce informa5on processing demands.
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Decision-‐Making Biases
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Evidence-‐Based Decision Making
! Evidence-based decision making (EBDM) 9 represents a process of conscientiously using
the best available data and evidence when making managerial decisions
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A Model of Evidence-‐Based Decision Making (EBDM)
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Seven Implementa5on Principles
1. Treat your organization as an unfinished prototype
2. No brag, just facts 3. See yourself and your organization as
others do 4. Evidence-based management is not just for
senior executives
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Seven Implementa5on Principles (cont.)
5. Like everything else, you still need to sell it 6. If all else fails, slow the spread of bad
practice 7. The best diagnostic question: What
happens when people fail?
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Why Is It Hard to be Evidenced-‐Based?
1. There’s too much evidence. 2. There’s not enough good evidence. 3. The evidence doesn’t quite apply. 4. People are trying to mislead you. 5. You are trying to mislead you. 6. The side effects outweigh the cure. 7. Stories are more persuasive anyway.
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General Decision-‐Making Styles
! Value orientation 9 reflects the extent to which an individual
focuses on either task and technical concerns or people and social concerns when making decisions
! Tolerance for ambiguity 9 extent to which a person has a high need for
structure or control in his life
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Decision-‐Making Styles
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The Role of Intui5on in Decision Making
! Intuition 9 represents judgments, insights, or decisions
that “come to mind on their own, without explicit awareness of the evoking cues and of course without explicit evaluation of the validity of these cues”.
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A Model of Intui5on
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A Model of Intui5on
! Holistic hunch 9 judgment that is based on a subconscious
integration of information stored in memory ! Automated experiences
9 choice based on a familiar situation and a partially subconscious application of previously learned information related to that situation
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Road Map to Ethical Decision Making: A Decision Tree
! Decision tree 9 graphical representation of the process
underlying decisions and it shows the resulting consequences of making various choices
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An Ethical Decision Tree
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Group Involvement
! Minority dissent 9 extent to which group members feel
comfortable disagreeing with other group members, and a group’s level of participation in decision making
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Advantages and Disadvantages of Group-‐Aided Decision Making
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Group Problem Solving Techniques
! Consensus 9 reached when all members can say they either
agree with the decision or have had their ‘day in court’ and were unable to convince the others of their viewpoint. Everyone agrees to support the outcome.
! Brainstorming 9 process to generate a quantity of ideas
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Rules for Brainstorming
1. Defer judgment 2. Build on the ideas of others 3. Encourage wild ideas 4. Go for quantity over quality 5. Be visual 6. Stay focused on the topic 7. One conversation at a time
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Group Problem Solving Techniques
! Nominal Group Technique 9 process to generate ideas and evaluate
solutions ! Delphi technique
9 process to autonomously generate ideas from physically dispersed experts
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Group Problem Solving Techniques
! Computer-aided decision making 9 a variety of computer, software, and electronic
devices to improve decision making 9 allows managers to quickly obtain larger
amounts of information from employees, customers, or suppliers around the world
9 Chauffeur-driven systems, group-driven electronic meetings
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Crea5vity
! Creativity 9 process of using intelligence, imagination, and
skill to develop a new or novel product, object, process, or thought
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The Crea5vity Stages
