MGT 291 Chapter 10

7 Rules of Brainstorming

1. Defer Judgement -- Dont criticize during initial stage of idea generation 2. Build on the ideas of others 3. Encourage wild ideas 4. Go for quantity over quality 5. Be visual (use different colored pens to write on big sheets of flip chart paper) 6. Stay focused on the topic 7. One conversation at a time -- no one interrupts another person

Decision Making Effectiveness in a Group is Dependent on Successfully Accomplishing the Following .. (4)

1. Developing a clear understanding of the decision situation 2. Developing a clear understanding fo the requirements for an effective choice 3. Thoroughly and accurately assessing the positive qualities of alternative solutions 4. Thoroughly and accurately assessing the negative qualities of alternative solutions.

When VO and TFA are combined, they form 4 styles of decision making

1. Directive -- Low tolerance for ambiguity and oriented toward task and technical concerns when making decisions (Efficient, logical, practical, and systematic in their approach to solving problems) -- Action oriented and decisive and like to focus on facts --exercise power and control and tend to focus on the short run 2. Analytical -- This style has a much higher tolerance for ambiguity and is characterized by the tendency to overanalyze a situation -- consider more information and alternatives than directive -- careful decision makers who take a long time to make decisions -- respond well to new or uncertain situations and can be autocratic 3. Conceptual -- Have a high tolerance for ambiguity and tend to focus on people or social aspects of a work situation. -- Take a broad perspective to problem solving and like to consider many options and possibilities -- adopt long-term perspective and rely on intuition and discussions with others to acquire information. 4. Behavioral -- Work well with others and enjoy social interactions in which opinions are openly exchanged. -- Supportive, receptive to suggestions, show warmth, and prefer verbal to written information. -- Tend to avoid conflict and be too concerned with others. -- Can lead to a "WISHY WASHY approach!!" -- have a hard time saying no to others and have a hard time making difficult decisions.

The two intuitive processes (Holistic Hunch and Automated Experiences) are influenced by two sources...

1. Expertise -- Represents an individuals combined explicit knowledge and tactic knowledge regarding an object, person, situation, or decision opportunity -- Increases with age and experience 2. Feelings -- Reflects the automatic, underlying effect one experiences in response to an object, person, situation, or decision opportunity. Based on the interaction between one's expertise and feelings in a given situation.

5 Advantages of Group-Aided Decision Making

1. Greater pool of knowledge 2. Difference Perspectives 3. Greater Comprehension 4. Increased Acceptance 5. Training Ground

4 Stages of the Rational Model

1. Identify the problem or opportunity 2. Generate alternative solutions 3. Evaluate alternatives and select a solution 4. Implement and evaluate the solution chosen

5 Steps of the Evidence Based Decision Making Model

1. Identify the problem or opportunity 2. Gather internal evidence or data about the problem and evaluate its relevance and validity 3. Gather external evidence about the problem from published research 4. Gather views from stakeholders affected by the decision and consider ethical implications 5. Integrate and critically appraise all data and then make a decision

Step #3: Evaluate Alternatives and Select a Solution (3 Considerations)

1. Is the potential solution ethical? 2. Is it feasible? 3. Will it remove the causes AND solve the problem?

4 Implications of the Garbage Can Model

1. More pronounced in industries that rely on science-based innovators (pharmaceutical companies) 2. Many decisions are made by oversight 3. Political motives frequently influence decision makers 4. Important decisions are more likely to be solved than unimportant ones because they are more salient to organizational participants.

SIMON'S NORMATIVE MODEL --What are the 4 most frequent causes of poor decision making?

1. Poorly defined processes and practices 2. Unclear company vision, mission, and goals 3. Unwillingness of leaders to take responsibility 4. A lack of reliable, timely information

5 Creativity Stages

1. Preparation -- reflects the notion that creativity starts from a base of knowledge 2. Concentration -- Individual focuses on the problem at hand 3. Incubation -- Done unconsciously. During this stage, people engage in daily activities while their minds simultaneously mull over information and make remotion associations. 4. Illumination -- Associations in the incubation stage ultimately come to life in this stage (illumination) 5. Verification -- Entails going through the entire process to verify, modify, or try out the new idea.

5 Disadvantages of Group-Aided Decision Making

1. Social Pressure 2. Domination by a Vocal Few 3. Logrolling (individual pet projects) 4. Goal Displacement (secondary goals such as winning an argument) 5. "Groupthink."

2 Broad Approaches to Making Decisions

1. The Rational Model 2. Or Various Non-rational Models

Summarizing the Rational Model (3)

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.

What are the 7 reasons why it is hard to be Evidence Based?

1. There is too much evidence 2. There is 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

7 Implementation Principles

1. Treat your organization as an unfinished prototype (organization may be broke and need of repair, dont assume that nothing needs to be changed) 2. No brag, just facts 3. See yourself and your organization as others do 4. Evidence-based management is not just for senior executives (best organization are ones where all employees are committed to EBDM, not just top managers) 5. Like everything else, you still need to sell it 6. If all else fails, slow the spread of bad practice (ignoring requests and delaying action) 7. The best diagnostic question: what happens when people fail? (always use mistakes to make yourself and the organization stronger)

Decision Making Bias #1: Availability Heuristic

A decision makers tendency to base decisions on information that is readily available in memory. (recent events, salient such as plane crash, and evokes strong emotions) Is likely to cause people to overestimate the occurrence of unlikely events such as a plan crash or school shooting. Similar to recency affect, where a student is likely to give a teacher high performance ratings if he did well over the past 3 weeks.

Delphi Technique

A group process that anonymously generates ideas or judgements from physically dispersed experts. Unlike the Nominal Group Technique, the Delphi Technique expert ideas are obtained from questionnaires or via the Internet as opposed to face-to-face group discussions.

Step #4: Implement and Evaluate the Solution Chosen

After a solution is implemented, the evaluation phase is used to evaluate its effectiveness. If the solution is effective, it should reduce the difference between the actual and desired states that created the problem. And not successful if the gap was not closed.

Non-Rational Models of Decision Making (Based on 3 assumptions)

Attempt to explain how decision are actually made 1. Decision making is uncertain 2. Decision makers do not possess complete information 3. Difficult for managers to make optimal decisions

Automated (AUTOMATICALLY) Experiences

Choice based on a familiar situation and a partially subconscious application of previously learned information related to that situation. Ex: When you have years of experience driving a car, you react to a variety of situations without conscious analysis.

The Garbage Can Model

Decision making is sloppy and haphazard Assumes that decision making doesn't follow an orderly series of steps. Decisions result from complex interaction of four independent streams of events: 1. Problems 2. Solutions 3. Participants 4. Choice opportunities

Tolerance for Ambiguity

Extent to which a person has a high need for structure or control in his life.

Minority Dissent

Extent to which group members feel comfortable disagreeing with other group members, and a group's level of participation in decision making.

Decision Tree

Graphical representation of the process underlying decisions and it shows the resulting consequences of making various choices.

Decision Making Bias #3: Confirmation Bias

Has 2 components 1. Subconsciously decide something before investigating why it is the right decision. This directly leads to the second component. 2. Seek information that supports our point of view and to discount information that does not.

Nominal Group Technique

Helps groups generate ideas and evaluate and select solutions. Structured group meeting that follows a specific format.

Decision Making Bias #4: Anchoring Bias

How would you answer the following two questions? 1. Is the population of Iraq greater than 40 million? 2. Whats your best guess about the population of Iraq? Was your answer to the second question influenced by the number 40 million in the first question??? This occurs when you are effected by the initial piece of information even if it is irrelevant.

Decision Making

Identifying and choosing solutions that lead to a desired state of affairs.

Intuition

If you have ever had a gut feelings about something, you have experienced the effects of intuition... Represents the judgements, 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" Anyone can be intuitive and is unrelated to gender. Ex: Im not a gambler, and I didn't have that kind of money, but my funny bone instinct kept urging me on.

Brainstorming

Is used to help groups generate multiple ideas and alternatives for solving problems.

Holistic Hunch

Judgement that is based on a subconscious integration of information stored in memory Person may not know why they want to make a decision but the choice "feels right"

Stage #2: Generate Alternative Solutions

Managers struggle with this step because of 3 key decision making blunders... 1. Rushing to judgement 2. Selecting readily available ideas or solutions 3. Making poor allocation of resources to study alternative solutions Decision makers are encouraged to slow down when making decisions, to evaluate a broader set of alternatives, and to invest in studying a greater number of potential solutions.

Integrating Rational and Non-Rational Models (Snowden and Boone's Idea) -- 4 Kinds of decision environments and an effective method of decision making for each.

Not as haphazard as the Garbage Can Model but acknowledges the challenges facing today's organzations. 1. A SIMPLE CONTEXT is stable, and a clear cause-and-effect relationship can be discerned, so the best answer can be agreed upon. 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. 3. In a COMPLEX CONTEXT, there is one right answer, but there are so many unknowns that decision makers dont understand the cause-and-effect relationships. 4. In a CHAOTIC CONTEXT, cause-and-effect relationships are changing so fast that no pattern emerges.

Decision Making Bias #6: Hindsight Bias

Occurs when the knowledge of an outcome influences our beliefe about the probability that we could have predicted the outcome earlier. We are affected by this bias when we look back on a decision and try to reconstruct why we decided to do something.

Decision Making Biases

People make a variety of systematic mistakes when making decisions. These mistakes are generally associated with a host of biases that occur when we use judgmental heuristics.

Stage #1: Identify the Problem or Solution

Problem -- Exists when the actual situation and the desired situation differ Opportunity -- Represents a situation in which there are possibilities to do things that lead to results that exceed goals and expectations.

The Rational Model

Proposes that managers use a logical four-step approach to decision making.

Consensus

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. Group members may still disagree with the final decision but are willing to work towards its success.

Computer-Aided Decision Making

Reduces consensus roadblocks while collecting more information in a shorter period of time. 1. Chauffeur-driven systems -- ask participants to answer predetermined questions on electric keypads or dials (live television audiences or college clickers) 2. Group-driven electronic meetings -- managers can use email systems or the Internet to collect information or brainstorm about a decision that must be made.

Decision Making Bias #8: Escalation of Commitment Bias

Refers to the tendency to to stick to an ineffective course of action when it is unlikely that the bad situation can be reversed. Ex: Investing more money into an old or broken car, waiting a long time for a bus to take you somewhere when you could have walked just as easily, or trying to save a disruptive personal relationship that has already lasted 10 years.

Decision-Making Style

Reflects the combination of how an individual perceives and comprehends stimuli and the general manner in which he or she chooses to respond to such information. A team of researchers developed a model of decision-making styles that is based on the idea that styes vary along two different dimensions: 1. Value orientation 2. Tolerance for ambiguity

Value Orientation

Reflects the extent to which an individual focuses on either task and technical concerns or people and social concerns when making decisions. Task and Technical Concerns vs. People vs. Social Concerns

Decision Making Bias #5: Overconfidence Bias

Relates to our tendency to be overconfident about estimates or forecasts. This bias is particularly strong when you are asked moderate to extremely difficult questions rather than easy ones.

Bounded Rationality

Represents that decision makers are "bounded" or restricted by a variety of constraints when making decisions.

Judgmental Heuristics

Rules of thumb or shortcuts people use to reduce information processing demands.

Evidence Based Decision Making (EBDM)

Stems from two sources 1. desire to avoid the decision-making biases 2. and research done on evidence-based medicine Represents a process of conscientiously using the best available data and evidence when making managerial decisions.

Creativity

The process of using intelligence, imagination, and skill to develop a new or novel product, object, process, or thought.

Optimizing

The rational model is based on the premise that managers optimize when they make decisions. Optimizing involves solving problems by producing the best possible solution.

Decision Making Bias #7: Framing Bias

This bias relates to the manner in which a question is posed. The framing bias is the tendency to consider risks about gains, saving lives, differently than risks pertaining to losses, losing lives. You are encouraged to frame decision questions in alternative ways in order to avoid this bias.

Decision Making Bias #2: Representativeness Heuristic

Used when people estimate the probability of an event occurring. Based on the likely hood of an event occurring based on one's impression on similar occurrences. PwC hired me because prior students from Miami are good workers.

Group Involvement in Decision Making

Whether groups assemble in face-to-face meetings or rely on other technologically based methods to communicate, they can contribute to each stage of the decision making process. -- Important to create an environment where group members feel free to participate and express their emotions.

Satisficing

choosing a solution that meets some minimum qualifications, one that is "good enough"